China-based touch panel maker Shenzhen O-film Tech, in view of shrinking orders from China-based smartphone vendors due to increasing competition from in-cell touch panels produced by Japan Display (JDI), Sharp, Samsung Display and LG Display, plans to begin production of fingerprint recognition modules for use in smartphones at an initial monthly production capacity of four million units in the second quarter of 2015.
The move would make O-Film the largest China-based maker for the product as it changes its business model. Previosuly, O-Film saw 20 million in shipments but has since seen that number drop to 15-16 million as competitiors have bumped up in-cell touch panel production.
As demand for smartphones in the China market has turned weak in the second half of 2014, smartphone vendors have high inventory levels and clearing of inventories is expected to continue until the first quarter of 2015. Such developments in addition to the increased competition have prompted O-Film to lay off about 10,000 employees.
O-Film has also reportedly seen its market share with Lenovo drop signifcantly. According to China-based media reports, O-Film held a 70-80% share for Lenovo’s handset touch panels throughout most of 2014 but that percentage has now dropped to 15% due to product delivery issues. O-Film may also have to pay Lenovo a $80.9 million fine as a result, the reports added.
O-Film held a 22.1% share in the thin-film touch panel market during the first half of 2014, according to statistics from IEK.