The top 11 Chinese smartphone makers are Huawei Technologies Co., Lenovo Group Ltd., Xiaomi Inc., TCL Corp., ZTE Corp., Oppo Mobile Telecommunications Corp., vivo Communication Technology Co., Coolpad Group Ltd., Gionee Communication Equipment Co., Meizu Technology Co., and Tianyu Communication Equipment Co. (K-Touch).

Combined smartphone shipments of the top 11 Chinese brands are projected to reach about 530 million units. Of these, display-integrated touch panels, including liquid crystal display (LCD) in-cell, active-matrix organic-light emitting (AMOLED) on-cell, and LCD on-cell types, are forecast to take about 20.6%, or 109.2 million units. Considering that their combined employment in 2014 amounted to 30.9 million, or 7.4% of total shipments, the adoption has increased more than threefold year over year.

Of total smartphone shipments of the Chinese brands, which are set to increase this year, shipments of low-price entry-level smartphones trading at $150 or under are expected to grow sharply. In results, total shipments of film sensor-type touch panels, such as GFF, GFM, GF1, and G1F, are projected to jump 21.6% from 308.9 million units in 2014 to 375.6 million units in 2015. However, their combined share in the touch panel market will likely edge down from 73.7% to 70.9%.

While demand for film-type and display-integrated touch panels should grow, shipments of glass sensor-type touch panels are forecast to plunge 43.1% from 79.4 million units in 2014 to 45.2 million units in 2015, with its share sliding from 18.9% to 8.5%.

The display-integrated touch panel market is forecast to expand rapidly in 2015, mainly driven by the stabilized supply of in-cell and on-cell touch panels after an rise in the number of the in-cell and on-cell suppliers; improved price competitiveness of in-cell and on-cell touch panels through economies of scale; growing demand for thin components among Chinese smartphone makers; and simplified touch panel supply chain management (SCM).

As of 2014, Japan Display Inc. (JDI) was nearly the only panel maker that supplied LCD in-cell touch panels to Chinese smartphone brands, but entering 2015, Samsung Display Co. started to boost its supplies of AMOLED on-cell touch panels by lowering the price. LG Display Co., BOE Technology Group Co. and Tianma Micro-electronics Co. also started to deliver LCD in-cell touch panels to Chinese smartphone markers. Meanwhile, Innolux Display Corp., Chunghwa Picture Tubes Ltd., and HannStar Display Corp. have improved the quality of their LCD on-cell touch panels so they are expected to increase their share significantly in the market for smartphones priced at $120 or below.

With growing demand for LCD in-cell and AMOLED on-cell touch panels in the market for smartphones trading $250 or higher, one glass sensor (OGS) touch panels, which are fiercely competing with the display-integrated type in the market, have been gradually losing their ground. The OGS (G2) type had been a popular touch solution for high-end smartphone models in China until 2013, thanks to its slim module and high transmittance.

However, the solution still struggles with its weak edge strength; inability to apply a variety of colors on a bezel, such as a white bezel; relatively high supply prices; and a limited number of vendors. The OGS is suffering more losses after Chinese smartphone makers started to use 2.5D cover glass in smartphones trading at $250 or higher.

The number of suppliers of the display-integrated touch types, such as LCD in-cell, AMOLED on-cell, and LCD on-cell types, is expected to rise further, and their yield rates should improve, enabling the stable supply and lowering the price. As a result, the share of display-integrated touch panels will likely grow further in the Chinese smartphone market. In particular, once the display-integrated touch solution starts to be widely adopted in smartphones priced at about $200 in 2016 as expected, it should begin to substantially eat away at the film-type touch sensor market, which has been led by GFF and GFM types.