A new report from information and analytics provider IHS (News - Alert), “Tablet PC Touch Panel Shipment Database,” has just become available and the numbers show a huge -- and growing -- demand for the display panels used in media tablets. Demand more than doubled year-over-year in Q1 2013. In particular, this boom in shipments sharply points to a hunger for low-priced 7.x inch products. We should temper this somewhat by clearly noting that the comparisons are between Q1 2012 and Q1 2013. In fact, sequentially, between Q4 2012 and Q1 2013, total shipments actually dropped about 13 percent. In turn, we need to temper this by also noting that Q4 is the holiday quarter and that shipments will almost always drop from any Q4 to the following Q1.

With that tempering out of the way, the fact nevertheless remains that global shipments for capacitive touchscreen displays for tablets came in at 45.2 million units for Q1 2013. Regardless of the inevitable drop from Q4 to Q1 -- and we need to note as well that the drop was not particularly large -- we need to recognize that year-over-year display shipments increased at a whopping 111.9 percent rate, and this is huge. Shipments more than doubled from the Q1 2012 number of 21.3 million units.


Image via Shutterstock

Needless to say, what this suggests is that, at the very least, Q4 2013 numbers -- those for this year's holiday buying season -- are likely to be in the same general neighborhood of rapid growth ramp up. The sequential drop is irrelevant looking backwards; it is when we look ahead that the Q1 numbers become much more indicative of where the market is likely to head -- and that can only be up, and up in big ways.

In the meantime, smaller devices in the seven-inch range look to be highly desirable. Yes, Steve Jobs (News - Alert) was clearly wrong about the smaller tablet market (though for all we know he was just buying a lot of time for Apple to build its own smaller tablet).

Duke Yi, senior manager for display components and materials research at IHS note that, “Sales of smaller-sized tablets are rising at a rapid rate, driving shipments of capacitive touchscreen displays ranking in size from seven to eight inches. These tablets, aside from Apple's iPad mini, are inexpensive, with pricing at $199, making them popular among consumers. With the level of competition increasing in both the tablet and panel markets, pricing is expected to continue to decline, boosting shipments of displays and end products in this size range.”

Most of this is very good news for consumers. Along with the increase in sales we've also seen an increasing number of panel makers; this means that we can expect to see the average selling price of tablet PC touch panel modules to drop at a quick rate. The average price of 7.0-inch tablet touch panels fell to $15.60 in Q1 2013, down a significant 16 percent from the $18.60 IHS charted for Q1 2012.

At the end of Q1 2013, display supplier TPK ended up with 29 percent market share in the tablet touchscreen market. This is due almost entirely to the fact that the company's customers include many of the leading device manufacturers, among them Apple, Amazon, Barnes & Noble, Microsoft (News - Alert) and Asus. This means that Google's Nexus 7, which is built by Asus, was among the players driving sales. This market share gives the company the top position in the tablet touch panel market in terms of unit shipments.

The runner up was Iljin Display, the biggest supplier of tablet PC touch panels for Samsung (News - Alert) Electronics, which accounted for a much smaller though still impressive 15.5 percent of market shipments in Q1 2013, a 7.5 percent gain year over year.

Meanwhile, the touch panel subsidiary of Foxconn Technology Group (News - Alert), GIS, is also increasing its supply of touch panels for Apple’s iPad and iPad mini, while also supplying 8.9-inch displays for the Amazon Kindle Fire HD. On the collective strength of these deals, GIS managed to accumulate a 13.3 percent share of total Q1 2013 shipments. GIS in fact improved its shipments both year-over-year (with 7.5 percent growth) but also sequentially, with an excellent 12.8 percent gain over Q4 21012.

We can look forward to continued and steady growth in Q2 and Q3 2013, but we ourselves are anticipating what we expect to be true blowout numbers in Q4 2013. The small tablet market looks to be the real sweet spot for the consumer segment. There is hardly any saturation of the market here; there is only one direction for the overall industry and for the display manufacturers to head, and that direction is most assuredly not south.