A message that has led to an old topic of discussion of LCD panel surpluses has sprung up: a team of researchers at Nottingham Trent University in the United Kingdom, the Australian National University and the University of New South Wales at Canberra have developed a proof-of-concept display technology that can replace the LCD panels common in many large-screen TVs today.
More than a decade ago, the bloody event of the overnight collapse of China's cathode ray tube (CRT) television industry with a scale of hundreds of billions of yuan is still chilling, especially for those who experienced it.
At present, the scale of China's LCD panel industry is far from comparable to the CRT TV industry, the scale has reached the level of trillions of yuan, coupled with the upstream and downstream supporting industries, the scale is even larger, and the number of employees is more million, not to mention the enterprise, even the official does not allow it to collapse like the CRT industry.
On November 11, 2020, TCL Huaxing's 11th generation ultra-high-definition new display device production line project (T7 project) under TCL Technology was officially mass-produced. After seizing the tail of the peak period of this LCD industry cycle, starting in the second half of 2021, the LCD industry cycle turned around and swooped down from the peak, all the way to the first quarter of 2023, and there has not been much improvement so far. Although third-party research institutions and some media have been predicting that LCD panels will begin to rise in price, and some panel head companies have begun to adjust prices, the market reaction is real, and the sluggish market performance in the first quarter of this year cannot be overly optimistic, because people after recovering from the new crown epidemic are still in a transitional psychological state, especially well-known companies frequently report layoffs, making uncertainties worse and suppressing people's consumption expectations.
Chinese mainland head panel companies can not always rely on reducing the LCD panel production rate to passively accept market fluctuations, in this way, the financial performance of the first year will be very ugly. Today's Chinese mainland head panel enterprises BOE, TCL Huaxing, Huike and other LCD panel industry has accounted for about 70% of the global share, after the LCD production capacity of the Korean factory is all retired, BOE, TCL Huaxing The two head enterprises have a total share of more than 50%, BOE, TCL Huaxing may have more motivation to change this sluggish market state and return to full production and sales.
At present, the annual production capacity of display panels in China exceeds 200 million square meters, and the global production capacity is about 350 million square meters, accounting for about 60% of the global production capacity. If the LCD panel production lines of Chinese mainland panel manufacturers reach full production, the annual production capacity is higher. So, where is the outlet to Chinese mainland such a huge amount of LCD panel production capacity? Where is the way out?
From the current market point of view, the quality of the market is people's confidence in the future market prospects. In the post-pandemic era, industries have just woken up from dormancy and need a transition period, but everything is going on for the better. In addition, after a long trough period, LCD panel prices have also begun to show signs of recovery, and some head panel manufacturers have begun to increase production operation rates and factory prices.
From the macro aspect of the country and the industry to the micro aspect of the head panel enterprise, various signs indicate that China's huge LCD panel production capacity needs more digestion channels, otherwise it will cause a huge waste of resources. Quark Finance believes that the current state can be adjusted through the following seven aspects.
1. The state and local governments support enterprises to tide over difficult times with financial policies
Under the influence of various unfavorable factors at home and abroad, such as the Sino-US trade conflict, the Russian-Ukrainian war, exchange rate fluctuations, and rising raw material prices, the state's support for manufacturing, especially industry, especially financial capital, taxation, etc., is more inclined, and provides all-round support to enterprises in scientific and technological research and development.
After the two sessions in 2023, the national and local governments have made drastic investments in industrial projects, indicating that the industry has also received strong support as an emerging industry, and various subsidies, tax incentives and other policies have been introduced. This relieves the pressure on corporate funds to a certain extent.
2. Export excess capacity abroad with the help of "One Road, One Belt"
Under the implementation of China's "one road, one belt" and domestic and foreign dual circulation strategy, the excess capacity of LCD panels has the possibility of exporting abroad.
According to customs import and export data statistics, China's new display industry in the past 10 years, the scale of continuous growth, from 2012 to 2021, the average annual compound growth rate of as high as 25.8%, the same period of import and export reversed, trade deficit from 14 billion US dollars in 2012 to 2021 surplus of 6.54 billion US dollars, marking the mainland's transformation from "less screen" to "big country with production screen". From January to November 2022, the amount of imported LCD panels was US$14 billion, and the export value in the same period was US$25.2 billion, and the trade surplus further expanded.
Head panel companies are also actively layout. On December 30, 2022, Huaxing India successfully achieved TV Open cell 100K output. It is reported that India Huaxing is TCL Huaxing's first overseas layout factory, located in Tirupati City, Andhra Pradesh, southern India, now planning 5 TV Bonding lines, annual production capacity of 8 million units, is TCL Huaxing in the global supply chain capacity layout and Indian market layout of an important base, the factory mainly produces 32"-55" TV Open cell, will be shipped to India and global market customers. The TV Open cell plays a key role in further enhancing TCL's competitive advantage in India and the global market. TCL acquired Sanyo's Mexican factory in Japan as early as 2014, and the annual shipment of TVs is about 8 million units; In 2021, BOE also went to Mexico to create 4 production lines to process TVs.
3. Cross-border creation and segmentation of the blue ocean market Cultivate and guide consumer trends
When LCD panel applications in traditional consumer markets such as TVs, monitors, tablets and mobile phones are shrinking and saturated, opening up new profitable market segments has become an urgent need for head panel companies. For example, the current development of the new energy vehicle market, the demand for flexible, touch-fit, shock-resistant display panels is strong. the shopping guide screen market for human-computer interaction required by new retail and new commerce; The large health industry, especially the high-resolution display screen for equipment in the medical industry and the indicative screen required by the hospital, has a huge market demand; the commercial display screen market required for education, conferences, etc.; Display screens required for large places such as public transportation, high-speed rail, subways, and airplanes; VR/AR/MR electronic helmet required microdisplay screen; Various screens required by the trillion-scale Internet of Things; Screens are everywhere, and various market segments still need head panel companies to develop and guide, create markets, and guide consumption.
In this regard, BOE is ahead of the industry, especially in medical and Internet aspects.
At present, BOE has been laying out the health industry since 2013, and through ten years of in-depth cultivation, it has made great progress in the fields of health management, digital medical care, and smart health care. BOE Digital Hospital has a layout in Beijing, Hefei, Chengdu, Suzhou and other places. After ten years of hard work, BOE Health has explored a path of integration and innovation between medicine and engineering. By creating hospitals, medical systems and cooperating with other medical institutions, we introduce the LCD panels produced by ourselves into all the links required by the hospital, implant them in various places from indicator screens, number screens, signs, medical equipment screens, etc., and cooperate with other medical institutions to increase the shipment of LCD panels and digest product inventory.
After years of innovation and development, BOE has established a business framework of "1+4+N+ecological chain" through business model innovation, and BOE's IoT innovation business, as the core component of this architecture, has gradually formed a comprehensive breakthrough trend. BOE IoT innovation is becoming an endogenous driving force for industrial ecological evolution and butterfly change, especially in 2022, BOE IoT innovation has achieved remarkable results. At present, BOE's IoT solutions have been successively implemented in smart parks, smart finance, smart travel, visual arts, smart retail and other fields. In 2022, BOE's integrated management platform for smart outlets will have more than 10,000 terminal accesses.
With the emergence of technologies such as the Internet of Things, cloud computing, big data, and wearable public information display devices, the display panels required in this field will have great room for development.
4. Increase the localization rate of upstream materials and expand profit space
Although the Chinese mainland's LCD panel production capacity occupies about 70% of the global market share, the localization of upstream materials and equipment needs to be further improved, if the substitution is further improved, the cost of each link of the entire industrial chain will decrease, improving the competitiveness of LCD panel products or expanding profit space.
If in-depth analysis, the future LCD panel production line will not have new projects, for panel companies, only depreciation sharing and equipment maintenance problems, and no new large expenditure costs, in this way, the cost of upstream materials has become very prominent, in polarizers, glass substrates, liquid crystal materials, LED lamp beads, filters, cover glass, driver ICs, light guide plates, diffusers, brightening films and other materials, glass substrates, polarizers, driver ICs, liquid crystal materials occupy a large cost.
At present, polarizers can not be completely replaced, especially TAC film and PVA film materials can not make breakthroughs so far, can only import raw materials from Japan, South Korea, the current demand for polarizers is huge, in addition to domestic deep textile, Sanlipu, Shanshan optoelectronics and Hengmei optoelectronics, there are Japanese related enterprises to provide supply; In terms of liquid crystal materials, mixed crystals have always been the weakness of domestic enterprises, since Chengzhi Yonghua, 800 million space-time, Hecheng Display and other enterprises have made technological breakthroughs, they have begun to meet domestic demand in terms of production capacity. In terms of glass substrates, in addition to Dongxu Optoelectronics, Kaisheng Technology, and Rainbow Optoelectronics have made breakthroughs in 8.5-generation glass substrates, the production lines above 8.5 generations are still blank, and are divided by Corning in the United States, Asahi Glass and Electric Glass in Japan. In terms of driver ICs, TV chips have gradually made breakthroughs in the past two years, and have been greatly alleviated by the "stuck neck" state of foreign companies.
5. Increase technological innovation to stimulate the marginal effect of LCD panel consumption
From an economic point of view, any product has a marginal effect, which is also the motivation for enterprises to continuously carry out technological research and development.
LCD panel products are the same, when people's demand for LCD display is expected to decline, OLED display, electronic paper display, laser display and Micro LED display have become the object of early taste.
Therefore, after the LCD panel production capacity reaches its peak, in the case of general surplus, the head panel company must innovate in technology, innovate in product appearance, and give consumers flexibility in the way of presentation to slow down the decline rate of the marginal effect of the product;
Under the wave of global digitalization and IoT, changes in user usage scenarios and application requirements have brought new opportunities for product innovation and brought new incremental space to the market, especially the demand for education, intelligent manufacturing, commercial display, big data, cloud computing, Internet of Things, virtual reality and other market segments have good growth potential.
From the perspective of future content requirements and application scenarios, there are more and more flexible and diverse display applications such as games, short videos, automotive, and medical care, and content demand drives the demand for the whole machine, and the demand for the whole machine drives the demand for display devices. Therefore, high contrast, high resolution, high refresh rate, low power consumption, flexibility and alienation, 3D surfaces, etc., have become future display needs.
In terms of scene empowerment, BOE builds a scenario-driven integrated and symbiotic Internet of Things innovation ecology, allowing screens to integrate more functions, derive more forms, implant more scenarios, build core capabilities of technology and management with scene driven, accelerate the process of industrial digitalization, and create a new blue ocean market for LCD panel digestion. But you can't eat the big profit.
6. It is time for Chinese mainland head enterprises to win the right to speak in the global LCD panel market
When Japan and South Korea gradually withdrew from the global LCD panel market, only Innolux and AUO in Taiwan occupied more than 20% of the global market share.
The global LCD panel market cake does not increase but shrinks in the case, to win Taiwan's Innolux and AUO market share, to digest mainland LCD panel products or good, after all, more than 20% of the market share, this is also a lucrative piece of fat, in the context of the Sino-US science and technology war, Innolux Youda chose the United States, but also gradually moved the mainland factory to Southeast Asia and India, mainland head panel manufacturers in the LCD panel price trough, massive production capacity and political influence without scruples, seize 20% When the global LCD panel production capacity is focused on the mainland, relying on the adjustment of visible hands, it should be possible to get rid of the cyclical constraints of the LCD industry.
It is not easy to easily win more than 20% of InnoYOU's market. First of all, relevant companies in Japan and South Korea will not sit idly by and watch Chinese mainland head panel manufacturers seize the market and ignore it, they need market competition and profit, even if the price is high, they will continue to send orders to Innolux and AUO. In addition, regardless of the scale or technical strength of Innolux and AUO, they will not easily give up this market after decades of development and accumulation in the LCD panel industry.
At present, under the background of the Sino-US science and technology war, TSMC, Innolux, AUO Optoelectronics and other Taiwan companies have given answers with actions, choosing the United States side, listening to the call of the Americans, and transferring the mainland and Taiwan's manufacturing industry to the United States, Southeast Asia and South Asia, so the mainland head panel manufacturers do not have to consider political and other factors, just start directly, and use market means to regain the only LCD panel market share of Taiwan enterprises, which can firmly grasp the right to speak in the global LCD panel market.
7. Play the role of "two hands": rebalance the supply and demand relationship of the market
In March 2022, BOE won the highest honor in the global intelligent manufacturing field "Lighthouse Factory", setting an innovative model for digital development for the entire industry.
Transformation and upgrading has always been advocated by mainland China in the manufacturing industry, through the transformation of traditional manufacturing into intelligent manufacturing, industrial ecological digitalization and networking, change the traditional production line and product architecture, reduce costs and increase efficiency, or can be converted to C2F model, etc., the future profitability will be further improved.
If in the next few years, LCD panel products are indeed excessive, then only the role of the market's resource allocation and the government's "visible hand" can only be brought into play, and the supply and demand of the LCD panel and the market can be balanced through mergers, transformation and upgrading, bankruptcy, etc., so as to achieve a virtuous cycle and development.