(Text/Pan Yuchen, Edited by/Zhou Yuanfang)
On September 29, the highest temperature in Guangzhou was above 35℃. Under the bright sun at noon, the ongoing production ceremony of the TCL Huaxing 8.6th generation oxide semiconductor new display device production line project (hereinafter referred to as the "t9 project") is simple and enthusiastic. In his speech, Li Dongsheng, founder and chairman of
TCL, called the t9 project a major strategic deployment of TCL Huaxing's "towards global leadership". Its positioning the production of high-end IT and professional display products, completing the TCL Huaxing product line.
TCL Huaxing t9 project commissioning ceremony (photo taken by Observer.com)
TCL Huaxing COO Zhao Jun further stated in an interview with Observer.com and other media that TCL Huaxing has had a local leading advantage in television and LTPS based on mobile applications, but in the fields of IT and high-end commercial use, there is actually no particularly suitable production line. The t9 project came into being, making up for the shortcomings of TCL Huaxing in product and production line structure. The
t9 project invests 35 billion yuan, with a monthly production capacity of 180,000 glass substrates. Construction will start in March 2021 and will be capped that year. The main equipment will be moved in in April this year, the first product will be lit up in July, and the production will be put into production in September, nearly 3 months ahead of the original plan.
It is also worth noting that on the 29th, the 8.6th generation new display panel production line project of Tianma Company, affiliated to the Aviation Industry, started construction in Xiamen . The total investment of the project is 33 billion yuan, and it is also a high-generation production line specializing in the field of small and medium-sized displays. In addition, players such as BOE , Visinox , Huike , etc. are all moving frequently and joining the arms race.
Economic cycle . Industry cycles are superimposed on geopolitical sudden factors. The global display panel industry is currently facing a hundred feet of ice. The "China's strength" of investment and the "China speed" of construction can still be maintained, which is impressive.
Shentianma grounding ceremony (CINNO picture)
Industry winter superimposed by multiple factors
Since this year, the global demand for display panels has been serious.
According to statistics from AVRWO, panel shipments in the second quarter of this year shrank to 42.8M, and growth fell back to 4.8%.
Wind data shows that from July last year to August this year, the price of 43-inch LCD TV panels fell from US$139 per film to US$50 per film in August, a drop of 64%, and the prices of 50 and 65-inch LCD TV panels fell by 65% and 63% respectively. The price of large-size panels above 43 inches is lower than the production cost.
43-inch, 50-inch and 65-inch panel price trends (September 2020 to August 2022, wind chart)
In fact, the cold winter had arrived as early as 2019. After a brief pull of the "home economy" and "government spending" caused by the new crown epidemic, consumer electronics demand was overdrawn. Coupled with the intensified global inflation, the conflict between Russia and Ukraine and the repeated impact of the domestic epidemic, TV consumption was sluggish, brand factories continued to shrink panel procurement plans, and friendly competitors in South Korea, Japan and Taiwan were cautious in building new production capacity, and even shrinking investment and selling assets.
As the "third group" in the global panel industry, Taiwanese companies are feeling a greater chill. Since May, rumors of merger between the "panel double tiger" group and AUO have been reported in Taiwan, and the two sides responded to the public in ambiguous responses; at the end of July, AUO stated at the French statement meeting that it would carefully manage cash flow , and this year's capital expenditure will be reduced by 20% compared with the target set at the beginning of the year. Part of the reduction is that investment in new factories in Houli slowed down. In August, some of the employees of a group reported to Taiwanese media that large panel factories began to force employees to take leave.
99 In September, Taiwan's Economic Daily reported that in the report, the South Korean Samsung is supporting the mainland's "red supply chain" when it withdraws from LCD panel manufacturing. Its thousands of large-sized LCD panel patents, including 577 US patents, will all transfer TCL Huaxing, the world's second largest LCD panel manufacturer through shareholding, which will enable mainland companies to increase competitiveness in overseas markets and compress the market space of Chuangchuang and AUO.
In terms of financial status, the revenue of "Double Tigers" in July has been halved compared with the same period last year, both of which fell to a 30-month low. In August, Qunchuang's consolidated revenue was 15.3 billion (approximately RMB 3.44 billion), a monthly decrease of 3%, a decrease of 51.3% from the same period last year. The combined revenue of NT$158.8 billion in total in eight months was NT$158.8 billion, a year-on-year decrease of 34%.AUO was NT$16.02 billion (approximately RMB 3.6 billion), a 51% drop from the same period last year.
At present, Korean companies represented by Samsung are still the "first group" in the panel industry, but as mainland companies rapidly increase LCD production capacity and reduce profit margins, they are unwilling to continue to be entangled in the price wars of mid- and low-end products, and are accelerating the de-liquid crystallization to achieve a full OLED layout. In June 2022, Samsung closed its last LCD panel production line in South Korea, ending its 30-year LCD panel business. LG is also reported to be selecting the timing for the last closing of the LCD line.
Financially, Samsung showed that 's sales in the second quarter were 7.71 trillion won and operating profit was 1.6 trillion won, down 17.2% from the same period last year. Although Samsung Display completely withdrew from the LCD business in June, it is estimated that it had accumulated about US$2 billion (about 2.6 trillion won) in inventory by the second quarter alone. In LG, LG Display had a net loss of 328 billion won (about 290.8 million US dollars) in the second quarter of this year.
21 global LCD TV panel market regional structure and changes (Luotu Technology Picture)
Mainland enterprises are the "second group". Companies such as BOE, Huaxing Optoelectronics , Huike, Shenzhen Tianma, and Visionox are showing a strong pattern. Overall, they are in a trend of taking advantage of both low, medium and high end. They are not only leading the world in LCD production capacity and generation line layout, but also vigorously deploying OLED technology route products, and currently occupying the second echelon of small and medium-sized OLEDs.
Of course, the current financial statements of mainland companies are not that good-looking.
htmlOn August 29, BOE's semi-annual report showed that the operating income in the 2022 semi-annual year was 91.61 billion yuan, a year-on-year decrease of 15.66%; the net profit attributable to shareholders was 6.596 billion yuan, a year-on-year decrease of 48.94%.On the same day, Shenzhen Tianma and Visionox also disclosed their financial reports. Shenzhen Tianma's revenue in the first half of the year was 15.738 billion yuan, a year-on-year decline of 6.69%, and its net profit attributable to shareholders was 370 million yuan, a year-on-year decline of 30.19%; Visionox's revenue was 3.411 billion yuan, and increased by 23.72% year-on-year, and a loss of 1.149 billion yuan.
htmlOn September 29, the third quarter performance forecast released by TCL Technology showed that due to the decline in industry demand and the decline in prices of main display products, the semiconductor display business revenue from semiconductor was 37.26 billion yuan, a year-on-year decrease of 8.81%, and a loss of 2.27 billion yuan. Revenue in the first three quarters of 2022 is expected to be 127.4 billion yuan to 126.7 billion yuan (121 billion yuan in the same period last year); net profit attributable to shareholders of listed companies is 200 million yuan to 300 million yuan (as high as 9.1 billion yuan in the same period last year). If compared with the profit of 660 million yuan in the first half of the year shown by TCL Technology's financial report, it is expected to lose 360 million to 460 million yuan in the third quarter.TCL Huaxing t9 project commissioning ceremony
counter-cyclical, who wins this time?
In fact, for the panel industry, financial data is not all. Almost all the remaining players on the market have risen from countercyclical investment.
In the evolutionary history of the semiconductor display industry, in 1968, it was the American company that first invented the LCD display model, but failed to continue to invest in industrialization; the Japanese began to enter the bottom calculator and electronic watch, and gradually led the entire industry; South Korea also took advantage of the crisis in the 1990s to defeat Japan by "counter-cyclical investment". Today, the two leading BOE and TCL in mainland China also took advantage of the opportunities before and after the "subprime mortgage crisis" in 2008 to establish their foundation. The current semiconductor display industry has become a confrontation between China and South Korea.
Therefore, the panel industry is characterized by high technology, heavy asset , long cycle, society's demand for it will always exist, and the application field is constantly expanding, but product technology will continue to iterate. If you can keep up with the pace of upgrading, the return on investment will be relatively stable within one cycle. At the same time, its competitive barriers are very high, which also means that the entry barrier for competitors is very high and is also the core competitiveness that supports the sustainable development of the company.
What really worries Korean giants like Samsung is that their first-mover advantage and market share shrink at the same time in the downward cycle and are unable to turn things around. This is exactly the case in today's market.
At the beginning of this year, industry research institution RUNTO believed in a review of last year and its outlook for this year that the rise of mainland manufacturers has caused the market share of the Taiwan and Korean camps to shrink.
In 2021, the total shipment of mainland panel factories reached 158 million pieces, accounting for 62%, setting a new historical high value and an increase of 7 percentage points from 2020. If China Electronics Group CEC is not considered, the other four major panel factories in mainland China have achieved increased volume and share growth.
panel factory shipped 52 million pieces in 2021, accounting for 20%, a decrease of 3 percentage points compared with 2020. The market share of Taiwan-type double tiger group Chuangchuang and AUO have both contracted.
Korean panel factories (including mainland factories) shipped 29 million pieces, accounting for 11%, a decrease of 7 percentage points from 2020. The share reduction is the first among the four major regions. In 2022, due to the deterioration of TV panel operating profits, Korean manufacturers are expected to gradually withdraw from their large-size LCD business and focus on the pan-OLED business, as well as more cutting-edge QNED, Micro LED and other technologies.
2021 global LCD TV panel factory shipment ranking (unit: thousand pieces, Luotu Technology Picture)
Not only that, the new display industry in mainland China will also surpass South Korea in revenue in 2021. According to data released by the Korea Display Industry Association, the market share of sales revenue of Chinese panel manufacturers in 2021 was 41.5%, exceeding 33.2% of Korean manufacturers, ending South Korea's dominant position in the global new display field for 17 years.
Mainland Chinese TV panel manufacturers shipped 84 million pieces in the first half of 2022, and their global market share once again set a record high of 67%, an increase of 6.2 percentage points from the same period last year; Korean manufacturers only had 15% of the TV LCD panel market share in the first half of the year.
This year, the sales of the new display industry in mainland China will continue to remain the world's number one. Research firm Omdia predicts that the global sales of the new display industry in mainland China is expected to reach 43% in 2022, while South Korean manufacturers will barely maintain a market share of 30%.
In the small and medium-sized OLED market, mainland Chinese manufacturers are accelerating their catch-up. In recent years, manufacturers such as BOE, TCL Huaxing Optoelectronics, Tianma, and Visionox have made a lot of investment in the field of small and medium-sized OLEDs, and their production capacity is constantly being released. The industry predicts that by 2024, the production capacity of small and medium-sized OLEDs by mainland Chinese manufacturers will exceed that of South Korean manufacturers.
Currently, the large-size OLED technology route is unknown, and the South Korean QD-OLED and W-OLED technology routes are still not the best solution. In the process of full market game, BOE, TCL Huaxing, Shentianma and Visionox not only occupy the LCD market share that Korean companies have withdrawn, but also accelerate their climb to the OLED field.
"At present, the demand for the two major applications of consumer electronics represented by TVs and mobile phones is relatively sluggish, but the demand for on-board display brought by new energy vehicles, as well as differentiated applications such as medical displays, commercial displays and public displays, is growing rapidly." Talking about the market demand in the cold winter, Zhao Jun said, "In addition, the trend of large-size TVs is more obvious. The average size of the TV increases at a rate of 1-2 inches every year. As long as the average size of the global TV market increases by 1 inch, the production capacity of an 8.5 generation line must be digested. Therefore, although the overall demand volume has decreased, the demand for TV screens is still stable based on area."
"t9 production line is the world's latest generation LCD panel production line, with relative latecomer advantages. Its technology and process use the industry's most advanced technical process equipment. Therefore, the t9 project has the advantages of cutting efficiency of 8.6 generation lines, large cutting area and high efficiency, and can achieve small and medium-sized product accuracy of 6 generation lines in product accuracy." Zhao Jun said, "TCL Huaxing has been mainly competitive in TV and LTPS panels in the past. The t9 production line is very flexible, which can make up for TCL Huaxing's shortcomings in product structure, and can also realize product adjustment and combination, and improve its ability to deal with market fluctuations and market risks."
TCL Huaxing COO Zhao Jun was interviewed by Observer Network and other media.
's convergence of current market demand has led Chinese and Korean players to "roll" the 8.5/8.6 generation line: the 8.6 generation new display panel production line project started in Xiamen on the same day, the 8.6 generation OLED panel line that Visionox is investing in the same period, the 8.6 generation IT OLED panel production line that BOE is planning to rebuild in Chengdu, and even the new RGB 8.5 generation OLED line that South Korea's Samsung and LG have laid out after they withdraw from the LCD panel field. The target market is all medium-sized display application products such as "IT panels and on-board displays".
At the same time, TCL Huaxing Zhao Jun's attitude of using the t8 project using the printed OLED technology route is also representative of the attitude of not blindly pursuing capacity expansion.
"The t8 project has no clear timetable yet. Although TCL Huaxing has made a long time preparation and planning for printing OLEDs, it has become mature in the entire product technology. It needs to be further optimized in upstream luminescent materials, printing equipment, , etc.," said Zhao Jun. "Since the products of the t8 project will be mainly used to produce TV panels and display panels, feasibility assessments must be made in terms of commercial feasibility and technical feasibility." Behind the "volume" of
: China's systemic rise of high-end manufacturing
"The entire panel industry is at least focusing on the LCD panel industry in China. What is the logic behind it? It is that Chinese panel companies are becoming more and more competitive." Zhao Jun pointed out in the interview, "On the one hand, we must see that the current production capacity of the panel industry is indeed overcapacity; on the other hand, among the composition of these production capacity, there are a large number of 4.5 generation lines, 5 generation lines, 5.5 generation lines, and old production lines for ten or even twenty years. Whether in terms of efficiency, product specifications, and technical competitiveness, they cannot keep up with the current demand for consumer electronic display. The old production lines and backward production capacity will gradually withdraw, which will bring the industry back to a relatively healthy and benign environment."
talked about the current situation of the display screen, and the director of the International Boutique Brand Strategy Institute Lu Xiao talked about a past story to Observer.com. When Huawei launched the Mate 9 mobile phone in November 2016, its Pro version was equipped with Samsung OLED curved screen. At that time, it encountered Samsung's "bottleneck" and its production capacity was limited.
Later, Huawei released Mate 20 Pro in October 2018, using two screens from South Korea and BOE, China. The screens supplied by LG once appeared "green screen door". Since then, BOE's OLED screen has gained a foothold in Huawei's supply chain. At that time, BOE's OLED production line was only one year in production, which was the application on Huawei's high-end mobile phones that helped it open up the market.
"High-end display is just a point, and behind it is the systematic rise of China's high-end manufacturing," Lu Xiao pointed out. "With the breakthroughs in various fields such as China's intelligent connected vehicles, , high-end medical equipment, chips, biopharmaceuticals, etc., the development of different fields will naturally collaborate with each other. For example, chips are actually not just chips, but high-precision processing technology used for chip manufacturing can also be used in many other fields. High-end demand and supply will continue to be released."
"This process often occurs in crises," Lu Xiao said. "The game between a big country is like a marathon. As long as the first starter does not stagnate and does not make mistakes, the late starter often can only accumulate strength and is difficult to have the opportunity to surpass. Once the financial crisis in 1997 and the subprime mortgage crisis in 2008 occur, those who are prepared have the opportunity to surpass upward. This is the objective law of the development of things."
Of course, for specific companies, before that day comes, they must first live.
