Touch-Screen Shortage Hurts Windows 8 PC Sales

TOKYO (Nikkei)--A shortage of touch screens is one reason for the sluggish sales of personal computers running Windows 8, the latest operating system from Microsoft Corp., industry insiders say.

A key selling point of Windows 8 is the ability to use the computer by simply touching the screen. Launched last autumn, it was billed as the savior of the struggling PC industry. NEC Corp. (6701) and other PC manufacturers put out Windows 8 machines for the year-end shopping season, but most of their touch-screen offerings were high-end 13- and 14-inch models. There were few available models in the most popular size, 15 inches, which accounts for 40% or so of notebooks.

"I am very frustrated," a PC sales staffer at a big Tokyo electronics retailer says, "because we are not able to demonstrate Windows 8's powers with 15-inch models."

Demand has grown sharply since last summer for touch screens used in smartphones and tablets. Taiwanese manufacturers have moved to make such panels. But "supply (of larger PC-use ones) could not keep pace with demand," a major Taiwanese touch panel maker says, in part because their production yields are lower than those of smaller displays.

A shortage of ITO (indium tin oxide) film, a key component of some touch screens, is another factor. Increasing the sensitivity of the film becomes more difficult as screens grow larger. This has resulted in a scramble of orders for high-performance products supplied by Nitto Denko Corp. (6988) and a few other manufacturers.

A total of 6 million notebook touch screens were shipped, and were employed in 2% of all notebook computers, in 2012, according to estimates by DisplaySearch. Prices remain high, with 14-inch screens selling for 60-90 dollars apiece at the end of last year.

ITO film manufacturers have recently begun making investments to boost output. Production yields are expected to improve at major touch-screen manufacturers. In addition, Japanese touch-screen producer Gunze Ltd. (3002) has started making notebook-use products. The supply of PC-use touch screens is thus expected to grow, and some Japanese PC makers have released spring models featuring 15-inch touch screens.

But with consumer interest shifting to smartphones and tablets, it is unclear whether PC sales will recover even after the touch-screen shortage goes away.

(The Nikkei, March 9 morning edition)

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