Taipei, May 21 (CNA) Taiwan flat-panel makers AU Optronics Corp. (AUO) and Chimei Innolux Corp. are lagging behind Japanese and South Korean competitors when it comes to thinner touch panel technology used in high-end smartphones, a Taipei-based analyst said recently.
Japan's Sony Mobile Display began mass production of its in-cell touch panels this February, as the Sony Corp. unit readies itself to supply the key component for Apple Inc.'s next-generation iPhone 5, said Stone Wu, senior analyst at IHS Displaybank.
Two other Japanese panel suppliers, Sharp Corp. and Toshiba Mobile Display, and LG Display Co. of South Korea have also been tapping into the iPhone 5 panel supply chain, with the three companies slated to begin mass production of the panels sometime before the end of May, he said.
Similar products made by Taiwan-based AUO, however, will not enter mass production until the third or fourth quarter, while Chimei Innolux will not produce any in-cell touch panels in 2012, Wu noted.
"The yield rate of in-cell panels remains a key issue for most suppliers," he told reporters in an interview.
"Even for those companies that start mass production in May, they can only reach a yield rate of 65 to 70 percent on average at present," Wu said, adding that the yield rate for touch panels used in the current iPhone 4S is about 80 to 85 percent.
Compared with other technologies, touch panels that use the advanced in-cell technology can be made thinner because the touch sensors are actually placed inside color filters rather than on top of them.
In addition, Wu predicted that touch panels using in-cell technology will be installed in high-end smartphones rather than mid-range and entry-level models.
This is because manufacturing costs of in-cell panels are 20 percent higher than high-quality IPS (In-Plane Switching) panels used in premium smartphones and tablet computers, he explained.
Earlier in February, AUO told investors that its in-cell panels had completed research and development, and the company would design products with customers in the second half of this year.
AUO's potential customers may include mobile phone makers -- likely to be Taiwanese -- because the yield rate of in-cell touch panels is easier to improve for models sized less than 5 inches, Wu said.
According to IHS Displaybank, touch panel shipments are forecast to reach 1.24 billion units in 2012, up 27.6 percent from the 968 million units shipped last year.
In terms of technology types, projected capacitive touch panels, such as ones using in-cell technology, will remain in the mainstream category, accounting for 69.5 percent and 77.2 percent of the total touch panel shipments in 2012 and in 2013, respectively, the research firm said.
(By Jeffrey Wu)