BOE's OLED wars, one-man shows, group performances and invisible hands

Text/Wisdom

BOE caught up again.

On April 4, Samsung Display finally made up its mind to start building an 8.6-generation OLED production line with an investment of $3.1 billion, which will also be the world's first 8.6-generation OLED production line and the world's most advanced OLED production line.

Samsung's ambition is that this production line will produce 10 million pieces a year by 2026. According to the public caliber of Samsung Display President Choi Joo-sun a year ago, the annual sales of this production line will reach a staggering $50 billion, or even higher.

The analysis of the South Korean media is broken. Samsung Display has been leading the display field for 17 consecutive years, until 2021, the Chinese enterprises represented by BOE and Huaxing Optoelectronics have surpassed, and Samsung Display and LG Display have gradually withdrawn from the LCD LCD display field. At present, Samsung Display has completed the sale and closed the LCD production line, while LG still has only one LCD production line left in Guangzhou, and it is still struggling to find buyers, selling this LCD production line, or selling the entire LG display business is an option.

The location of Samsung's new OLED production line is in Chungcheong-do, a semiconductor town in southern South Korea, and the original site is an LCD production line that Samsung has just shut down. The efforts of China's industry in the past 20 years have defeated Samsung and LG and won the entire LCD industrialization competition. Now, the theme has moved to the next level.

BOE is one step away from Samsung

In the past two years, BOE has grown rapidly in the OLED field - it has become an important reliance on domestic Android manufacturers, and it is also an important supplier of OLED screens for Apple mobile phones, and its share has surpassed LG, an old rival in the LCD era. BOE's 8.6-generation OLED production line has also reached the final planning stage.

A few days ago, at the BOE 2022 results communication meeting, BOE Chairman Chen Yanshun warmly comforted those angry investors, and at the same time, extremely cautiously revealed BOE's latest progress and plans in the OLED field, BOE OLED market target 120 million pieces, optimistic about the general trend of OLED in the IT field, will choose the opportunity to invest in this field.

In the past 20 years, BOE's huge investment in the LCD field has achieved great success at the industrial and market levels, but it has not brought returns to investors in the secondary market. Now, BOE intends to launch a final pursuit of Samsung Display and the entire Korean display industry, what will be the return of the success or failure of this process to secondary market investors?

At the performance communication meeting, many people raised the question of when the BOE OLED sector would be profitable, and Chen Yanshun and other BOE management responded evasively. Regarding the long-rumored large-size OLED production line plan in the market, BOE director Gao Wenbao ambiguously answered: The large-size OLED production line has been in the planning of BOE, and a corresponding team has been established to evaluate the technical route, equipment matching, input and output, and "will announce the next move at an appropriate time." ”

Now, Samsung Display has taken the lead in playing cards, will BOE follow up immediately?

BOE attacked the hinterland

"Wisdom" has mentioned many times before that BOE's OLED business is progressing. In the past year, BOE OLED shipments reached 80 million pieces, although it did not achieve the target of 100 million pieces emphasized by Chen Yanshun many times, but it has surpassed LG and become the world's second largest OLED manufacturer, with a global share of 20%. However, it is still far from Samsung's 70% share.

The rapid growth of BOE's OLED business is closely related to the promotion of Apple and Huawei's two major customers, especially Apple, which has made Samsung feel a slight chill.

Over the past year, BOE's shipments to Apple's supply chain have more than tripled. According to Guo Mingchi's prediction, BOE will have a share of more than 70% in the iPhone 15 and iPhone 15+ orders in 2023, while Samsung only has 30%. A year later, BOE will also get more than 20% of the high-end LTPO orders for the iPhone and will become Apple's largest display supplier.

No wonder, the Korean media often release various unfavorable information in the cooperation between BOE and Apple, and the rapid growth of BOE has threatened the territory of Samsung OLED, which is also the market where the outside world generally predicts Samsung's huge advantage.

There is also a territory conquered by BOE is China's Android factory. With the launch of Huawei's folding screen mobile phone in 2019 and the reality of overseas chain disconnection, Huawei has to use BOE as the screen supplier of its high-end flagship models, even if the BOE OLED screen quality is a huge gap with Samsung OLED, especially in the field of folding screen mobile phones.

Since other Android manufacturers generally need to copy the design scheme of Huawei folding screen mobile phones, and adopt Huawei folding screen mobile phone hinge suppliers, BOE has gradually become all domestic folding screen mobile phone suppliers. The product manager of an Android manufacturer revealed that due to cost considerations, as soon as the end of 2023, BOE will become the OLED screen supplier of all domestic Android factory folding screen flagship models, and Samsung Display has considered withdrawing from this segment.

Alternatively, Samsung Display will have to change the way it sells its suite of sets, and only provide OLED screens, and UTG covers will have to use Kaisheng Technology's UTG.

BOE management predicts that in 2023, BOE's shipments in the field of folding screens will reach 10 million pieces, which is a slightly optimistic forecast. In the first half of the year, Huawei flip folding screen mobile phones had to recall products because of screen problems, which affected the sales of this series. It is difficult to say whether the real problem of this problem comes from BOE's OLED, or from other suppliers.

This issue has greatly affected the performance and morale of the Huawei team. However, this major problem does not seem to affect BOE's position in Huawei's supply chain, and perhaps Huawei also has its helplessness.

Sales volume and share are one thing, profit is another. Chen Yanshun mentioned in response to a question that BOE's OLED business still has a large loss. With the efforts of domestic counterparts such as Tianma and Visionox, it is still not optimistic when to make profits.

Investors have asked about OLED's profitability, but BOE management is quite cautious. "Wisdom" believes that the biggest value of BOE OLED screens for domestic Android manufacturers is that BOE can withstand strategic losses, thereby forcing Samsung OLED to lower prices at extremely low prices, which is indeed the case at present. BOE OLED should not expect profits in the short term.

In line with Cui Zhoushan's view, BOE's management also values the huge market value of OLED IT products. As early as a year ago, Choi Joo-sun revealed this epic investment plan at a forum in the display industry in South Korea, Samsung plans to invest in this new OLED production line, and is expected to reach $50 billion in sales.

BOE OLED is the key to the rise of domestic mobile phones

Apple, Asus and other IT giants are promoting the use of OLED screens in IT display products, as well as TVs, including Huawei, Xiaomi, Skyworth, LG, Samsung are trying to launch OLED screen TV products, but because of the price, it has not been popularized. Now, Samsung Display has finally rushed ahead of BOE and announced an investment plan for the world's most advanced OLED production line.

The success or failure of Samsung's OLED production line is not only whether Samsung Display can continue to be incense, but also whether the entire Korean display industry can survive under the Chinese cluster offensive, and the competition of Chinese and Korean consumer electronics brands in the OLED category. South Korean President Yoon Seok-yue and Samsung family member Lee Jae-yong also attended the event in person, and their importance can be seen.

Facing Samsung OLED, will Li Dongsheng be absent

Korean media pay special attention to the progress information of BOE's 8.6-generation OLED production line. BOE rides alone and catches up with Samsung OLED, which has made Samsung and even the South Korean display industry feel great pressure.

A month ago, South Korean media reported that BOE director Gao Wenbao visited Tokki, a key OLED equipment manufacturer, hoping that Tokki could ensure the supply of its OLED equipment as soon as possible, and LG, Samsung, and BOE are currently the main competitors of this technology production line. However, the outside world does not know the results of Gao Wenbao's visit.

In 2021, there was speculation that BOE could transform its Fuzhou production line and build an 8.6-generation OLED production line, but BOE has denied it. In 2022, domestic display industry researcher Ouyang Zhongcan once proposed that Chengdu, Sichuan and Chongqing already have the foundation for building 8.6-generation OLED production lines. The outside world believes that BOE is more likely to prefer to build its 8.6-generation OLED production line in Chengdu.

BOE has not yet clarified its site selection and production line plans. In the face of the potential of the hundreds of billions of IT panel market, as well as the appeal of giants such as Apple, as Samsung determines its high-generation OLED production line, BOE, which has been in reserve for many years, should not let the outside world wait too long. And this time, domestic followers and peers will not follow up for the time being.

At the same time as Gao Wenbao's visit to Tokki, Li Dongsheng also visited the company. However, in the public information, Li Dongsheng is always ambiguous about the OLED new production line plan, not very sure and positive. At present, Huaxing Optoelectronics still has only one 6th generation OLED production line in Wuhan. Li Dongsheng has doubts about the localization of OLEDs, and the reason is very simple: OLED production lines have high costs and will bring high depreciation costs.

The important thing is that the OLED industry has not yet experienced a trough, the core technical personnel of Samsung's OLED production line have never passed, talents are difficult to find, the direct result is that all OLED production lines in China can dig too few OLED talents, yield, technical level has been difficult to get a qualitative improvement. Needless to say, including BOE, the level of China's OLED display products is still far from Samsung OLED, and there is no hope of catching up in the short term.

Li Dongsheng is not ignoring OLED, 3 years ago, Li Dongsheng mentioned on important occasions such as the National Two Sessions that he planned to invest in the second OLED production line, during which a local government once anxiously announced that Huaxing Optoelectronics was about to invest in a new production line, which caused a commotion in the capital market. Huaxing Optoelectronics quickly denied it.

TCL Technology has strategically invested in another Japanese display industry in the decline of aristocratic JOLED, planning to promote the industrialization of printing display technology with it, Huaxing Optoelectronics once announced plans to build a printing display OLED production line in Guangzhou, choosing to use printed OLED to enter the large-size OLED market. At present, Li Dongsheng's confidence and sincerity in this technical field are insufficient.

But now, JOLED bankruptcy is imminent, and the Guangzhou printing OLED production line is still far away. Once a pioneer in printed OLED technology, Kateva, like JDI, has been seeking financial support from local governments in China in the past few years to support the industrialization of its technology.

Why is it difficult to land printed OLED? Why do Samsung and BOE compete in the 8.6th generation OLED production line? The industrialization of new display technology seems to come from the adventurous spirit of entrepreneurs, and the final key determinant is the terminal market, and the people who determine what display technology becomes mainstream are not Li Dongsheng, Chen Yanshun and Cui Zhoushan, but Cook, Yu Chengdong, Musk.

The biggest contributor to the rise of OLED in China is not only Wang Dongsheng and Chen Yanshun, the most important thing is actually Yu Chengdong. Under the reality of broken chains, Yu Chengdong reluctantly chose a subdivided track such as a folding screen, and helplessly chose BOE, whose quality and technical maturity are far inferior to Samsung. After the rise of BOE in the OLED field, it turned around to help the rise of OPPO and vivo in the high-end market and challenge the position of Apple and Samsung high-end machines in the global market.

Now OLED is the only hope for China's Android manufacturers to catch up with Apple and enter the high-end. Android manufacturers high-end plan two sentences, one, to do Apple refuses to do, has not yet done folding screen mobile phones. Second, go for twice the cost of Apple's hardware and sell a price close to Apple's entry-level high-end machine. The key behind the two sentences is related to China's OLED industry.

Huaxing Optoelectronics, BOE, Huike and other LCD group customers, have long ceased to make an article in the LCD field. The protagonists of future hardware technology, whether it is Apple's hybrid display, or the car screen display of smart electric vehicles, as well as the folding screen mobile phones promoted by the current Android manufacturers, all revolve around various OLED technologies.

The lack of a world-class terminal business, a terminal business with real vitality, has affected Li Dongsheng's trend judgment, Li Dongsheng himself is not, and there is no real product manager around.

LCD is no longer the customer's strategy, when will Li Dongsheng make a move in the OLED field? Perhaps, Li Dongsheng is too superstitious about his financial skills. In the past few years, Li Dongsheng has made several good transactions, including Central, Samsung Suzhou Line, and Omar Appliances, while avoiding several bad transactions. Li Dongsheng may be waiting for an opportunity to acquire several domestic OLED production line assets at a lower cost, or buy the entire LGD.

The right and wrong behind this choice cannot be explained by a layman. As the outside world has been worried about the LCD business, it is not only the decisions of these entrepreneurs who determine the price fluctuation of LCD, but also the power of the government behind it, whether they have the ability to fund and support these projects, but also determine the life and death of these projects, success or failure.

Beyond BOE, the invisible hand

On April 10, JDI, the "last hope of the village" in the Japanese display field, announced that it signed a memorandum of understanding with Chinese LCD manufacturer Huike Co., Ltd. to cooperate in the fields of next-generation OLED panel technology and high-end automotive displays.

In recent years, JDI has been throwing hydrangeas to local governments in China, as well as TCL Technology, BOE and financial investors, seeking cooperation and even selling itself as a whole to obtain opportunities for sustainable development and even the return of the king. In the meantime, with the help of a capital broker from Taiwan, China, he once approached settling in Zhejiang, China.

The problem was that in the transaction case at that time, Gou Taiming quickly announced his withdrawal, and Li Dongsheng and Chen Yanshun were not very interested. Without the participation of an industrial force, the industrial authorities and local financiers are extremely hesitant.

The hope of the whole village in South Korea, Samsung OLED high-generation online horse

The appearance of Huike changed this pattern. JDI has been losing money for 10 consecutive years, but has always claimed to have some special OLED processes, patents and technologies, and it seems that it just lacks funds. In addition, JDI has maintained a fairly smooth relationship with Apple for a long time, and riding JDI is also a shortcut to Apple's supply chain. Previously, there were voices that JDI had committed to Sharp, which Gou controlled, and 3 years ago, JDI did sell an LCD factory to Sharp.

But Sharp is now insured, Gou Taiming has long not wanted to fight, if there is a suitable bid, Gou Taiming may consider selling all display assets like LGD.

The problem is that the IPO impact has not been successful, the LCD downward cycle, several production lines are invested and built at the same time, and Huike should not have such financial strength to support the landing of JDI's so-called proprietary technology production line.

Huike and JDI hold hands, the key to success or failure should not be these two protagonists, but also everyone needs to collect firewood. At present, only local governments and state-owned financial investors have the courage to be blindly optimistic and adventurous enough to support this OLED experiment with industrial portfolios. Considering the whereabouts of the brokers behind JDI and its resources when he sold himself a few years ago, it may be possible to guess the taste.

Academician Ouyang Zhongcan predicted that Chengdu and Chongqing have the construction conditions for OLED high-generation lines, which should not only refer to what OLED industry resources and foundations, but also the ambition of the leader. If BOE decides to settle in Chengdu, will Chongqing consider other candidates? The runner-up player in the semiconductor display industry, Li Dongsheng hesitated, it was the turn of the third runner-up in the industry?

Chongqing's deeply rooted Huike Company may also have this opportunity?

JDI and Huike's OLED dream is not much smaller than Samsung, and the media reports that the plan for this pair of OLED dream team combinations is: by 2027, achieve the world's first wearable shipments and share, by 2028, vehicle display, VR, desktop display will reach the world's first, IT equipment to reach the world's third.

Sadly, there must be a very large goal to make the gold owner swallow the hook in the future. The question is, are JDI and HKC really ready to reserve the equipment, materials, technology and talents of the OLED high-generation line?

In any case, for HKC, which has been suppressed by BOE and CSOT for a long time in the LCD era, the upgrading of technology itself is a great opportunity to change the seat and fate, and Wang Zhiyong has more reasons to take risks than Li Dongsheng.