In sharp contrast to the deteriorating situation of Japan's display industry, as my country's many high-generation LCD panel production lines have been put into production, my country has become an important panel production base in the world. However, just as my country's display industry is accelerating and reaching the global peak, Hon Hai's acquisition of Sharp has made it more difficult for my country in the "last mile". Under such circumstances, how should our country face new challenges?
In recent years, my country's LCD panel industry has risen rapidly. By 2016, TFT-LCD panel shipments ranked second in the world by area, with a global market share of more than 20%, and the overall industry scale exceeded 300 billion yuan, basically reversing the unfavorable situation of TV panels relying on imports. With the vigorous deployment of major panel manufacturers such as BOE, CSOT and CEC Panda, mainland China's TFT-LCD production capacity is expected to overtake South Korea and become the world's largest in 2018 to 2019. However, with the rapid development of my country's flat panel display industry today, the global panel industry pattern has quietly undergone tremendous changes.
The strategy of Korean manufacturers has changed, and LCD technology faces severe challenges
From the perspective of display technology, Korean manufacturers have made great efforts to fully deploy OLED. After Samsung sells a 5th-generation line to my country Truly, it is expected to close half of the 7th-generation LCD production lines at its Tangjing factory in South Korea in October, and the last 6th-generation LCD production line at the Cheonan factory will also be closed at a scheduled time. As a result, Samsung Display's LCD production lines will only have half of the 7th-generation lines in Tangjing Factory, two 8th-generation lines and the 8th-generation line in Suzhou, my country. Although these production lines are used to produce TV panels, they will gradually be converted to OLED production lines in the future. Samsung Display has gradually closed most of its LCD production lines with low production efficiency, and its original intention is to gradually withdraw from the LCD market.
In fact, OLED panels have been developing rapidly in recent years, especially in the small and medium-sized markets, posing severe challenges to LCD panels. According to IHS data, although LCD screen technology is still the dominant technology in the display industry, AMOLED screen shipments in 2016 will increase by 40% compared with the same period last year, reaching 395 million units, and its operating income is also expected to increase by 25%.
For the mobile phone OLED panel market, Qunzhi Consulting also gave good expectations. According to Qunzhi Consulting data, Samsung Display shipped more than 80 million units in the first quarter of this year, ranking first in the world, with a year-on-year growth of more than 50%. Of the more than 50 new smartphone models released in the first quarter, nearly one-third used AMOLED screens. Last year, the most shipped LCD mobile phone panels were BOE’s total shipments, but this year it was Samsung’s AMOLED panels.
In the large-size OLED market, South Korea's LGD is also accelerating its layout. Currently, LGD has invested in two 8.5-generation OLED production lines and will put another 8.5-generation line into production in the first half of next year. By then, the production capacity of OLED TVs will reach 1.5 million to 2 million units. In addition, LGD has further investment plans for OLED panel production lines.
South Korean manufacturers are accelerating the deployment of OLED display technology and should not be underestimated. Nowadays, our country's panel manufacturers have invested heavily in building LCD panel production lines. Our country's panel manufacturers should also attach great importance to the layout of new display technologies. During the window period for technological innovation in the panel industry, high-end technology layout is also very important.
Hon Hai’s acquisition of Sharp will reshape the global industrial landscape
From the perspective of the manufacturer landscape, Hon Hai’s acquisition of Sharp may bring changes to the entire display industry landscape. Sharp has huge panel production capacity and technology patents. The acquisition of Sharp's Hon Hai will produce a strong chemical reaction and the industrial chain will be more complete, further enhancing its overall competitiveness and bringing it closer to the world's top companies, especially Samsung. In the field of TV panels, with the mass production of high-generation lines in 2017, Hon Hai's production capacity will be greatly improved, and its market share will reach 20%, further narrowing the gap with Samsung, LG, and BOE.
In the small-size field, Hon Hai can directly obtain Sharp's existing LTPS production capacity, and it will further lay out its LTPS production lines, which will inevitably promote the improvement of the entire LTPS production capacity. It is worth noting that OLED panels have been positioned by Hon Hai as the pillar of Sharp's reconstruction, and it plans to achieve OLED mass production in 2018. To this end, Hon Hai plans to invest 200 billion yen in OLED panels, hoping to catch up with Korean manufacturers such as Samsung with large-scale investment.
Today, the global display industry is in a stage of competition. The alliance of panel manufacturers and the rapid development of new display technologies have made my country's panel manufacturers face greater challenges. What is gratifying is that in the field of small and medium-sized panels, manufacturers such as BOE, CSOT, and Tianma continue to accelerate the layout of LTPS production lines. Some AMOLED panels such as Hehui Optoelectronics and Tianma have begun to be shipped and are used in mobile phones; in the field of large-size panels, my country's BOE has already laid out its 10.5-generation LCD panel production line, and CSOT is expected to follow suit. In the field of large-size OLED, CSOT has been conducting research and development on printed OLED technology. If real breakthroughs can be achieved in R&D and mass production, then my country will gain a say in the field of large-size OLED and break LGD's monopoly in this field.
Expert opinion:
Hu Chunming, deputy secretary-general of the LCD branch of China Optics and Optoelectronics Industry Association: The development of the display industry should focus on deploying innovation along the industrial chain
Currently, the display industry is facing great challenges, such as overcapacity, technology substitution, etc., but I believe that challenges also mean opportunities. Although products such as flexible displays, VR displays, and smart mirrors are not very mature yet, these new supplies are constantly emerging. These are one of the most important development opportunities facing the display industry. my country's display industry already has the leading foundation and conditions. First of all, from a market perspective, my country is the largest consumer market for electronic information products in the world and the most important manufacturing base; secondly, from a technical perspective, my country has entered the internationally advanced level in terms of accumulation of TFT processes; finally, from an industrial chain perspective, my country has begun to cultivate a number of upstream supporting enterprises with core independent intellectual property rights, and has also partially achieved material and equipment matching.
However, in the face of these opportunities, there are still certain constraints for my country's display industry to develop rapidly. First, the collaborative innovation model of our industry chain with panels as the backbone of enterprises has not been established. Second, the government’s investment needs to be strengthened and sustained.
The so-called collaborative innovation is to deploy the innovation chain around the industrial chain, including upstream materials, midstream device panels, and downstream terminal applications. As of 2015, my country's investment in the display industry was close to 500 billion yuan, of which more than 400 billion yuan was panel investment, and the investment in upstream materials and equipment was less than 100 billion yuan. From this data, it can be seen that our country's industrial chain is not strong enough, so the next major task for our country is to deploy innovation around the industrial chain. In addition, our country must also arrange a capital chain around the innovation chain. In 2015, there were 22 panel production lines in mass production in my country. In the future, whether it is the direction of government funds or the innovation and development funds of enterprises, it must be in panel technology, with panel backbone enterprises as the core, and extending to upstream materials and equipment.
Che Hanshu, Vice President of China Star Optoelectronics: "Four Steps" strategic route to cope with the new pattern of the display industry
Although LCD panels are a highly technology-intensive and capital-intensive industry, manufacturers have remained enthusiastic about investing in and building factories in recent years, which has made my country's large-size LCD panel market stand out and flourish. Hon Hai's acquisition of Sharp is the biggest news in the display industry this year. This acquisition will have a certain impact on my country's panel industry. After Hon Hai acquires Sharp, it will mass-produce OLED before 2018. Although some people think that Sharp has no OLED accumulation before and Sharp is almost an old man and has nothing to fear, but I don't think so. Japanese consumer electronics companies, including Sharp, have encountered huge difficulties in recent years, but Sharp's technical strength cannot be underestimated, and its latecomer momentum is still very strong. Sharp owns the key technologies and patents of LTPS and IGZO. When OLED was not yet popular, LTPS and IGZO were the most popular technologies. It could not only occupy the strategic high ground in the supply chain of important customers such as Apple, but also make some technical reserves for OLED. After the acquisition of Sharp, I think Hon Hai’s production capacity above the 5.5-generation line will increase to 20% this year, reopening the gap with BOE and being the same as second-placed Samsung. How many.
Under such circumstances, CSOT will firmly develop in accordance with the existing "four-step strategy". CSOT should form advantages in efficiency, production capacity, yield, operations, products, etc., strengthen its strength in developing new applications, patent operations, including participation in standard formulation, and ultimately achieve the practical layout of industrial chain integration and ecological integration. This is CSOT's strategic development path. China Star Optoelectronics’ next five-year plan includes development routes for AMOLED and flexible displays.
In the future, South Korea, Japan and Taiwan will avoid direct competition with us, that is, they will not compete head-on in the 8.5-generation TFT-LCD field, but will develop in other fields. However, despite the strong development momentum of LCD panels in our country, it is okay to rely on group operations, but the individual strength is not strong. The flat panel display industry has indeed given us huge opportunities, but it also faces very big challenges. my country's display panel industry has both challenges and opportunities. Now we are only gradually becoming a global leader in "big", and the next step is to take a step further in "strong".
Zhang Hong from Qunzhi Consulting: The global panel industry has formed a new "iron triangle" pattern
Hon Hai was originally an OEM for TV business, but the current scale is not very large. In 2015, the market share of Hon Hai's TV OEM business was about 11%, and the customer structure is relatively simple, with almost 60% of the TV OEM business being OEM for Sony. After Hon Hai acquires Sharp, it will integrate Sharp's electronic components business group, which is bound to have a profound impact on Hon Hai Group, and its strength will be significantly improved.
First of all, from the perspective of operating income, the operating income of Hon Hai and Sharp reached US$163 billion in 2015, ranking among the top three high-tech companies in the world, second only to Apple and Samsung.
Secondly, from the perspective of large-size panel layout, Innolux focuses on products ranging from 40 inches to 65 inches, while Sharp basically focuses on products above 60 inches. After Hon Hai acquires Sharp, it will form an effective complement in the field of LCD TV panels, making its entire product line more complete, and customer resources can be further integrated and optimized. It is worth noting that Sharp has always had close cooperation with China Electronics, and Hon Hai Group is expected to further strengthen cooperation with China Electronics in the future.
Finally, in the small-size panel market, Hon Hai has plans in Taiwan, mainland China and Japan. Judging from the panel supply chain structure of the world's mainstream mobile phone brand manufacturers, Sharp mainly supplies world-renowned brand manufacturers such as OPPO, Xiaomi, Meizu, ZTE, and Le TV. Innolux mainly supplies Huawei, ZTE, and TCL brands. After Hon Hai's acquisition of Sharp, it will help Hon Hai's mobile phone OEM customers further grow.
The current global display industry presents a "three countries and four regions" pattern. From the perspective of turnover analysis, the turnover of global mainstream panel manufacturers in 2014 and 2015 has exceeded the 100 billion U.S. dollar mark, and the turnover in mainland China has increased significantly, indicating that the display industry in mainland China has experienced a rapid growth process in recent years, and its competitiveness and influence have gradually increased. In terms of area, the shipment area of mainstream panel manufacturers in mainland China increased significantly by 44% year-on-year in 2015, while the shipment area of Japan and Taiwan also showed a year-on-year decline. A new iron triangle structure of mainland China, South Korea, and Taiwan will be formed. Competition in the entire display industry will be the competition of the strong, and the competition will inevitably become more intense.
ANNA