The lack of core technology leads to panel dependence on imports

China is the world's largest producer of televisions, but China's TV manufacturers do not have core technologies. During the period of flat-panel TV, the development of LCD panel industry in China is seriously lagging behind. LCD panels, which account for more than 60% of the cost of TV sets, mostly rely on imports. The production of large-size LCD panels is completely in the hands of Japanese and Korean companies.

The core technology is subject to people, the LCD panel relies on imports, and the products have no features, which makes Chinese TV manufacturers only seek breakthroughs in price, which further leads to the meager profits of China's TV manufacturing industry.

In 2003, SVA invested huge sums of money to introduce the fifth generation line, and it is expected to break through in the LCD panel industry. “The first LCD panel production line in China” was the determination and hope of the transformation and upgrading of SVA in the past. It took the outdated CRT pure flat panel and launched the 5th generation line of TFT-LCD panel. The action was widely praised by the industry.

However, LCD TV technology is developing rapidly, LCD panels are updated quickly, and technology is backward, resulting in products that are not competitive. If their TV products are slow-moving, it will lead to a large supply of LCD panels, and the impact of high cost of imported materials will be more obvious. More, the more serious the loss. The continuous upgrading is a loss that is higher than one year in a year. In the end, in the rumors that SVA upgraded the TFT production line in 2008, the annual loss has reached a staggering number of billions of yuan.

Drawing on the lessons learned from SVA, which did not have the relevant technology, BOE acquired the TFT-LCD (Thin Film Transistor Liquid Crystal Display Device) business of Hyundai Display Technology Co., Ltd. under Hyundai Semiconductor Co., Ltd. for US$380 million, and then spent 1.05 billion yuan. Hong Kong dollar acquired 26.36% of the shares of TPV Technology Co., Ltd. listed in Hong Kong and Singapore, becoming the largest shareholder of TPV Technology and mastering the related technologies of LCD panel production.

Since the first half of 2009, with the gradual increase in sales of flat-panel TVs in China, the demand for panels has grown rapidly, leading to an increase in the price of LCD panels. Japanese and Korean manufacturers such as LG, Samsung, and Sharp have focused their attention on China. This has also led to the switch to various panel manufacturers to cooperate in the production and construction of factories in China, as well as domestic color TV companies have also launched a new competition for panel manufacturing projects.

However, China's LCD panel industry faces another difficulty: the upstream raw material field of LCD panels is still controlled by foreign companies such as Japan and South Korea. The Chinese companies face more than just the weakness of upstream panel companies, but also from raw materials. The entire Chinese flat panel display industry chain is weak.

In 2008, China's demand for glass substrates has reached 170 million square meters. According to research firm DisplaySearch, by 2013, China's demand for glass substrates will increase by nearly 7 times compared with 2008. The glass substrate is one of the key basic materials for the liquid crystal panel industry, accounting for 17% of the total cost of the liquid crystal panel, but unfortunately, such a huge market can still be controlled by others.

In addition to glass substrates, the second-ranked polarizer accounts for about 11% of the manufacturing cost of TFT-LCD panel materials. It is also a relatively wide-ranging capacity distribution, but even so, local companies still lag behind abroad. In the fourth quarter of 2008, LG Chem's share of the global polarizer market was 30%. In 2009, its market share reached 45%. It is expected to exceed 50% in 2012. Japanese companies have a slightly weaker share of Korean companies, and our domestic companies can only provide a small number of low-end products in the field of polarizer production.

Domestic industry analysts said: In addition to the high local matching rate of backlight modules, other upstream supporting products of the domestic LCD panel industry must rely on imports.

The great value behind the investment in LCD panel industry

A high-generation LCD panel production line can drive the accelerated accumulation of upstream and downstream related industries such as glass substrates, color filters, polarizers, backlights, liquid crystal modules, and LCD TVs, forming an annual output value of more than 100 billion yuan. The flat panel displays the industrial cluster.

Especially in China's color TV market, in the face of the huge LCD TV market in China in the future, once the project is completed and put into production, investors can naturally obtain higher returns. Behind this 5 billion is the industry value chain of hundreds of billions.

Looking at the well-known color TV companies that have successfully succeeded in internationalization, they all master the high-end panel mass production technology, which is the largest part of the value of the industry chain. Whoever controls the LCD TV industry chain ability can gain high growth and high returns over the industry level.

LCD panels and LED chips have always been the two largest cost expenses for color TVs, accounting for more than 70% of the total cost of the whole machine. Since the liquid crystal panel has been controlled by foreign companies such as Japan and South Korea, as a domestic color TV manufacturer of a downstream enterprise, it is sometimes necessary to sell the panel and even raise the price. Zhang Yu, the director of BOE public relations, said: "Nokia, Apple and other big customers still have to bear high-value panels. Chinese companies are getting more than 10% higher prices than Apple."

Yang Xuexue, director of the Electronics Industry Division of the Guangdong Provincial Economic and Information Technology Commission, said that before the introduction of the module project, Guangdong's LCD TV manufacturing struggled in 15% of the value-added space, "a 3,500 yuan LCD TV, The value we create is only about 900 yuan."

According to statistics, in recent years, Guangdong has imported more than 1 billion LCD panels each year, with a total value of more than 10 billion US dollars. Liquid crystal display panels have become an important component after integrated circuits and microelectronics.

“Chinese color TV companies cannot produce LCD panels, and foreign-produced panels are often the first to supply sales of their own companies.” Industry experts said that if the LCD flat panel display industry is not developed, the Guangdong TV industry, which has been developed after years of hard work, will be re-emerged as Downstream processing and assembly workshops in the upstream LCD panel factory may even shift production or shrink.

It has undoubtedly the desire of all domestic TV manufacturers to have their own LCD panel production line and get rid of the monopoly of foreign companies in the panel.

It is understood that in addition to the BOE Beijing 8th Generation Line Project, Kunshan Longfei and Shenzhen Huaxing Optoelectronics, respectively, with the help of rich industry experience and certain independent technical strength, industrial chain support, has been approved to be under construction. In addition, five projects including Hefei Jingdong Line, Nanjing Sharp Line, Suzhou Samsung Line, Guangzhou LG Line and Chengdu Foxcon Line are awaiting approval, among which Suzhou Samsung, Guangzhou LG and Chengdu Chimei are expected to be approved.

The production of LCD panel production lines can form a flat panel display industry cluster with an annual output value of more than 100 billion yuan. Home appliance companies in China can get rid of the monopoly of LCD panels of foreign-funded enterprises, reduce the production cost of TV sets, and improve corporate profits. In local governments, they can also drive economic development and optimize industrial structure.

There is such a huge value behind it, and it is no wonder that local governments and TV manufacturers are enthusiastic about the construction of LCD panel production lines.

China's mainland demand for LCD panels is strong

2009 is a year of ups and downs in China's color TV market. Due to the financial crisis, the color TV industry faces a series of challenges such as shortage of upstream resources, slowing demand, and sluggish domestic and foreign sales. Just when the entire industry encountered bottlenecks in development, with the help of a series of economic pull policies issued by the Chinese government, the color TV industry was able to break through the predicament and set sail again in 2009.

According to data from Aowei Consulting (AVC), the overall size of the color TV retail market in 2009 was 34.3 million units, down 3.7% year-on-year. Among them, the annual retail volume of LCD TVs was 23.25 million units, an annual increase of 98%; plasma TVs 1.72 million Taiwan (annual increase of 5%); CRT TV 9.34 million units (annual decline -58%). Of particular concern is the rapid growth of flat-panel TVs, with an annual sales share of 73%, double the proportion in 2008.

In the second half of 2009, China's color TV market relied on the recovery of the economic environment, the growth of flat demand, and the support of national policies, which made it get rid of the stagnant growth and showed a high-speed growth trend for the development of the color TV industry in 2010. Laid a good market foundation.

According to Aowei Consulting (AVC) forecast, the overall domestic sales of color TV will reach 44.31 million units in 2010, and the domestic sales growth rate will reach 12%, including 37.73 million retail markets, 2.71 million B2B markets, and 3.87 million inventory/prototype/new channels. station. The core factor for the growth of the color TV industry in 2010 should be attributed to the expansion of sales specifications for flat products. According to AVC Consulting (AVC), the domestic sales of flat-panel TVs in 2010 was 39.76 million units, accounting for 90% of the total color TVs, with an annual increase of 36%. There are 33.59 million retail markets, 2.61 million B2B markets, and 3.55 million new stocks/samples/new channels.

According to the latest forecast data from DisplaySearch, the demand for LCD TV market in 2009 reached 127 million units, an increase of 21% from 105 million units in 2008. It is estimated that the global sales of LCD TVs will reach 188 million units in 2012, with an average annual growth rate of 15%. The average annual growth rate of the Chinese market is as high as 29%, indicating that the future market sales will maintain rapid growth and demand is huge.

Zhongyikang Times Market Research Co., Ltd. estimates that the size of China's color TV market will reach 41.12 million units in 2010, of which 34.8 million LCD TVs will account for about 85% of domestic color TV sales. In 2010, it became the year of LCD TV in China, and LCD TV will completely dominate the color TV market.

Because China's LCD TV panels mainly rely on imports, in 2008, China's TV panels imported about 12.8 million pieces. In the same year, China's Monitor panel demand was 34.91 million pieces. The domestic four factories can only supply one-third, and the import demand is 13 million pieces. NB panels require 8.8 million pieces, because the technical problems are almost entirely dependent on imports, so it is estimated that China imported 34.6 million panels in 2008.

In 2009, during the global economic downturn, the demand for LCD panels in China increased sharply. Only TV panels reached 20 million. It is expected to increase to 28 million in 2010 and 35 million in 2011. Even so, the cumulative LCD-TV penetration rate in 2011 is less than 30%. The annual demand for LCD panels in China, including exports, is about 50 million.

At present, although the demand for LCD-TV in mainland China is still lower than that in the Americas and Europe, it has the fastest growth, with an average annual growth rate of 30%, especially in the first quarter of 2009, which is 70%. The demand in the first quarter is the same season in 2007. three times. And mainland China is the world's major production base for TV, Monitor, and NB. Not only does it have domestic demand, but also processing and export demand, China will become the largest demand area for LCD panels.

Hanri LCD panel expansion creates pressure on the platform

On April 16, 2010, Sharp, Japan's largest LCD panel manufacturer, announced that it will build a monthly production capacity of the 10th generation (glass substrate size 2,880 x 3,130mm) LCD panel factory in Osaka City in response to the strong demand for LCD panels. In July this year, it doubled to 72,000 pieces.

Sharp's world-first 10th generation plant was launched in October 2009. The current monthly production volume is 36,000 pieces. The latest development of "UV2A" panel production technology can produce high contrast and energy saving 40. Inch (or above) panel. After the expansion, the panel production system required for 15.6 million (40-inch) LCD TVs will be supplied each year.

Panasonic also announced on April 12, 2010 that the demand for LCD TVs at home and abroad has increased rapidly. Therefore, the new LCD panel factory (Himeji Factory), which was originally planned to be mass-produced in July this year, has been started three days in advance. Production, initial monthly production capacity of 405,000 units (converted to 32 inches, the same below).

On June 3, Panasonic announced that the Himeji Plant will double its production capacity to 810,000 units in February 2011. Panasonic's other LCD panel factory (Maomao Plant) is currently mass-produced at a scale of 600,000 units per month. Therefore, after the capacity of the Himeji Plant will double next year, the monthly capacity of Panasonic's LCD panels will increase to 1.41 million units. It is 2.3 times the current production capacity.

According to Samsung's investment plan for 2010, Samsung will invest 18 trillion won to expand production equipment, of which 11 trillion won is used to increase semiconductor manufacturing equipment and 5 trillion won to expand LCD panel production capacity. In addition, Samsung will invest 8 trillion won in new technology research and development.

Samsung insiders said that this is the largest single-year investment plan in Samsung's history. After this round of investment, Samsung Electronics will realize large-scale mass production of 30-nanometer DRAM, a fourth 8-generation LCD panel production line capable of producing 70,000 pieces per month, and the largest AMOLED production line in the world. With the start of the new production line, Samsung expects to hire 10,000 new employees in 2010, including 3,000 semiconductor businesses and 4,000 LCD monitors.

Samsung also expects that the market demand for large-size LCD TV panels will continue to increase next year in the investment announcement. Therefore, Samsung will invest 2.5 trillion won to build a new 8th generation LCD panel production line, and plans to build a fourth eighth-generation LCD panel production line. In 2010, Samsung’s total investment in LCD will reach 5 Trillion won.

In terms of LEDs, Japanese manufacturers such as Mitsubishi, Sharp, Toyota and Toshiba expanded their LED production capacity in June. Mitsubishi Chemical plans to invest 7 billion yen to expand its production capacity of the original LED production line. It is expected that by 2015, LED production capacity will increase to six times. Sharp announced that it will mass produce LCD TV backlights and blue LED chips for LED lighting at the Fukuyama Plant. By 2011, the annual production capacity of blue LED chips in the two factories in Sharp Fushan and Sanyuan can reach 5 billion. Toyota's global LED giant plans to double its annual LED production capacity by 2012, from the current 5 billion to 10 billion. Toshiba said it will mass produce LED chips at its Kitakyushu plant in 2011.

In terms of OLED panels, according to Reuters in April, LG said they will invest 250 billion won (about 226 million US dollars) to expand the production capacity of OLED production lines. They are investing in an OLED production line and are expected to start production in the third quarter. The new investment will make their OLED production capacity in the second half of the current three times. The investment is also part of LG's plans to increase production of OLED panels, electronic paper and solar cells.

Samsung, a South Korean company, also said in April that it will invest 86 million euros to build a 5.5-generation OLED panel factory, which is expected to be officially put into operation in January 2011. The industry's OLED panel substrate size is 1300 x 1500mm, which will cut small-sized OLED panels, mainly used in portable devices such as notebook computers (NB), portable audio and video (PMP), MID, and tablet computers. The industry's optimal cutting size is 21.5 inches and 32 inches, and it is expected that small and medium size OLED TV panels will also be available in the future.

The global panel industry is mainly concentrated in Japan, South Korea, Taiwan and China in Asia. Among them, Japan is the most advanced technology, followed by South Korea, with the largest production capacity in South Korea, and Taiwan has a cost advantage over Japan. The demand market is the largest in mainland China.

Because of the lack of orders for the world's LCD panels and the large fixed investment, several panel makers in Taiwan not only suffered serious losses, but also had a heavy financial burden. Now that the global economic recovery and the sharp increase in demand in the Chinese market, Japanese and Korean companies have expanded their production capacity and seized the global market share. This is undoubtedly a huge pressure on Taiwan's panel companies.

Taiwan panel enterprises layout mainland search for development

At the end of December 2009, Taiwan held an “inter-department” meeting to conduct final research on the release of LCD panels and wafers to the mainland. The final document can be reached as soon as January 2010, and will not be new once released. The restrictions on the layout of the mainland market will certainly follow the "leading technology" and "based on Taiwan investment" principle.

On February 10, 2010, the Taiwanese economic department that insisted on implementing the policy of years of technical blockade announced that it would conditionally open up the production line of LCD panels of the 6th generation or above on the island to invest in the mainland. The new regulations allow Taiwanese companies to set up three production lines of more than 6 generations on the mainland, but they must have a technological gap with their own factories in Taiwan for one generation.

Although there are still technical limitations, it is undoubtedly an exciting news than the previous technical blockade.

AU Optronics Co., Ltd. is the No. 1 and the world's third largest manufacturer of thin film liquid crystal displays (TFT-LCDs). The company's products have a global market share of 20.9%. In 2009, the company achieved a turnover of US$11.8 billion.

On April 21, 2010, AUO's LED factory Lunda plans to expand production four times this year, and set up a production base in Suzhou to establish a “one-stop” operation mode from upstream epitaxy, midstream wafers, downstream packaging to application products.

At present, Ronda produces 30,000 wafers per month in Taiwan, which is expected to increase four times to 130,000 at the end of this year, and 60 to 70 MOCVD machines. In order to be close to the Backlight Module factory, Ronda will also set up a factory in Suzhou. The factory covers an area of ​​240,000 square meters. It is expected to start in the second quarter and mass production in the first quarter of next year. There will be 50 MOCVD machines at the time. A large demand for backlights and LED lighting.

On April 29, AUO held a resolution of the board of directors to establish a LCD TV panel back-end module factory with Haier Group in Haier Industrial Park, Qingdao, Shandong Province; and TCL Ace Electric Co., Ltd., a subsidiary of TCL Multimedia Technology Holdings Co., Ltd. Huizhou Co., Ltd. established a LCD TV panel rear module factory in a joint venture mode in Zhongkai Development Zone, Huizhou City, Guangdong Province.

In cooperation with Haier Group, a joint venture company was established. The joint venture company will initially be named Qingdao Haier Photoelectric Co., Ltd. The company's registered capital is set at US$7 million, Haier holds 70%, and AUO holds 30%. After the investment case is approved by the relevant competent authorities, it will be the back module factory of AUO and the local brands after closely arranging the East China, South China and Great Western regions.

In early 2010, AUO signed an agreement with Hefei Economic and Technological Development Zone to invest in 32-inch LCD panels in Hefei.

Module factory and LCD TV project. The first phase of the project has a fixed asset investment of 1.05 billion yuan, a registered capital of 50 million US dollars, an area of ​​500 mu, a building area of ​​250,000 square meters, a construction scale of 400,000 sets/month of liquid crystal display modules, TV assembly and backlight modules. Upstream and downstream integrated production bases including spare parts. The project started the construction of the pile foundation in May 2010. It is planned to be completed and put into operation in May 2011. It is expected that the output value will reach 6.5 billion yuan in 2011 and the output value in 2013 will be 19 billion yuan.

On March 19 this year, Taiwan panel maker Chi Mei Optoelectronics, Hon Hai's subsidiary Innolux and Tongbao Optoelectronics "three in one" and "Xinqimei" were formally established.

In April, New Chimei’s consolidated revenue reached US$1.59 billion, a 30% quarter-on-quarter increase and a 287% year-on-year increase. In spite of the trend, the company decided to issue 700 million shares of cash by public or private placement, or increase the capital to issue overseas depositary receipts (GDR). Novelty currently uses touch panels and tempered glass as its main production projects.

Xinqimei was only one week after its establishment. CEO Duan Xingjian said that they are considering the construction of LCD panel factory in the Mainland. However, the details have not been disclosed, but they said that they will submit an application to the Taiwan regulatory authorities as soon as possible.

Duan Xingcheng previously said that although Chi Mei has a lot of high-end technology, any construction projects will not be discussed before the merger. At present, the merged new Chi Mei is clearly accelerating the pace of competition in the mainland market. After all, competitor AUO has already taken its lead.

Guo Taiming, chairman of Hon Hai Group, also said that the combined group new panel company will definitely build a factory in the mainland.

Through a series of actions by Taiwan's two major LCD panel giants and mainland investment, it can be found that the intention of Taiwan's panel makers to layout the mainland is very clear. Taiwan panel makers have long recognized the importance of the mainland market. Expressing the intention to invest and build factories in the mainland, and calling on relevant departments of Taiwan to loosen the policy as soon as possible. Now Taiwan's economic sector has finally relaxed relevant policies, including foreign investment banks such as Morgan Stanley and Citigroup, all of which believe that this move is conducive to the common development of the LCD panel industry in China and Taiwan.

The industry also generally believes that the mainland and Japan and South Korea panel companies have a brand competition relationship, the cross-strait panel industry is the real advantage complement, one party out of technology, one party out of funds and underwriting, will be a big opportunity for Taiwan panel factory, can continue to expand the city The ratio is to compete with the Japanese and Korean chambers. The mainland TV manufacturers can also master relevant core technologies, enhance brand competitiveness, increase corporate profits, and achieve cross-strait win-win.

ECFA brings cross-strait panel industry anti-Korean new opportunity

On June 29, 2010, Chen Yunlin, President of the Continental Sea Association, and Jiang Bingkun, Chairman of the Taiwan Strait Foundation, held their fifth formal meeting in Chongqing to conduct business on the Cross-Strait Economic Cooperation Framework Agreement (ECFA) and the Cross-Strait Intellectual Property Protection Cooperation Agreement. Negotiate and eventually sign the agreement.

According to Annex I of the agreement, the two parties will implement early harvesting plans for some products, and electronic products have entered the list of tax reductions or exemptions. However, LCD panels that have received attention from all parties in the industry are absent from the tax reduction list. However, this does not affect the cooperation and win-win situation of the liquid crystal panel industry across the Taiwan Straits, and the determination to join hands to resist the monopoly of Japan and South Korea.

Zhu Lijun, a researcher at Galaxy Securities, said that economic and trade exchanges between the two sides of the strait were not equal before, and ECFA is an institutional arrangement for cross-strait economic and trade normalization. After the signing of this agreement, cross-strait economic cooperation will enter a new stage. "Although the current LCD panel products are listed in the ECFA tax reduction list, the signing of ECFA across the Taiwan Strait has already formed a huge industrial advantage, which is expected to enhance the investment and consumption confidence of the cross-strait color TV manufacturing industry."

Jin Xiaofeng, deputy general manager of Aowei Consulting, said, "Although the ECFA agreement does not involve liquid crystal panel products, the synergy between the cross-strait liquid crystal industry chain has already begun to take shape, and it has already expressed its determination to jointly resist Korea.

"The electronics industry is one of the industries that does not need to sign ECFA." Professor Jiang Yucong of the School of Management at Taiwan University said that in the past 10 years, the electronics industry in Taiwan has already completed its layout in mainland China.

Taiwan's LCD manufacturing companies such as AUO and Chi Mei are implementing and investing in the mainland, and the relationship between Taiwan's upstream manufacturers and mainland color TV manufacturers will be closer. It is understood that the AUO Hefei plant has held a groundbreaking ceremony on June 29th. The plant has invested 1.05 billion yuan and recruits 5,000 people. It is scheduled to be put into production in May 2011. . Another Taiwanese panel maker, Chi Mei, apparently did not stop the pace of the mainland. It is reported that Chi Mei is carrying out a new wave of layout plans in the mainland, including the construction of new back-end module factories in Chengdu and Wuhan. Chi Mei's factories in Ningbo, Nanjing and Foshan also plan to expand the plant simultaneously.

Although the LCD panel products are not seen in the ECFA tax reduction list of the cross-strait economic cooperation framework agreement, this is inevitably disappointing. However, at present, the cooperation between LCD panels and machine manufacturers in the two sides of the strait has been carried out in an active way. In the hope of jointly promoting prosperity, efforts are being made to break the excessive dependence of China's color TV manufacturing industry on the Korean panel industry.

Industry sources said that the color TV industry should look at the signing of ECFA from a forward-looking and macro perspective. The ten types of products involved in ECFA will pass the tax reduction arrangements of both parties, and the processing and manufacturing costs in the cross-strait industrial chain will be reduced, which will greatly reduce the cost of Taiwan-funded enterprises investing in the mainland and promote the development of mainland-funded enterprises. The domestic market, the economic dependence of LCD panels and machine manufacturing will be further strengthened, and ECFA brings a new opportunity for the cross-strait panel industry.

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