What is the problem of "folding screen mobile phone pioneer" Royole Technology?

From the urgent withdrawal of IPO applications to the "food shortage" salary arrears, the controversy of Royole Technology has not been broken. What is the problem of Royole, which was once advertised by the industry as a "folding screen mobile phone pioneer"?

From "capital chase" to "food shortage and unpaid wages"

As early as October 2018, royole technology, which is not famous, released the world's first folding screen mobile phone "Soft Pie" before Samsung, when the folding screen mobile phone was not as common as it is now, although many head manufacturers have announced the beginning of the development of folding screen terminals, but never seen mass production models, even if the technology accumulation of Samsung, but also in the FlexPai listed a few months after the launch, only launched the self-developed folding screen mobile phone.

Soon after its establishment, Royole Technology received tens of millions of yuan of financing from Songhe Capital and Shenzhen Venture Capital. On August 9, 2018, Royole Technology won the E+ round, with a valuation of up to $5 billion.

In 2020, Royole Technology ranked 70th in the "2020 Hurun Global Unicorn List" and topped the "Top 100 Chinese Science and Technology Innovation Enterprises" list in 2020 released by China Entrepreneur. On May 10 of the same year, Royole Technology received an F round of financing of US$300 million.

At that time, Royole Technology was considered by the industry to be a "unicorn" that subverted the panel display industry, and even Xu Xiaoping, a well-known angel investor, regretted missing it. Capital places a "heavy bet" on it in order to win the next panel era.

Royole Technology's scenery did not last long, on December 31, 2020 submitted the sci-tech board listing application only a little more than a month later, Royole Technology took the initiative to withdraw the listing application documents, technology, production capacity, yield rate, business model and a series of problems began to appear, Royole Technology in the industry competitiveness caused widespread doubts.

Royole Technology, which has been losing money for many years, does not have the ability to "make blood", and the company's cumulative loss from 2017 to the first half of 2020 exceeded 3 billion yuan. According to a number of media reports, many employees began to complain about Royole Technology's arrears of wages on the Internet.

What is the problem with Royole Technology?

In the early days before the folding screen industry was immature, having a higher display technology than the industry level, more cost-effective cost and sustainable business model were the key elements to achieve a breakthrough.

First of all, we look at the technical route, Royole technology and the traditional OLED industry route is not consistent, the current global research and development of flexible screen mainstream screen manufacturers, such as Samsung, BOE, TCL, etc., generally use low-temperature polysilicon (LTPS) technology route, Royole is the original "ultra-low temperature non-silicon process integration technology (ULT-NSSP)".

According to Liu Zihong's introduction, the technology is lower than the LTPS process temperature, which can reduce the investment cost of equipment, reduce the thermal expansion and contraction of substrates and films, and improve yield rate.

Liu Zihong believes that the "unique way" of the technical path can reduce costs and improve yield rates, so is this really the case?

At present, the mainstream flexible OLED production line is mainly the 5.5 generation line and the 6 generation line to produce rigid and flexible OLED. Because Royole Technology adopts a different ULT-NSSP technology than the common in the industry, it also creates a so-called "6-generation line" in the naming of "generation line". According to the display panel industry, different substrate sizes correspond to different "generation lines" rules, and the higher the general generation line, the more advanced the technology.

According to public information, 4 of the 7 domestic OLED companies with production OLED have 5.5 generation lines, namely BOE, Shentianma, Visionox and Royole Technology.

From the perspective of the construction time, BOE was as early as 2014, and royole technology's 6-generation (5.5-generation) line was established in 2018, the latest.

Sun Yongjie, the manager of "Banmen Axe", told TechWeb that we can find from the public data collation that from the perspective of line construction cost input and production capacity, BOE is 22 billion yuan (monthly output of 2K); Shenzhen Tianma is 4.55 billion yuan (monthly output of 15K); Visionox was 4.53 billion yuan (15K per month), compared with 11 billion yuan (15K per month) for Royole Technology. The construction cost and production capacity of the ULT-NSSP technology announced by Royole Technology (including the yield rate and market demand closely related to production capacity) not only do not reflect the advantages, but there is a considerable gap with friendly businessmen.

"From the perspective of absolute production capacity, royole technology's monthly output is only 15K, which is the lowest among domestic manufacturers with 6 generations of lines." As we said earlier, production capacity is closely related to the two factors of yield rate and market demand. Therefore, no matter which factor, or the superposition of two factors, it proves that Royole Technology is weak in the competitiveness of the above manufacturers. Sun Yongjie said.

There is no mass production capacity and product yield support, but also let royole technology flexible screen product sales dismal, a boss engaged in mobile phone sales in Zhongguancun told TechWeb, a few years ago also heard of Royole technology folding screen products, but soon many dealers will no longer buy, because there are not many customers on the market to buy.

Since the technology and cost do not have obvious advantages over the industry, let's take a look at the business model of Royole Technology products.

The business model of flexible display panel enterprises is nothing more than two, one is an intelligent terminal for individual users, and the other is to provide flexible products for the industry and act as a supply chain enterprise.

According to the "Smart Phone Market Tracking Report for the Fourth Quarter of 2021" released by Omdia, Samsung folding screen mobile phones have shipped more than 10 million units, accounting for 88% of the sales of folding screen mobile phones, and it is also the only brand with folding screen mobile phones that has sold more than 10 million.

From the perspective of the current situation of the industry, the current acceptance of folding screen mobile phone users is not high, especially the functional breakthrough of the folding product has not been achieved. The result of the final sales of Royole Technology's products is hugely different from that of industry giant Samsung.

From the perspective of supply chain, BOE 6 generation line panel covers China's mainstream mobile phone brands such as Huawei OPPO and vivo, and Visionox has also become a supplier of Xiaomi, ZTE, LG, TRANSSION and other brand customers, and Royole Technology occupies a very small share in the flexible OLED screen application of the smart phone industry, and the profit space is very limited.

Trying to apply flexible screens to B-end industry customers such as consumption, sports events, and conferences has also achieved little success, and has not caused great repercussions in the industry.

In summary, whether it is a flexible terminal for the individual market or an industry-oriented supply chain level, Royole Technology has not opened the market.

From the beginning of its establishment to the present, due to the lack of substantive performance support, Royole Technology has been in crisis, it is not difficult to understand why there are frequent voices such as "wage arrears", in the face of the double challenges of "technology" and "market", where should Royole go?