Zhidongxi (public account: zhidxcom)
author | Yunpeng
editor | Moying
Zhidongxi News on August 13, just two days ago, Tianfeng Securities Apple analyst Ming-Chi Kuo issued a report saying that BOE has entered Apple's high-end product line for the first time and will supply Mini LED screens for next year's MacBook Air.
On the other hand, the rise in panel prices caused by the shortage of driver ICs has allowed BOE to make a lot of money in the LCD market. In the first quarter of this year, BOE's revenue was close to 50 billion yuan, a year-on-year increase of more than 100%, while its net profit increased more than 8 times year-on-year to 5.1 billion yuan, achieving a net profit margin of more than 10% in the panel industry.
Behind BOE's "fullness", many companies in its supply chain have successively started their own IPO journeys. Two of them have received inquiries in July, and three have been successfully listed this year.
The above table is compiled based on the IPO prospectuses of various companies.
In the IPO prospectuses of these companies, we can clearly see that their businesses are closely related to BOE. Among them, BOE accounts for up to more than 75% of the business, and at least about 5%.
When the elder brother is full, the younger brother will naturally follow suit.
What is even more noteworthy is that the main products of these IPO companies range from screen production equipment to optical sheets and even OLED organic light-emitting materials.
Does this mean that not only the midstream screen manufacturing field, but also the upstream materials and equipment field, China's screen industry chain is quietly ushering in its own critical breakthrough moment? Behind the rise of
at BOE, what role do these IPO-intensive supply chain companies play in the screen industry? Have their core products and technologies achieved important breakthroughs? After this IPO tide subsides, it is worth exploring in depth whether there will be any "real gold" left behind and it can become a "catalyst" company at a key node in the domestic screen industry chain.
1. Break through the production equipment barriers and use BOE to enter the Apple Huawei production line
In this wave of IPOs led by BOE, we can see many upstream companies. They are not BOE’s direct suppliers, but BOE’s “friends of friends”.
Since BOE has entered Apple’s supply chain and supplies many domestic first-tier terminal manufacturers, it can also be considered that these upstream companies have entered the supply chain of world-class giants by virtue of “BOE’s success”.
For a long time, the advantages of the domestic display technology industry chain have mainly been in the middle and lower reaches, with strong manufacturing capabilities and a huge mid-range market. In the fields of upstream materials and production equipment, we are often stuck.
Previously, Smart East had conducted an in-depth review of the development of China's LCD screen industry and OLED screen industry. In fact, it is not difficult to find that the current Samsung , LG and other giants have strong control over upstream suppliers. There are extremely strong historical factors in it.
To give the simplest example, only one company in the world, Tokki, Japan, can produce the evaporation machines needed to produce top-grade OLED screens. In the early days, it could only produce 4 such machines per year.
It is said that the error range of Tokki evaporation machine can be controlled within 5 microns, which is about one hundredth of the diameter of a human hair. The overall length of the evaporation machine is about 100 meters, just like a small train. Nearly 20 years ago, the price of such an evaporation machine was about US$85 million, but now the price of a top-level chip lithography machine is only US$100 million.
In other words, the evaporation machine is the "photolithography machine" in the screen field.
Tokki evaporation machine
When the Tokki company was on the verge of bankruptcy, it was Samsung that rescued it and allowed it to continue. Therefore, most of the high-end evaporation machines were taken over by Samsung. How can other companies compare with Samsung for this "life-saving grace"?
Sometimes, money cannot solve all problems.
Therefore, breakthroughs in independent high-end screen production equipment are particularly critical. Lingyunguang, one of the companies
is rushing to IPO this time, its core products include production line testing equipment for various screens. It is said that the detection efficiency of its LCD lighting quality detector has reached more than three times that of manual labor, and can achieve high dynamic range detection close to the limit of the human eye.
The core technology of Lingyunguang mainly focuses on the fields of machine vision and optical communication, and production line inspection equipment usually applies a large number of machine vision-related technologies.
Schematic diagram of Lingyunguang's main product forms
According to statistics from CINNO Research, based on the number of installed machines alone, Lingyunguang's market share of and in China's small and medium-sized screen panel fully automatic lighting inspection equipment in 2020 was 35.9%, ranking first in the industry and a leading player in the segment.
In fact, many To B products of machine vision technology companies are currently used in various product production lines in the consumer electronics industry. As testing equipment to replace labor, this is also one of the major trends in the industry.
Currently, one of Ling Yunguang’s main customers is BOE, which accounts for 4.73% of its revenue. It is worth mentioning that in 2016, Lingyunguang also began to become the preferred short list supplier (Preferred Supplier List) of and Apple's in the field of machine vision.
In addition, familiar companies such as AAC Technology , TCL Group , and Hon Hai Precision ( Foxconn ) also appear on its list of top customers.
It is not difficult to find that Lingyunguang’s customers are mainly concentrated in the mid- and downstream module manufacturing and terminal product manufacturing links.
Looking at the screen field alone, the production process of a screen is very complex. The choked advanced production equipment mentioned above is mainly concentrated in the front part of the process, while the testing equipment is located in the back section and is not the key core production equipment.
The OLED production process covered by Lingyunguang's products is mainly concentrated in the Cell process and module process parts.
Similar to Lingyunguang, there is another BOE supplier Shenzhen Keda that has officially landed on the Science and Technology Innovation Board in March this year.
Shenzhen Keda's main product is flat panel display device production equipment. Specifically, it includes automatic assembly of display modules, touch modules, fingerprint recognition modules, and intelligent detection equipment.
Now they are also extending their business territory to the fields of semiconductor packaging and testing, camera assembly, and manufacturing of key components of smart equipment.
Shenzhen Keda is mainly involved in the OLED process flow (red dotted box)
Shenzhen Keda’s head customers are also very familiar to us. Mainstream screen manufacturers such as BOE, TCL Huaxing Optoelectronics, Shenzhen Tianma , Visionox , and Bourne Optics , Lens Technology , Ofilm and other key component manufacturers of consumer electronics products are all involved. Among them, BOE is the largest player, accounting for 12.16% of revenue.
These customers of Shenzhen Keda are suppliers of many technology giants. Shenzhen Keda's testing equipment is used in mobile phones, tablets, smart watches and other products of mainstream mobile phone manufacturers such as Apple, Huawei, Samsung, Xiaomi , OPPO, vivo, Honor , etc., and the coverage is relatively wide.
Although overall, whether it is Lingyunguang or Shenzhen Keda, their products are still not the core key equipment in the screen production process, their R&D capabilities and future potential are still worthy of attention.
Some Shenzhen Keda products
Lingyunguang and Shenzhen Keda were founded in 2002 and 2004 respectively. Both have nearly 20 years of corporate development history. Currently, Lingyunguang has mastered 296 domestic patents and has more than 434 R&D personnel in the company, accounting for more than 34%. Shenkoda also owns 217 patents and 35 software copyrights. The small breakthrough of
in screen production equipment is behind the painstaking research and development of many Chinese researchers in the screen field.
Perhaps we can only take down testing equipment today, but as these companies are trained in the giant supply chain and their technology and processes are constantly upgraded, the possibility of them continuing to make breakthroughs is also increasing.
2. 20 years of hard work to break through material technology, millions of dollars to acquire technical talents from Samsung
If we talk about high-end screen manufacturing equipment, "Made in China" has a relatively good industrial foundation, then many companies in the field of screen materials are facing the dilemma of "starting from scratch", and the phenomenon of being stuck is even more serious.
For example, in the OLED field, upstream OLED materials account for about 20%-30% of the entire OLED panel cost, mainly including organic light-emitting materials, electrode materials, various polarizers, packaging glue, etc.
Chart source: Guosheng Securities
In this field, European, American, Japanese and Korean manufacturers such as Japan's idemitsu, South Korea's Samsung and LG Chemical , the United States' Dow Chemical and UDC, Germany's Merck, etc. basically monopolize the global OLED material market. In the organic light-emitting materials market alone, Japanese and Korean manufacturers take more than 80%.
Not only OLED screens, but also the LCD field where mainland screen companies have absolutely dominated the market, core materials are still a big problem. Since LCD is called "liquid crystal screen", liquid crystal is naturally the most basic material. In the field of mixed liquid crystal materials, German and Japanese giants monopolize more than 90% of the global market.
In the field of these screen core materials, overseas giants have made a strict and systematic layout and blockade of patents and technologies. Domestic companies that are decades behind at the starting line will find it extremely difficult to break through these barriers in the short term.
Of course, we also see hope. The mainland company Wright Optoelectronics, which started sprinting for the IPO of the Science and Technology Innovation Board in June, its main business is the research and development and production of OLED organic light-emitting materials. It has now achieved mass production and supply of several OLED organic materials.
Wright Optoelectronics OLED intermediate materials
At present, Wright Optoelectronics has won customers such as BOE, and Hui Optoelectronics , TCL Huaxing Optoelectronics, and has become the only domestic supplier of BOE OLED light-emitting functional materials.
In the field of OLED terminal materials, Wright Optoelectronics has currently accumulated 61 authorized patents and 191 patents are being applied for. These patents cover the light-emitting layer, hole transport layer, electron transport layer materials, etc.
In OLED screens, the cathode, anode and luminescent layer are the core materials. It can be seen that currently, mainland companies can also find some breakthrough points in these key material fields.
Schematic diagram of the basic structure of OLED screen
Behind these important breakthroughs, key talents play a key role. In the IPO prospectus of Wright Optoelectronics, we can find an important scientist named Jin Rongguo. He once served as the chief engineer at Samsung Display's R&D center. His ability and importance are self-evident.
Jin Rongguo’s salary in 2020 is 3.34 million yuan, which is not only 2.77 times the annual salary of Chairman Wright Optoelectronics, but also more than 2.5 times the total annual salary of the other five core technical personnel. Jin Rongguo alone accounts for 40% of the total remuneration of directors, supervisors, senior executives, and core technical personnel.
Salary of some executives and core technical personnel of Wright Optoelectronics, chart source: Wright Optoelectronics IPO prospectus
This is embarrassing, but at the same time, it also shows an indisputable fact: the screen industry is in urgent need of core technical talents, but there is a huge gap in domestic related talents.
are also one of the biggest stumbling blocks for the domestic screen industry to catch up.
On the other hand, although Wright Optoelectronics has made breakthroughs in OLED organic light-emitting material related technologies, it is still some distance away from large-scale mass production.
An insider from a domestic screen company told Zhixixi that currently domestic OLED materials with independent intellectual property rights are far from achieving large-scale sales, and the market share of and is also relatively low.
In addition to OLED luminescent materials, in the field of LCD screen materials, Fengsheng Optoelectronics, as one of BOE's suppliers, also started its own IPO sprint in June this year. They are also a company with a history of nearly 21 years.
light guide plate is one of the main products of Fengsheng Optoelectronics. This type of plate is often used in large-size LCD TVs, LCD monitors and other products.
Fengsheng Optoelectronics light guide plate products
Fengsheng Optoelectronics’ customers are mostly upstream suppliers of panel companies, such as Suzhou Tianlu and Shangqi Optoelectronics. We may not be familiar with them, but we are all familiar with the actual end customers of Fengsheng Optoelectronics products, including BOE, Samsung, LGD, AU Optronics, Huawei, Hisense , Xiaomi, Skyworth , etc.
can be said to have customers ranging from overseas giants to domestic mainstream display terminal manufacturers. The company has 34 patents.Now Fengsheng Optoelectronics is also working on emerging technologies such as Mini LED and quantum dots to develop light guide plate materials involved in these technologies.
Of course, objectively speaking, the LCD screen is mainly divided into two parts: the liquid crystal panel and the backlight module. The backlight module accounts for about one-fifth of the overall cost, but the core material of the backlight module is not the light guide plate, but various optical films.
At present, 80% of the production capacity in the global optical film field is monopolized by overseas giants, among which Japanese companies dominate, such as the familiar Mitsubishi , Toray , etc.
can see that although domestic screen manufacturers are playing an increasingly important role in the midstream manufacturing industry and even have no rivals in the LCD market share, there are still many gaps that need to be filled in the upstream core technology field of panels.
3. Behind the intensive IPOs of BOE’s “little brothers”, domestic screen technology may reach a critical turning point
BOE’s achievements in Apple’s supply chain have focused more attention on mainland screen manufacturers, but at the same time we can also see that behind these mainland panel giants, in China’s screen industry chain, every spot of light is flashing.
It is true that the success of IPO will not bring rapid technological advancement to these companies, but from this thick prospectus, we can see that these industry chain companies are struggling to move forward on each segmented track.
In addition to Lingyun Optoelectronics, Wright Optoelectronics, Fengsheng Optoelectronics, Shenzhen Keda and other companies, there are many figures who are on a similar track and have achieved good results. For example, OLED, which completed the IPO of the Science and Technology Innovation Board in July last year, has made breakthroughs in OLED organic light-emitting materials and evaporation source equipment.
You must know that the evaporation source equipment is one of the core components of the evaporation machine, and the evaporation machine is the most important equipment in OLED panel production.
Schematic diagram of evaporation source components
OLED is also an important supplier to screen manufacturers such as BOE and Visionox. These two giants are important customers of OLED OLED materials and evaporation source equipment, and the AMOLED screens produced from these production lines are used in mobile phone products of Huawei, Xiaomi, ZTE and other brands.
You should know that OLED, a young company founded in 2014, was originally a company selling OLED materials. However, after years of accumulation, they have now obtained 101 domestic patents in organic light-emitting materials, and have truly carved out their own market in the field of upstream materials.
Of course, through the above analysis, we can clearly see that in the field of advanced screen production equipment and screen core materials, we still have a lot of homework to "make up".
The breakthroughs of existing domestic screen industry chain companies are more focused on some non-core equipment and non-core material fields. For example, in key areas such as OLED manufacturing equipment, polarizers, and color filters, Japanese and Korean companies still have absolute dominance, and it is difficult for mainland manufacturers to make substantial breakthroughs for the time being.
However, on the other hand, the continuation of the Sino-US technology war, the intensification of trade frictions, and the wave of localization of China's technology industry have become objective opportunities for mainland screen industry chain companies to break through.
It is very obvious that in the field of high-end AMOLED screens for mobile phones that Samsung originally monopolized, more and more domestic screen manufacturers, including BOE, TCL CSOT, and Visionox, are trying to make breakthroughs in products and technologies, and have successfully won part of the cake.
Whether it is Huawei, Xiaomi, OPPO, vivo or Honor, mainstream mobile phone manufacturers are increasingly using domestic screens in their products. And it should be noted that it is not a small-scale trial in edge products, but a large-scale mass production application in main flagship products.
Xiaomi MIX4 (left) using TCL CSOT AMOLED screen and Huawei P50 Pro (right) using BOE AMOLED screen
On the one hand, domestic high-end AMOLED screens have almost equaled Samsung in terms of display effect, and with the launch of new production lines, domestic AMOLED production capacity is also rapidly catching up. On the other hand, more applications of domestic AMOLED screens have also driven the development of the products and technologies of screen upstream supply chain manufacturers.
, a virtuous cycle chain, has already started rolling in China’s screen industry.
The total growth trend of all types of OLED production capacity of mainland head screen manufacturers, chart source: Guosheng Securities
Conclusion: After BOE’s “lead”, the “little brother” may break into a wider world
In the screen field, we are a little late. It took BOE 28 years to enter the high-end product supply chain of world-class manufacturers, and became the world’s number one in the LCD panel market.
Behind such brilliant results, as the market share of domestic players gradually expands, countless "accompanying" supply chain players have gradually come to the forefront, and even started their own IPO sprint journey. From them, we have seen technological breakthroughs from key equipment to core materials.
Today, whether it is smartphones, tablets, smart TVs, various AIoT products, or smart home appliances, screens are still one of the most important media for human-computer interaction. Mastering the core screen technology has also become a key part of the technology industry.
Domestic display giants such as BOE and TCL CSOT have adopted and applied domestic technologies and products, which have also given these "little brothers" good growth nutrients. IPO is just a starting point. Under the background of the continuous maturation of the domestic capital market and the promotion of policy dividends, these new forces on the market will also accelerate their growth, bringing more impetus to the breakthrough of domestic screen technology.
