Japan and South Korea have withdrawn from the LCD panel business, and the global panel market will usher in a period of transformation

Southern Metropolis Daily

2024-05-18 15:44Published on the official account of Guangdong Southern Metropolis Daily

Recently,Japan's head panel companies have announced that they have made a decision to stop production of their panel factories - Nandu Bay Finance Agency previously reported,Sharp Company announced its future business strategy on May 14,One of the major adjustments is that the subsidiary "Sakai Display Products" located in Sakai City, Osaka Prefecture will stop production of large LCD panels for TVs before the end of September,The purpose is to ensure working capital through the sale of assets。

Japan and South Korea have withdrawn from the LCD panel business, and the global panel market will usher in a period of transformation

At the same time, JDI, another leading Japanese manufacturer, also said that it has decided to end production at its Tottori plant by March 2025, which uses amorphous silicon technology but has limited production capacity to cope with higher-performance products. For the former Dongpu Plant, which will end production in March 2023, the handover of the plant will be completed on April 1, 2024.

So far, the already "weak" Japanese panel companies have basically announced the abandonment of the LCD display panel market, and before that, the South Korean company Samsung, LG has also closed a number of LCD panel production lines, which also means that the market share of the mainland LCD panel will reach an unprecedented height.

The LCD screen market is surging, and the head production capacity country has changed hands several times

Previously, Sharp "officially announced" that the Sakai factory would stop production of large-scale LCD panel business for TVs, causing shocks in the industry.

It is reported that the consolidated financial report for the 2023 fiscal year disclosed by Sharp showed a net loss of 149.9 billion yen (about 6.9 billion yuan). After a loss of 260.8 billion yen in the previous fiscal year, it was the second consecutive year of losses. According to Sharp's latest financial report, the downturn in the LCD business is the biggest factor causing Sharp's losses for two consecutive years. Because of the sluggish TV LCD panel business, coupled with the rising cost of raw materials and labor, Sharp was worried that the loss would continue to increase, so it made the decision to stop production.

At present,Sharp is the only company in Japan that produces LCD panels for TVs,With the discontinuation of Sharp's industrial line,The production of TV panels in Japan will end,The company's operation, which was once called "Sharp of LCD", will usher in a major turning point。

According to the latest "Global TV Brand Shipment Monthly Data Report" released by Ovirivo, global TV shipments in the first quarter of 2024 will be 43.2 million units, a year-on-year decrease of 0.8%; Among them, Samsung, Hisense, and TCL rank among the top 3 in global shipments, with shipments of 8.4 million units, 6.2 million units, and 5.8 million units respectively, while Sharp shipments rank 9th, with only 900,000 units, only about one-tenth of Samsung.

According to the reporter of Nandu Bay Finance Society, Japanese motor manufacturers were pioneers in opening up the TV LCD panel market. In 1990, 90% of the world's LCD screens were produced in Japan; In 1991, Sharp took the lead in starting the first production line of large-size LCD screens. In the mid-1990s, 95% of the world's LCD production capacity was in Japan, almost monopolizing the entire industrial chain.

After the financial turmoil in the 90s of the last century, Japanese companies lost unsalable panels and reduced their investment, and Korean companies took the opportunity to increase investment in LCD panels to break the monopoly of Japanese companies. In 1995, Samsung and LG respectively built their own LCD production lines. In 2001, after Samsung and LG invested in the 5th generation production line, Korean companies completely overtook Japanese companies such as Sharp.

Since then, with the improvement of China's comprehensive national strength and the rise of economic strength, the mainland's vigorous investment and independent innovation in LCD panels have gradually broken the Korean monopoly. As panel manufacturers in Chinese mainland continue to make efforts, they have successively invested in production lines and increased investment, and manufacturers such as BOE, Huike, and Rainbow have quickly caught up. Public data shows that in 2017, the mainland became the largest source of LCD display panel production capacity, and Chinese mainland panel manufacturers have made great progress in terms of "quantity" and "quality".

According to IHS Markit, in 2018, the shipments of LCD panels above 9 inches by Chinese mainland panel manufacturers increased from 177,000 units to 2.242 million units, an increase of 11.7 times. In 2019, the number of global LCD TV panel shipments was 283 million pieces, a slight decrease of 0.2% year-on-year, and the shipment area was 160 million square meters, a year-on-year increase of 6.3%.

According to the search of the reporter of Nandu Bay Finance Society, public information shows that in 2020, the global market share of mainland panel production capacity will be nearly seventy. In 2021, BOE, the leading LCD panel company in the mainland, will have a revenue of 219.3 billion yuan and a net profit of 25.831 billion yuan, a year-on-year increase of 412.96%; Another panel factory, Huaxing Optoelectronics, had an operating income of 163.5 billion yuan and a net profit of 14.96 billion yuan, a year-on-year increase of 195.3%. Even the second-tier Visionox also performed well, with revenue growth of 32.32%.

Since the second half of 2021, with the slowdown in the growth rate of display panel consumption and the concentrated release of new production capacity on the supply side, the demand for LCD display panels has cooled, and the price has also fluctuated and declined. WitsView data shows that in 2022, the global shipment of large-size LCD panels will be 888 million pieces, a year-on-year decrease of 9.71%; The global shipment area of large-size LCD panels was 219 million square meters, a year-on-year decrease of 5.70%.

Some industry insiders said that in recent years, the overall LCD panel market can be said to have experienced a big shock, from tens of billions of profits in 2021 to tens of billions of losses in 2022. Due to the temporary recovery of the LCD screen market caused by the epidemic caused by the home demand, many companies have increased production capacity, but with the gradual cooling of the demand for mobile devices, the demand for large domestic home appliances has declined, and many LCD large-screen panels are therefore unsalable.

It is reported that under the severe situation of Asian currency appreciation, rising raw material and fuel prices, and rising manufacturing costs, many LCD industry companies have decided to significantly reduce their production lines or even stop production. Therefore, during the 2022-2023 period, many Japanese and Korean companies will gradually withdraw from the LCD panel market, and after Samsung and LG have closed a number of LCD panel production lines, Panasonic has also announced its official withdrawal from the LCD panel business. Until recently, Sharp shut down the domestic LCD panel production line, and the market share of the mainland LCD panel reached an unprecedented height.

China has become a global LCD panel production capacity center

Industry insiders said that manufacturers who have experienced the pain of huge losses in 2022 urgently need to reasonably arrange industrial investment, and have begun to show a trend of pursuing stable profits and adopting a business strategy of on-demand production. Therefore, with the gradual withdrawal of Korean and Japanese companies from the LCD field, there is no new LCD production line planning in recent years worldwide, and the overall LCD production capacity growth rate has almost stagnated in the next few years, so the competitive advantage of Chinese mainland panel companies in this field is becoming more and more obvious.

At present, there are two commonly used display screens: LCD and OLED displays. According to public data, the mainland has a relative advantage in the shipment rate of large-screen LCD market. According to market research company Omdia, in 2023, LCD TV panel shipments will be 258.27 million pieces, of which Chinese manufacturers account for more than 60%, and the market share of products continues to increase. China's largest panel manufacturers BOE, Huaxing Optoelectronics, and HKC shipped 60.18 million pieces, 48.4 million pieces, and 39 million pieces respectively, while the South Korean company LG shipped only 13.34 million pieces.

Huizhou TCL Huaxing Optoelectronic Display Industry Belt Workshop.

Divided by wide-angle technology category,2023year,BOE's IPS/FFS(BOE name ADS)Technology TV panel shipment area accounts for 23%,Occupy the first place。 Huaxing Optoelectronics' VA technology TV panel shipment area accounted for 21.5%, ranking second, and Huike's VA technology TV panel shipment area accounted for 13%, ranking third.

It is reported that although OLED display technology has incomparable advantages of LCD and LED, the life of OLED organic materials is not long, coupled with the complex manufacturing process, resulting in high production costs and poor yields. According to the analysis of professional institutions, the output value of LCD panels last year was about 90 billion US dollars, OLED was only 24 billion US dollars, and Micro LED was 400 million US dollars.

Therefore, although the current technology iteration and the competition for OLED's right to speak seem to have become fierce, the consensus of the industry is that in the short term, OLED panels will still be the main force in the small-sized mobile device market, and they will be introduced into TV, lighting and other applications, and it will take time to ferment. In the era of large screens, traditional LCD screens will still occupy the mainstream of the market. LCD is still the most mainstream display panel application technology, especially in non-mobile medium and large display application scenarios, its position is unshakable.

It is worth noting that after Sharp announced the suspension of production, the Korean company LG Display also recently announced that it would sell the Guangzhou LCD factory in June this year, with a sales amount of about 5.316 billion yuan. As LG Display is switching from LCD to OLED-centric business structure, it is currently in talks to sell its Guangzhou plant to some Chinese mainland panel companies. In the case of the gradual shutdown of global LCD production lines, the global panel industry center will gradually shift to Chinese mainland.

Industry insiders said that Chinese mainland panel factories have basically achieved dynamic regulation of supply and demand in the panel market through flexible adjustment of production line utilization rate, and when a new round of upward cycle of the industry is coming, the continent's current voice and pricing power in the LCD panel industry chain have steadily increased, and successfully opened an unprecedented "production control and price protection" policy in 2023, effectively controlling the stability of large-screen LCD TVs in the mainland at a lower price, and major manufacturers can support the policy of "promoting the trade-in program of consumer goods" at low prices. Effectively enhance the economic market activity of household appliances.

The reporter of Nandu Bay Finance Society noticed that many recent reports believe that 2024 will be the year of full recovery and profitability of the panel industry, and the annual industry growth rate is expected to reach 11%. In the future, under the premise that the panel factory adheres to the production control and price guarantee, the strict production control on the supply side makes the price gradually warmed up, and it is expected that the price fluctuation range of the display panel will be reduced, and the profitability of the panel factory will be improved.

In addition, the recently released "New National Nine Articles" also mentioned that after that, it will increase incentives for high-quality companies with dividends, and take multiple measures to promote the increase of dividend yields. In this regard, in the new era of the panel industry, which is gradually returning to rational competition, the large capital investment pressure of panel manufacturers used for cyclical capacity expansion in the past will be significantly reduced, which will greatly liberate the cash dividend ability of panel manufacturers. For investors, LCD panel companies will have a higher imagination space for cash dividends, and their value investment attractiveness will also be significantly improved.

The layout of high-value products has also been prepared by Chinese companies for a long time

Some industry insiders said that the contraction of Sharp's LCD business is just a microcosm of the transformation challenges faced by the global LCD industry. According to the reporter of Nandu Bay Finance Society, it was observed,With the upgrading of consumption and the increasingly strong demand for high-end TVs,Traditional LCD panels have gradually entered the stock period,At present,LCDin display effect、Power consumption、Thickness、Plasticity and other aspects compared with OLEDThe obvious disadvantages,Constantly upgradingOLEDThe screen will become the mainstream in the future。

It is understood that most of the international manufacturers that have gradually shut down LCD panels have chosen to shift their focus to OLED panels. In recent years, with the improvement of OLED display panel technology and performance, the cost has also been effectively controlled, which has further enhanced the market competitiveness of OLED products, and the market share has continued to increase. At present, Korean manufacturers occupy a dominant position in the field of high-generation OLED, but the OLED process route adopted by Korean companies is only a compromise solution, and it has not effectively promoted the widespread popularity of OLED in the TV and IT markets.

In this regard, the mainland is also constantly following up the pace of development of new business formats, and from the perspective of production capacity, leading enterprises have accelerated the layout of high-value products. Recently, under the influence of Apple's orders, the two sides plan to invest in the construction of 8.6 generation OLED production lines, aiming to seize the market share of IT applications, with a total investment of 63 billion yuan, mainly targeting IT market applications. TCL Huaxing also announced that it will mass-produce printed OLED in the second half of 2024, which will be the first to be applied in the IT and medical fields.

From the perspective of the industrial chain, according to the production capacity data of Omdia, the proportion of production capacity of Korean enterprises in the OLED market has dropped from about 84% in 2018 to about 60% in 2022, and OLED production capacity is accelerating the transfer to Chinese mainland. With the closure of some of Sharp's production capacity, the proportion of Chinese manufacturers will increase again. And as domestic manufacturers promote supply chain cost reduction, cost advantages will be highlighted, accelerating to catch up with and surpass Korean manufacturers. In the short term, panel factories benefit from the elasticity of revenue and performance brought about by the rise in OLED prices; In the medium and long term, the transfer of the industrial chain to China and the growth of market space will usher in development opportunities for domestic panel factories.

In terms of the overall OLED industry, Chinese manufacturers continue to narrow the gap with Korean manufacturers in terms of technology and scale, and domestic panel companies are rapidly catching up with South Korea's leading position. According to the statistics recently disclosed by CINNO Research, from the perspective of global AMOLED smartphone panel shipments by region in the first quarter of 2024, South Korea's share narrowed to 46.6%; The shipment share of domestic manufacturers accounted for 53.4%, an increase of 15.6 percentage points year-on-year and 8.5 percentage points month-on-month, and the share exceeded 50% for the first time. It is foreseeable that the leading Chinese-funded manufacturers represented by BOE and TCL Technology will also replicate the successful path of LCD in the field of OLED in the future.

Recently, the trend of mainland digital and LCD panel head companies has also confirmed this. According to public data, Huawei aims to ship 60 million to 70 million smartphones in 2024, doubling the shipment volume in 2022. Among them, the shipment target of folding screen mobile phones is 7 million-10 million. At present, Huawei, Honor has further strengthened cooperation with BOE, Visionox and other domestic panel manufacturers, VIVO, OPPO have also gradually switched from SDC to domestic panel suppliers, driving the penetration rate of domestic OLED panels to continue to increase, and the industry is expected to exceed South Korea for the first time this year.

Whether it is in the production line upgrade or the first to invest in OLED research and development, domestic enterprises have completely changed the domestic panel industry completely dependent on foreign situation, with the improvement of the domestic OLED-related industrial chain, domestic manufacturers in cost, geography, the advantages of industrial chain integration will be reflected. Some people in the industry said that with the further maturity of domestic OLED panel technology, the mainland OLED industry will occupy more and more market share in the future. In addition to the OLED field, it is worth noting that in the field of Micro/Mini-LED, Chinese manufacturers have synchronized with the world, and have carried out a lot of technological development in the past ten years, and have built a number of experimental lines and pilot lines, and the construction of large-scale production lines has also begun.

It is worth noting that both traditional LCD panel companies and the OLED panel industry are transforming towards a healthier business state, gradually shifting from focusing on shipments to pursuing innovation, and entering an innovation-driven growth stage to achieve higher premiums. After reaching the peak of the global LCD panel production capacity in 2023, China's display panel industry will strive to explore a new path of value growth in 2024.

Written by: Nandu Bay Finance Society reporter Kong Xueshao intern Guo Jiayi

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