Growth in FPD & telecom

The Industrial Economics and Knowledge Center (IEK), under
the Industrial Technology Research Institute (ITRI), which released its forecast
for 2006, sees tremendous growth particularly in the FPD (flat panel display)
and communications sectors. In the opening speech during a press conference held
recently, Yu Chi Chong, the Vice Director of IEK said that Taiwan's major
industries including IC, optical electronics, materials used by electronics and
communication industries are expected to grow because of general mass production
entering the consumer markets. Each sector has an effect on the other like the
IC, Yu said that the demand for LCD's driver IC will grow, thus the FPD and
the electronics materials sectors will also increase. Yu also reported that
Taiwan's GDP will reach 3.8 percent this year and 4.1 percent in 2006,
slightly lowered than the forecast of IMF where the predicted global GDP will
reach 4.3 percent this year and same figure of 4.3 percent for 2006.

Communication industry: Driven By 3G and low-end handsets

In the communication industry, mobile sector will see the launching of 3G
and low-end handsets. With a lot of promotions such as digital contents,
internet accessibility, wireless LAN connection and Skype gearing this year, it
is likely that 3G handset will finally lift off after being stagnant for almost
a year now. Led by Intel, chief architect of WiMax along with its supporters and
manufacturers has established WiMax's standards, and is now pushing hard to be
commercial in 2006. IEK predicts that the global production value of WiMax AP
will reach US$ 50 millions; the value of end-user equipment will total US$ 80.0
millions. Going into 2007, the number of GSM mobile phone will go down as many
end-users opted to use 3G mobile phone or smart phone.

However, Yu said that the introduction of low-end mobile
phone in the global market would see a significant shift particularly in the
third countries. The markets in China and India will see an influx of these
low-end mobile phones will catalysts OEM orders where many Taiwanese companies
to able to produce at high production output. In 2006, the cheapest mobile phone
will carry a tag price of US$ 50, from this year at US$ 80. It is likely that
the unit price will go down so more, possibly US$ 46 before the end of first
half.

Chang Hai Shi, analyst from IEK said the communication
industry will be the most popular industry in Taiwan next year with several
hottest products to emerge such as mobile phone, GPS, Passive Optical Network (PON),
IAD and WiMax, set to start commercialize in 2006. The total production of
Taiwan mobile industry will reach over 80 millions units by the end of this
year.

The communication industry grow up 23.4 percent wholly one
year, distinguish by type with communication, wireless communication grow up
27.3 percent, wide-band network grow up 16.7 percent, communication whole output
value is it top 600 billion new Taiwan dollar to expect 2006, grow up 21.5
percent one year relatively, wireless communication is it grow up 21.1 percent
to estimate in advance, the wide-band network is 22.3 percent.

FPD industry: Larger sizes, lower prices

FPD industry attains excellent performance this year; expect to grow by 31.1
percent with a value of more than NT$ one trillion in 2006, according to Cheng
Chia Lueng, an analyst of IEK. The demand of notebook PCs, LCD monitors, and LCD
TVs will increase in 2006, driving the production level into new high. Local FPD
industry will also see paradigm shift at many companies will form a complete
upstream and downstream chain; plus the support of integrated device
manufacturers and bumping factories. Meanwhile, medium and small-scale TFT-LCD
panel will also gain good growth from the high order of cell phone market that
will replace colored STN panel and become the mainstream gradually, the
assessing value will be up to NT$ 1.079 trillion in 2006.

In Taiwan, TFT-LCD makers will add more of its fifth
generation and sixth generation production lines. This year, there were 3
production lines of fifth generation added and running volume productions. In
2006, 3 production lines of sixth-generation schedule to operate. However, Cheng
pointed out that the production lines of 3.5 generation would produce medium and
small panels. While PDP production will see slowdown as other new innovations
panel's products emerging in last few month. Cheng warned that many local
companies would face more competition not only from Korea, but also from China.
Reports coming in showed that China is also strengthening its TFT-LCD production
by granting more tax amnesty to foreign companies. IEK is pointed out at the
same time, though factory's investment plan in Taiwan TFT panel is restarted
in the second half of 2005, is a noteworthy phenomenon that the development in
economy of China will ease up.

IC Industry: Driven by FPD and communications industries

Benefits from Taiwan and develop IC and FPD industry are unanimous, IEK
forecast that the total value of raw materials set to reach NT$ 301 billions.
LCD driven IC will perform well next year and Taiwan will supply at least 40
percent of global market needs of LCD panels used in LCD monitors, NB and LCD
TV.