Shows that major manufacturers are seizing the

MLED (Mini/Micro LED) is ushering in an explosive period. While the demand for LED chips has increased significantly, challenges have also arisen. In order to stabilize the supply of MLED chips and ensure supply, some major display manufacturers have begun to expand their recruitment efforts.

Recently, BOE and Hisense Video have invested heavily in LED chip manufacturers Huacan Optoelectronics and Qianzhao Optoelectronics. Previously, TCL CSOT and Sanan Optoelectronics had in-depth cooperation, and panel manufacturers Innolux and AUO in Taiwan have also entered LED manufacturer Fucai through private equity. Major display manufacturers have seized the "core" opportunity, and the battle for the MLED market has begun.

The industry staged a drama of grabbing "chips"

In the current relatively sluggish display market, MLED has high expectations. TrendForce, a market research institution, predicts that the compound annual growth rate of Mini/Micro LED display applications will be 18%, and the scale is expected to reach 188.6 billion yuan in 2030; the compound annual growth rate of MLED backlight applications will be as high as 42%, and the market size in 2030 is expected to reach 121.8 billion yuan. Among them, the Micro LED market will explode from 2023, and the market size will reach US$542 million by 2024, expanding 28 times in two years.

IT, TV and automotive are currently the main application fields of new Mini LED display products, and the demand for Mini LED backlights in wearable, tablet and other products is also gradually increasing.Large, if you add LED direct display, LED lighting and future Micro LED market demand, the demand for their common core luminescent material - LED chips will be huge. Currently, LED chip manufacturers in mainland China and Taiwan, such as Sanan Optoelectronics, Qianzhao Optoelectronics, Huacan Optoelectronics, Jucan, Zhaochi, Silan Mingxin, etc., are increasing chip production capacity.

However, as the demand for LED chips increases, challenges also arise. Chen Xuecheng, senior analyst of display technology at Sigmaintell, told reporters that although Mini LED technology is relatively mature now, Micro LED is still in the early stage of the technology life cycle, and there are still many technical bottlenecks in commercialization. Therefore, MLED cannot ensure yield.

In this context, LED chips cannot satisfy the appetite of all companies. LED chips are the most important link in the MLED industry chain, and are very critical for enterprise cost optimization, technology research and development, and product competitiveness improvement. In order to stabilize the supply of MLED chips and ensure supply, some major display manufacturers have begun to grab "cores".

Not long ago, BOE planned to subscribe for A-shares issued by Huacan Optoelectronics to specific targets with self-raised funds of no more than 2.1 billion yuan. After the subscription is completed, it will become the company's largest shareholder with a shareholding ratio of 23.08%, thus achieving control of Huacan Optoelectronics. BOE pointed out that through this strategic investment in Huacan Optoelectronics, the company will achieveThe integration of the core links of the MLED industry chain, and then the integration of its own advantageous resources accumulated in the fields of packaging and application, completely open up the entire industry chain of substrate, epitaxy, chip, packaging and application.

In fact, this is not the first time BOE has made a move on the MLED chip side. In March 2022, Tianjin BOE Innovation Investment Co., Ltd., which is wholly owned by BOE, planned to participate in the private placement subscription of Qianzhao Optoelectronics for 468 million yuan, but ultimately failed. In the end, Qianzhao Optoelectronics was successfully purchased by Hisense Vision. Since then, Hisense Video has continued to increase its holdings in Qianzhao Optoelectronics stocks. So far, Hisense Video holds a total of 181 million shares of Qianzhao Optoelectronics, accounting for 20.00% of the company's total share capital, with a cumulative cost of more than 1.4 billion yuan. A person from Hisense Video Securities Department pointed out that MLED is a very important technology path in display and is also the company’s focus in the future.

Hisense Video and BOE have successively invested heavily in upstream LED chip companies Qianzhao Optoelectronics and Huacan Optoelectronics, which is considered by the industry to be a sign that downstream display companies are deploying MLED chips upstream. But long before BOE and Hisense, TCL had already targeted the LED chip industry. In 2020, TCL CSOT and Sanan Optoelectronics, which ranks first in domestic LED chip shipments, jointly established Xinying Display Technology. Its Micro LED technology research and development project has officially started on January 4, 2022.

Huacan Optoelectronics, Qianzhao Optoelectronics, and Sanan Optoelectronics are all leading chip companies in the upstream of the LED industry chain. rootAccording to the 2021 China LED chip production capacity data compiled by the China Business Industry Research Institute, the LED chip production capacity of Sanan Optoelectronics, Huacan Optoelectronics and Qianzhao Optoelectronics has exceeded half of China's total production capacity, accounting for 31.68%, 14.28% and 10.60% respectively. So far, the three major LED chip factories with the highest production capacity have all tied up with display manufacturers to join the MLED battle.

Western Securities Research Report pointed out that in the past year, panel manufacturers have made similar moves to participate in equity stakes and bind MLED-related chip manufacturers. Panel manufacturers have chosen to directly tie up with LED chip manufacturers, which is very helpful in accelerating the establishment of a complete MLED technology system and ecology.

In addition, Chen Xuecheng also pointed out that major display manufacturers are carrying out vertical integration of the industry chain, which is also preparing for companies to improve their competitiveness in the MLED field in the medium and long term.

Competing for the right to speak in MLED

In recent years, the MLED market has been crowded with players. In addition to mainland China's layout in the MLED domain, Taiwan, South Korea, the United States, Japan, etc. are also vying for the right to speak in MLED. In particular, the new display camp in Taiwan, China, is making great efforts to develop the MLED industry. The LED and LCD industries in Taiwan, China, developed relatively early, and related products and sales once led the world. However, in recent years, they have been gradually surpassed by mainland China. Taiwanese manufacturers hope to compete with global giants through complete vertical technology integration. In terms of MLED, ChinaThe relevant industrial technology and equipment in Taiwan are not inferior to those in mainland China, and the industrial chain is also very complete.

Nowadays, BOE and TCL CSOT have further formed the two main MLED camps in mainland China by investing in Huacan and joining forces with Sanan respectively, which has increased the pressure on display panel manufacturers in Taiwan. Therefore, Taiwanese manufacturers are not willing to lag behind. In March 2022, Taiwan’s panel “double tigers” AUO and Innolux both entered Taiwan’s major LED manufacturer Fucai Holdings through private placements. It is reported that in the future, AUO and its subsidiaries Kangli Investment and Longli Investment are expected to hold 17.31% of Fucai Holdings, while Innolux and its subsidiary Qunyi hold a total shareholding ratio of approximately 0.49%. As a result, the MLED camp in Taiwan, China, has also begun to form, or it may form a three-legged situation with the two major MLED camps in mainland China.

The relevant person in charge of Fucai pointed out that Fucai and Epistar are responsible for the production of high-end LED chips, and Nitron is responsible for mass transfers. Panel manufacturers such as AUO and Innolux are closely connected in the middle. After MLED is commercialized in the future, Taiwanese manufacturers will still have greater opportunities and competitiveness.

Liu Zhaojun, executive secretary-general of the Guangdong Micro LED Micro Display Industry Technology Innovation Alliance, believes that mainland China has invested heavily in promoting MLED industrialization. According to statistics, my country's investment in the MLED industry has exceeded 60 billion yuan. With strong financial and local policy support from display companies in mainland China, current related technologiesand products are in the leading position in the industry, and many accessories have also achieved a high degree of localization, giving them obvious competitive advantages. Based on the continuous integration and improvement of the industrial chain, it is expected to lead the world in the MLED field.

Chen Xuecheng pointed out that the impact of the formation of industrial camps on the MLED industry is mainly reflected in two aspects: on the one hand, resource integration is conducive to realizing complementary industrial resources and enhancing the competitiveness of enterprises; on the other hand, it is conducive to promoting the maturity of the MLED industry. "Driven by the trend of MLED technology, panel manufacturers need to have more in-depth cooperation and technology research and development with the LED upstream industry chain, and the formation of the camp will further promote the rapid progress of MLED technology, while driving the rapid decline of MLED product costs and rapid increase in penetration rate." He said.

With regard to the vertical and in-depth layout of display companies and cross-border horizontal integration, the industry generally believes that this may become the development trend of the new display industry in the future. In the future, the development of the LED display industry may usher in profound changes. The traditional division concept of upstream, middle and downstream may no longer exist. It is more likely that industry giants will vertically integrate the upper, middle and lower industries into product companies. With the deepening of cooperation, it will help stabilize the LED display industry chain, strengthen product quality, accelerate the sinking of the supply chain, reduce costs, and realize the batch application of new MLED display products as soon as possible.