Chapter 4: The market and organizational principles in the interfirm relationships of the Japanese LCD materials industry
Various kinds of chemical materials are used to manufacture liquid-crystal displays (LCDs), known as LCD materials. The demand for LCD materials has increased since the 1990s due to the rapid increase of the digital camera, mobile phone and digital TV markets. Moreover, the purchasing cost of LCD materials became a high proportion of the manufacturing costs for LCD manufacturers. In particular, along with the enlarged size of the LCD panels, the proportion of purchasing cost of LCD materials to manufacturing costs of LCD increased. Therefore, this increase in demand and purchasing costs made LCD materials more important for LCD manufacturers. The LCD materials industry is different from the steel, machine tool and integrated circuit (IC) industries, as briefly described in the introduction. First, when compared to these industries, the LCD materials industry has a rather narrow scope since these materials are used almost exclusively for LCDs, whereas steel, machine tools and ICs have a wide range of applications. In addition, the LCD industry is relatively new considering that it was not established until the 1990s. Furthermore, as Japanese LCD companies were overtaken by South Korean and Taiwanese LCD companies in the 2000s, Japanese LCD materials firms have since then frequently transacted with foreign customers. As a result, there is only a short period when Japanese LCD materials companies depended largely on Japanese customers compared to the steel and machine tool industries.
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