Japan's Ulvac Inc said on Tuesday that demand for gear used in making small and next-generation OLED display panels for smartphones is strong, making up for a fall in demand for large liquid-crystal display (LCD) equipment.
Ulvac, based in Chigasaki, 50 km (30 miles) south of Tokyo, competes with the likes of Tokyo Electron and Applied Materials of the United States in equipment for making chips, flat-panel displays and solar cells.
Its president, Hidenori Suwa, told Reuters in an interview he was in contact with two companies about gear for new facilities in Japan to make small panels for use in smartphones.
His comments came after recent media reports that Sharp Corp and Toshiba Corp were planning to build new facilities to make small panels intended for use in Apple Inc's iPhone.
In solar cell technology, Suwa said he saw great potential for thin-film silicon panels, even though rival gear-maker Applied Materials withdrew from the market in July, saying it was unprofitable.
Last month Ulvac revised down its forecast for orders for flat-panel displays in the year to June 2011 to 77.6 billion yen ($926 million) from 84.5 billion yen ($1 billion).
At the start of the financial year, we were anticipating a lot of investment from China, Suwa said. It turned out that we couldn't bank on investment in China by foreign companies, so we revised our forecast. But what has largely made up for that is OLED and small panels.
Suwa expects demand for equipment used in making larger LCD panels for televisions to pick up in the second half of 2011, particularly in China. Ulvac announced in October that it would build a solar and LCD-panel gear factory in Suzhou, near Shanghai, in a bid to beat the strong yen and cut costs.
Samsung Electronics and LG Display of South Korea said earlier this month that they had won official approval to build flat screen plants costing $6 billion in China.
An Ulvac spokesman said more than 40 percent of the 77.6 billion yen in forecast flat-panel display orders for the year to next June was for equipment related to next-generation organic light-emitting diode (OLED) manufacturing, compared with only about 10 percent last business year.
In solar panel manufacturing, Suwa said the company aimed to cut per-watt manufacturing costs for thin-film amorphous silicon panels by more than half by the end of 2011, giving the technology much greater economic potential.
This will make it more cost-competitive than crystalline silicon panels, so it will be very suitable for large-scale solar farms, he said, adding that he expected the technology to make greater inroads into the market within a few years.
But the slump in prices for silicon has made thin-film technology a less attractive option, analysts say.
Looking at it objectively, the hurdles are high, said Mitsuru Osawa, an analyst at Ichiyoshi Research Institute, citing the lower costs of silicon and competition from other solar technologies. It's hard to make any predictions, but the general view is that amorphous silicon is going to have a tougher time.
But he said there was still a possibility Ulvac would beat its operating profit forecast of 8.2 billion yen for the year to June 2011.
There are strengths and weaknesses, like LCDs and OLED, and Ulvac's business is basically highly volatile, but overall I think the risks this year are relatively low, he said.
(Editing by Michael Watson)