"Lack of core and screen" has always been a hidden pain in China's industry, which is the first breakthrough in the display screen. In 2020, the display panel industry will be changing. Samsung and LG of South Korea will gradually withdraw from LCD and turn to OLED. The global LCD production capacity will accelerate to concentrate in China, and the scuffle between China, Japan and South Korea will become the only one in China.

 

After the impact of the epidemic in early 2020, the display panel industry turned straight up in the second half of the year, and the performance of domestic mainstream panel enterprises also recovered rapidly. After three years of long downward winter, the display panel industry returned to the rising cycle.

 

In the surging and rapidly changing market, market differentiation intensifies, "winner take all" and "Matthew effect" appear in this typical capital and technology intensive industry. Relying on the advantages of capital, technology and industrial chain, BOE and TCL Huaxing optoelectronics are rapidly expanding through new production capacity and expansion of M & A. the domestic display panel market is forming a situation of two strong competitors competing for hegemony. This also makes the industry begin to think that when the production capacity is rapidly concentrated to the giants, the panel industry may gradually get rid of the traditional cycle of "excess production downward loss elimination upward".

 

According to Dong min, Deputy Secretary General of China electronic video industry association, the global display panel industry is undergoing a great change“ China's enterprising, South Korea's shrinking, and Japan's withdrawal are the general trend. In the future, China's market is likely to form a super or duopoly situation, "Dong min told China business daily. China is undertaking global panel production capacity, but it should focus more on the next generation display technology, so as to avoid accepting backward production capacity and lacking emerging production capacity.

 

For display panel giants, they are already thinking and planning new growth poles outside the traditional market. The Internet of things, smart city, smart medical and other related emerging industries have become the focus of the layout. Earlier, in an interview with this reporter, BOE chairman Chen Yanshun said that BOE firmly believes in the transformation of the Internet of things and will build 10-15 innovation centers nationwide in the future, which will be a huge cake with infinite imagination. Accelerating capacity concentration in China

 

After years of high investment and losses, China's display panel industry began to reap the fruits: the global display panel production capacity is accelerating to transfer to China.

 

In 2020, Korean display panel giants LG and Samsung successively announced that they would quit LCD and switch to OLED, which greatly accelerated the transfer process. Samsung display is expected to close its LCD production line in March 2021, while LG display plans to close its LCD TV panel production line by the end of 2021, accounting for 13.2% of the world's total output. Other panel manufacturers are competing for the vacant share of Korean manufacturers.

 

According to the data of CCID consultants, China's LCD production capacity will account for 50% of the global production capacity in 2020, and the future LCD production capacity will continue to gather in China.

 

In recent years, with several g8.5/g8.6 and g10.5 generation lines successively put into production, China's LCD production capacity has maintained rapid growth. In 2019, the total LCD production capacity will reach 1134.81 billion square meters, ranking first in the world; In terms of OLED, with the accelerated investment and construction of G6 generation production line capacity, China's OLED capacity currently accounts for more than 10% of the world's total capacity. It is estimated that the capacity will exceed 10 million square meters in 2022, accounting for nearly 30% of the world's total capacity.

 

Global capacity concentration to China

 

China's production capacity began to concentrate on giants such as BOE. In 2020, BOE and csot will play a leading role in the two major mergers and acquisitions in the display panel industry.

 

On December 17, 2020, BOE announced that the company signed a capital increase agreement with Chengdu Zhongdian panda Display Technology Co., Ltd., which increased the capital by 7.55 billion yuan in the form of non-public agreement. Earlier on November 25, BOE announced that it planned to acquire 80.831% of the listed shares of Nanjing CLP panda.

 

Chen Yanshun said that after the merger, BOE's global market share will increase from 22% to 23% to 28% to 29%, and it will be the first in the world.

 

Huaxing optoelectronics has acquired Samsung's Suzhou production line and module factory, and plans to use part of its production capacity for the production of display panels in an effort to enrich its panel business portfolio.

 

However, for the two giants, huge mergers and acquisitions of assets opportunities and risks coexist. Now, it is a trend for the display panel industry to shift to OLED and other industries. With the high generation LCD production lines being put into production in succession, overcapacity in the next few years is a high probability event, and the industry may enter the downward cycle again. At the same time, most of the acquired assets are in a state of loss. How to effectively integrate and turn losses into profits will test the integration ability of the giants.

 

Can we get out of the cycle?

 

The sudden arrival of COVID-19 in 2020 brought the global economy to a pause. It also cast a shadow over the display panel industry that has experienced nearly three years of cold winter. However, since the second half of the year, the Korean industry has withdrawn from capacity and the long-range home demand has been induced by the epidemic.

 

According to Qunzhi consulting data, TV panel prices will maintain a large increase in November 2020, and it is expected to continue to rise in December; Founder Securities Research Institute predicts that as of December, the quotation of main size panels has increased by more than 20% on average compared with that of January at the beginning of the year. For example, 32 inches has increased from US $30 at the beginning of the year to nearly US $60.

 

In terms of inventory, channel inventory in North America is basically empty, that in Europe is at a lower level, and that in mainland China is slightly lower than the normal level. In order to cope with the traditional spring market peak season and the strong demand for replenishment, most brand factories believe that the panel prices from the end of 2020 to 2021 will continue to be optimistic.

 

Cheng Lili, research director of Ovir, told reporters that the change of Panda Electronics in 2021 and the exit of Samsung and other LCDs will have a great impact on the supply pattern. Mainland panel companies such as BOE and csot will shoulder the heavy burden. As the main manufacturers to undertake the exit of Korean factories, their performance next year is highly expected.

 

The industry believes that, in addition to home entertainment and telecommuting and other factors, large-size HD TVs and 5g mobile phones will bring a wave of replacement, which will push the panel industry into a new upward cycle.

 

According to the statistics of Qunzhi consulting, the average size of LCD TV panel in the world has increased from 41.3 inches in Q1 in 2016 to 46.1 inches in Q1 in 2020. Even though global TV shipments are generally stable, the capacity demand brought about by the change of demand structure of larger size is still growing.

 

However, the continued rise in display panel prices will soon affect the demand of the terminal market.

 

The display panel industry is a typical strong cycle industry. In the rising cycle, the panel price rises, and the strong profit will attract hot money and many homogeneous projects; In the downward cycle, excess capacity and fierce competition lead to lower prices and expanding losses of enterprises, and many enterprises either take the initiative to exit or eliminate. In 2020, it is in the downward cycle that Korean manufacturers take the initiative to withdraw from the most competitive LCD market and turn to the new front of OLED.

 

This is in sharp contrast to China's display panel giants, which continue to put into production and acquire in a reverse cycle. Under the background of industry downturn and turbulence, BOE and TCL's Huaxing optoelectronics have consolidated their leading position in the display panel industry, especially in the LCD field through massive investment and merger.

 

"Production capacity is rapidly concentrated in BOE, Huaxing optoelectronics and other Chinese enterprises, so that they have stronger control over production capacity and market price," a panel industry analyst told reporters. The result may be that in the future, the display panel industry may change from the previous cyclical drastic rotation to the seasonal fluctuation based on demand.

 

Display panel enterprises looking for new growth pole

 

After three years of downturn, the display panel industry is entering an upward cycle. With the recovery of panel prices, the profit level of panel enterprises is rising rapidly. In the third quarter of 2020, BOE's revenue reached a record high in a single quarter, with a net profit of 1.34 billion yuan, a year-on-year increase of 629.3%..

 

After gaining a firm foothold in the traditional display panel field, China's panel enterprises, represented by BOE, began to look for new growth poles.

 

"BOE is positioning itself as" an Internet of things company that provides smart port products and professional services for information interaction and human health ". At the BOE global innovation partners conference held on November 18, 2020, Chen Yanshun told reporters that over the years, BOE has been pushing the transformation of the Internet of things along the strategy of" opening both ends, breath holding / device and "all along.

 

The reporter noted that since 2013, BOE has been seeking transformation. In that year, BOE established a smart system business group and built four business systems, including intelligent manufacturing, smart retail, smart car alliance and smart energy.

 

Wang Dongsheng, former chairman of BOE, once said that it is very difficult for BOE to improve its profitability by doing panel industry alone. Based on this consideration, it was proposed at the 2013 annual general meeting that BOE should start to find new profit growth points.

 

In 2016, BOE put forward the transformation strategy of the Internet of things and began to transform to the Internet of things. In 2019, BOE has established a new industrial cooperation platform, the intelligent system innovation center.

 

It is revealed that next, BOE's smart system innovation is the focus of planning and development. BOE's focus on smart finance, smart retail, smart medical industry, industrial Internet, smart car alliance and smart city public services are the main industries in the current domestic Internet of things expenditure field.

 

According to IDC's calculation, the domestic market scale of these fields will reach 500 billion US dollars in the next five years. In view of this, BOE will plan 10-15 innovation centers nationwide in the future, and focus on six market segments by building five platforms in the innovation center.

 

However, in terms of BOE's performance in the first half of the year, the revenue of port devices accounted for 92.6%, while that of smart IOT and smart medical industry accounted for 12.8% and 1.2% respectively. BOE still highly relies on the port device business dominated by panels. However, smart IOT and smart medical industry can become the hope and new growth point of hedging panel strong cyclical risk in the future.

 

"From the current supply and demand of the display panel industry, from the second half of 2020 to 2021, the panel industry will be in a business cycle. In addition, relying on port devices, it will obtain more resources from local governments, which will form a better support for BOE's next transformation," said the analyst. However, whether it can be recognized by the capital market and become a new growth pole of BOE, It still needs a long time to cultivate and to be tested by the market.