EL SEGUNDO, CA – Despite the rapid expansion of the global flat-panel display business, the market for display driver ICs used in these screens is expected to undergo a deceleration in revenue growth during the coming years, according to iSuppli Corp.

Unit shipment growth for display drivers will slow to 15.1% in 2008, down from 26.2% in 2007. Annual growth will average about 11% from 2009 to 2011.

Thanks to the explosion of LCD and plasma television sales, the display-driver IC market has grown rapidly during the past several years, as more consumers and businesses have sought to replace their old CRT-based displays with newer flat-panel sets, says iSuppli.

However, while the panels continue making steady progress in expanding the overall size of the display market and increasing their market share, the display driver IC market story is one of rapid change in the face of pricing pressures and advances in panel technology, according to the research firm.

iSuppli estimates the global display driver market grew by 26.2% to reach 6.9 billion units in 2007, up from 5.5 billion units in 2006. Such growth was chiefly the result of two market areas: LCD-TV and notebook PC displays, both of which grew their end application units dramatically in the past year. Another major factor was the transition away from passive STN-type LCD displays and to active matrix TFT-LCD displays in many mobile and handheld products, such as mobile handsets and GPS navigation units. Such displays require larger numbers of display drivers, says iSuppli.

But while overall unit growth was strong, global revenue was up only 10.2% to reach $8.8 billion in 2007, up from $7.99 billion in 2006. Revenue growth was limited by the continued downward ASPs for the driver ICs, caused by fierce competition among display driver companies and by decreasing panel prices, factors that exerted pricing pressure on all suppliers to the panel manufacturers.

“A troublesome development for the display driver IC market is the fact that the panel pricing pressure – and thus driver IC pricing pressure – is not expected to abate anytime soon, as even more capacity comes on line during the next few years,” said Randy Lawson, senior analyst for digital TV and display electronics for iSuppli.

“Even more troublesome is the fact that many large-panel applications, which represent the largest overall volume market for display drivers, are moving rapidly to adopt multichannel drivers, and in some cases are integrating drivers into the panels themselves.

“This use of multichannel devices reduces the number of discrete drivers required per panel, putting a serious crimp on the growth prospects for large panel drivers. Coupling the declining driver IC ASP with the increasing usage of multichannel drivers in televisions, notebooks and monitors, one can see that the overall growth rate for display driver ICs is slowing dramatically.”

But, new applications and products are continuing to add growth in end markets, with devices like DPFs, multi-touch panels and 3D displays, all of which should help continue to expand the display market, iSuppli believes.

Advancements in OLED displays eventually should pave the way for larger – and thus higher volumes of – OLED-TV displays, which could dramatically expand the market for OLED drivers, says iSuppi. Meanwhile, display drivers are advancing to new types of interfaces being promoted by IC and panel manufacturers.