The new generation of “iPhone killer” smart phones will drive demand and increase sales of displays commonly used in smart phones in 2009 despite an expected decline in the overall mobile-phone display market, according to iSuppli Corp. Worldwide shipments of mobile-phone LCDs between 2.5 and 4.9 in. and with QVGA and higher pixel formats will rise to 149.9 million units in 2009, which is a 22.1% increase of 2008’s 122.9 million total. In contrast, overall mobile-phone shipments will decline by 11% for the year.

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Many smart phones use smaller displays and LCDs with other pixel formats. Yet these displays are most likely to be used in high-end, feature-rich products, and iSuppli believes their growth provides an accurate picture of growth in smart-phone display demand. Companies are producing higher-end multimedia-enabled phones that will compete with the Apple iPhone and use Google’s Android operating system, requiring larger displays with superior resolutions.

The rising demand for displays geared for smart phones and the continued strength in demand from the Chinese mobile-phone makers are helping propel a recovery in the mobile-phone display market, with sequential growth starting in the second quarter after two consecutive quarters of decline. Along with the recession and large inventories, normal seasonal factors caused overall shipments to decline sequentially by 17.4% in the fourth quarter of 2008 and by 8.5% in the first quarter of 2009.

“Early indicators from the Taiwanese small/medium suppliers are pointing to a strong third-quarter performance,” said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli. “The Taiwanese vendors are significant suppliers to the Chinese mobile phone makers for both the branded and clone markets. Incentives from the Chinese government have helped boost demand for consumer electronics, including cell phones, in rural China. The government is looking at expanding this program further.”

The third quarter is usually the strongest period of the year, as panels are shipped to meet the end-year holiday demand for electronic devices. Strong demand is expected from Tier-1 handset OEMs in this quarter, too. However, uncertainty in consumer demand persists. If mobile-phone sales fail to pick up the fourth quarter, oversupply in the mobile-phone display market could build up. For more about the pricing of small and medium displays, see iSuppli’s report, “Third Quarter Starts with Strong Market Showing in July,” at www.isuppli.com/Pages/L2_Small-MediumDisplays.aspx?PID=936&PR.

iSuppli Corp.