If you are wondering why that order of notebooks you placed last month still hasn't arrived, you may have to look all the way to Asia for the answer. Although demand for notebooks is steadily growing, a limited number of LCD manufacturers maintain a stranglehold on the worldwide supply, causing shipping delays across the board.
Suffering from lingering effects of the Asian financial flu, which halted investments in Japanese and Korean manufacturing facilities, LCD makers fell woefully behind the current demand curve for screens, which are being used for everything from flat-panel display monitors to tiny handheld devices. This has resulted in significant price increases for certain screen sizes, as well as lengthy shipment delays from notebook vendors.
The patience of many IT managers is being tried.
"I don't know what is going on, but we've never had to wait this long to get product," said an IT manager at a Fortune 500 company.
But there is some relief on the horizon, as Taiwanese manufacturers will be opening up six new LCD fabrication plants during the next 18 months. Most of the Taiwanese companies are taking the unprecedented step of partnering with cash-poor Japanese companies to increase production quickly.
But analysts say the relief will only be temporary for the notebook market. This is due to the fact that manufacturing plants will begin by making notebook screen sizes, only to quickly turn to supplying the fast-growing market for flat-panel displays.
"The new fabs are being made with monitors in mind, that is the growth business," said Paul Semenza, director of market analysis at Stanford Resources, a consultancy in San Jose. "There has been a shift of emphasis from notebooks to monitors."
Semenza said that demand for monitors will surpass that for notebook LCDs by 2003, which will have a profound effect on the sizes of LCDs that are made. In a market as complex and unique as this, many factors play a role.
LCDs are cut from large pieces of glass called motherglass. Each manufacturing facility that is built can only make one size of motherglass and manufacturers must predict demand far into the future, before they begin construction of new plants.
As a result, most new LCD makers are targeting the high-growth, high-margin flat-panel display market. That leaves notebooks, unable to support the heavier, more expensive large screens made for monitors, out of luck.
In the long term, analysts expect that notebook vendors will continue to face serious challenges in keeping notebook costs steady and delivering systems on time.