The rise of Chinese panels, but the leading position of Japan and South Korea is difficult to shake?

Looking at the development of China’s Display industry over the past few decades, although it has made good achievements in the field of LCD panels, a fact that cannot be ignored is that the leading position of Japanese and Korean manufacturers has always been difficult to shake.

There are two reasons why Japanese and Korean manufacturers are eager to transform. One is that today’s LCD industry is really not profitable. The influx of a large number of Chinese manufacturers has doubled the global LCD panel production capacity in a few years. The result of excess capacity is oversupply.

Recently, according to Korean media reports, LG Display plans to fully operate its OLED production line in Guangzhou in September, capable of processing 60,000 OLED panels per month. The Guangzhou plant will form a synergy with LG Display’s Gyeonggi-do plant in Po, and the third quarter will be a watershed for LG Display’s large-scale OLED business.

LG Display

Not only LGD, Samsung Display is also actively promoting its “C project” – QD-OLED TV panel production line investment plan. Why are LG Display and Samsung Display eager to clean up their LCD production lines and deploy OLED instead? In the eyes of many analysts and media, this is not unrelated to the rise of Chinese LCD panel companies.

The rise of Chinese panels, but the leading position of Japan and South Korea is difficult to shake

Previously, domestic media reported mostly on the rise of domestic LCD panels, which made Korean manufacturers finally choose to withdraw. Between the lines, we can feel the rapid development of China’s panel industry and the checks and balances on Japanese and Korean companies in recent decades. Some time ago, BOE surpassed LGD to become the world’s largest LCD panel market share, and was called a “historic moment” by the media, but this is by no means the time for us to relax because of our past achievements.

From the initial CRT to LCD, Japanese and Korean manufacturers not only ate the industry dividends, but also squeezed the residual value of an outdated production line, sold it to a group of Chinese manufacturers who were waiting to feed, and dug holes everywhere to set up obstacles, so that Chinese companies have taken many detours. The Chinese panel manufacturers who purchased and eliminated production lines at high prices can be said to be “outdated when they start construction”, and have always been behind Japan and South Korea.

In recent years, the rapid increase in China’s LCD panel production capacity and the stability of the technical level have accelerated the transformation of Japanese and Korean companies to a certain extent. Many people expressed their gratification that China’s LCD has finally ushered in a historic moment, but at the same time, we must also see the crisis behind it: Japan and South Korea have chosen to retreat bravely, are they really afraid of the threat of Chinese manufacturers at the technical level?

Why are Japanese and Korean companies withdrawing one after another?Profit is the key

In my opinion, the possibility of Chinese manufacturers threatening the exit of Japan and South Korea through core technologies is almost zero. After all, most of the so-called core technologies in our hands were obtained by acquiring the panel business of Japan and South Korea more than ten years ago. Although it seemed at the time that we had taken advantage of it, it was more likely that the other party would “keep one hand”; in the past decade, while Chinese manufacturers have continued to grow and develop, Japanese and Korean manufacturers have not stopped. We now have and The opponent’s arm-wrestling capital, but in the end whoever wins and who loses, no one of the three parties can secure the victory.

According to data released by the market research agency Omdia, LCD panels produced by Chinese panel manufacturers have accounted for about 50% of the global market share in April this year. In terms of shipments, the top two are BOE (27.3%) and Innolux (16.4%). Chinese panels have an absolute advantage in global LCD market share and shipments, followed by LCD The sharp drop in panel costs and the sharp compression of profit margins.

The market is high, and Korean companies squeeze the final value of LCD

For an industry with no money, savvy Koreans naturally want to retreat, but they are not just as simple as retreating quickly, which is another main reason why the other party is eager to transform. Taking advantage of the massive expansion of Chinese manufacturers, we must concoct the operations of more than ten years ago, sell our LCD panel production lines while they are hot, and eliminate production capacity to realize its final value.

They think so and do it. In January 2020, Samsung sold the main equipment of its LCD Gen 8 line to Chinese LCD MODULE company Hefengtai. According to reports, Hefengtai acquired 8-1 of 8-1 and 8-2 in its 8th-generation production line, and at the same time purchased some backward equipment in order to obtain preferential treatment from the local government.

Does this scene look familiar? Just 11 years ago, CLP Panda and the Nanjing government spent 13.8 billion to purchase a backward Gen 6 line from Sharp, just to cooperate with Sharp in the construction of the next Gen 8.5 line. Spending a lot of money to buy outdated production lines eventually became a “wage boy”, and this scene is still being staged 11 years later. In recent years, this trend has not decreased but increased. With the support of government funds, many small and medium-sized manufacturers in China’s panel industry have embarked on the road of acquisition. However, most of them are the production lines that have been eliminated by the other party. From a commercial point of view Look, none of this business is worth it.

However, we don’t know how the competition results of this new generation of technology will be. What Chinese manufacturers can do is to keep calm and continue to promote the layout of high-generation production lines and technology research and development, instead of being immersed in the halo of “global LCD panel leader”. revel.

On the other hand, we cannot continue to follow the old path of acquisition of production lines. CLP Panda, which was resold some time ago, is the best example. Without a huge amount of independent technical reserves, it is impossible to get rid of the fate of becoming a foundry in the end. Only when we truly have our own core technologies and innovation capabilities can we not fall behind in the next-generation technological competition.

At least now, it is far from the time for China’s panel industry to be proud. Today, Japanese and Korean manufacturers want to concoct the cycle of “getting through the dividends of old technologies – selling at high prices – developing new technologies” more than ten years ago, but today’s Chinese panel industry is no longer a novice who has just entered the market. As mentioned above, Chinese manufacturers already have the capital to compete with Japanese and Korean companies, and it is impossible for Japanese and Korean manufacturers to step away from China.