Global Oligopoly in Panel Industry: China's Project Variables

The global panel industry losing four consecutive quarters has still not seen the shadow of spring.

The reporter learned that after the dramatic shrinking of the capital expenditure plan, many high-level line plans for Hantai panel makers originally planned to be built on the mainland face variable, and many panel giants have begun to target 5.5 generation OLED panels in the mainland.

“Original Hon Hai’s Chi Mei hoped to join the Chengdu government and Changhong Group to invest in the 8.5-generation line but failed to get approval from the National Development and Reform Commission. Therefore, the three parties will focus on the 5.5-generation AM-OLED panel production line and are currently undergoing preliminary approval and EIA and other preparations.” November 3, sources told this reporter.

BOE plans to invest in 5.5-generation AM-OLED panel production line in Ordos. AU Optronics also communicates with the Ordos City Government through some intermediate agencies and intends to follow the BOE model to build 5.5-generation AM-OLED production lines locally. In August this year, AUO relaunched OLED R&D and started 3.5-generation AM-OLED panel production line in Taiwan.

In the performance briefing of the LGD Three Quarterly News on November 4th, LGD said that it will enter the field of touch panels and is currently adjusting the production line, that is, the production line of the original TV panel will be transformed into the production of small and medium-sized touch panels, and the construction of the original was started. The two 8.5-generation lines in South Korea and Guangzhou were postponed indefinitely.

Twisted investment

LCD TV demand is far behind the growth of panel supply, and more new projects may abortion “It seems that Samsung, AUO, and LGD have been approved for the three generations of high-generation lines. Currently, only Samsung may adjust to 8.5 generations. After the line started, but will be part of the production of small and medium-sized touch-screen panels, the other two if the panel industry losses can not be changed, it may only be postponed or even canceled." Display search China market director Zhang Bing said.

Although these three high-generation LCD panel production lines initially received government approval fees and setbacks, and mainland China's LCD panel import tariffs may increase, but now it is impossible for liquid crystal panel giants that have suffered huge losses and only 70% of production line operating rates. The start-up, because its investment scale is generally more than 3 billion US dollars.

Samsung Electronics China Limited sources told reporters that although Samsung held a groundbreaking ceremony in Suzhou at the end of May this year and TCL Group also took a 10% stake, due to changes in the size of the LCD panel mainstream market, it was finally decided to modify the original production plan. We have applied to the National Development and Reform Commission for upgrading from the original 7.5-generation line to the 8.5-generation line. Even if the approval is passed, we need the global LCD panel industry to pick up again before we can formally invest.”

At present, Samsung Electronics has a market share of 20% in the mainland, and Samsung Electronics has reached 3 million TV shipments each year in mainland China.

For LGD, for four consecutive quarters of losses, and a record-breaking $600 million in losses in the third quarter, it is facing huge cash flow pressures. Suspending some investment projects and compressing capital expenditure plans is The inevitable choice.

A Skyworth executive who originally planned to participate in 10% of the Guangzhou LGD8.5 line, said: “Although the Guangzhou municipal government hopes that the project will start as soon as possible, the final decision is still made by the major shareholder. The current LGD funding situation is indeed difficult The key to supporting new investment is that after the completion of the project investment, if the supply and demand situation of the global LCD panel is still difficult to change, the project will face a huge loss."

However, LGD has not completely abandoned the plan for the Guangzhou project. According to an insider of the LGD Beijing office, “The project was approved, and LGD was invested a lot of time and resource costs, so it will not completely abandon. At present, it seems to be moving a Korean 8.5-generation LCD panel production line equipment to the country. The best choice in Guangzhou, LGD is evaluating the feasibility of this approach internally, before LGD had two 8.5 generation lines in Korea.”

However, the global panel industry is not easy to pick up. Although panel giants generally predict that prices cannot drop seriously, according to recent data released by various market research organizations, the global LCD TV shipments in 2011 are estimated to be approximately 190 million. - Near 200 million units, the annual growth rate has dropped to about 5%.

Zhang Bing said that with at least 13 of the 8th-generation panel makers in the world, each factory has a monthly average of 60,000 tablets, and each 8th-generation mother substrate can cut 18 32-inch TV panels. The 8th-generation line can cut out 168 million 32-inch TV panels each year. What's more, there are a large number of 6th-generation line and 7th-generation line also have some production capacity for TV panels, and still under construction projects, LCD TV demand growth is far behind the growth of panel supply, so more new projects May abortion.

He also pointed out that "In fact, for South Korea's two major panel giants, OLED panel is already the focus of their next investment, Samsung's 8th generation OLED panel production line can be put into production as soon as the end of 2012, and LGD's $ 28.3 billion investment plan is also It has been fully launched, and the progress of the OLED project R&D and industrialization has also determined the progress of its mainland LCD panel project.

Loss shock wave

Although the same four consecutive quarterly losses, but compared with the loss of Samsung, LGD, Taiwan's panel giant's losses are even greater, Taiwan's panel maker Chi Mei recently released monthly data show that its September consolidated revenue of 41.4 billion The yuan new Taiwan dollar, a year-on-year decrease of 9%, the third quarter quarterly loss of 16 billion Taiwan dollars. AUO’s losses in the first three quarters amounted to NT$40.5 billion.

Together with consecutive losses of 9 quarters of Hua Ying and the loss of eight consecutive quarters of Han Yu Cai Jing, this year, Taiwan's panel makers will lose a total of NT$120 billion to NT$130 billion in losses, setting a new record for the financial tsunami in 2009. . From the perspective of the fourth quarter, there is no sign of any losses. Peng Shuanglang, AUO's executive vice president of global executives, even said that the panel industry will not be able to lose money in the coming year.

Under such circumstances, Chi Mei announced that it will cut its capital expenditure this year by half, from NT$100 billion to NT$50 billion to NT$60 billion, and delay the operation of the Chengdu 8.5-generation line. Previously rumoured to be related to the Changhong Group of the 8.5th generation of the Chimei U.S. joint venture, “In the current circumstances, the construction of the Chengdu 8.5-generation line is not of much significance, and it is difficult to obtain approval from the National Development and Reform Commission. The three parties have already agreed to implement the project. Change to a more advanced AM-OLED production line."

In order to turn a deficit, Chi Mei proposed a differentiation strategy and introduced three innovations, including product innovations (such as the introduction of 39-inch, 50-inch panels) and technological innovations (such as AMOLED display technology, in-cell touch technology, and on-cell touch). Technology), as well as business model innovations (such as the first to ship in cell model) and so on.

The same is true for AUO. AUO, which had once interrupted OLED technology development for many years because of its immature technology, began to restart the project in August this year. It plans to mass-produce 4.5-generation AM-OLED panels in 2012.

However, in the Kunshan Longfei 8.5 generation line due to capital and market conditions lagging behind, AU Optronics also tried to make breakthroughs in the field of mainland OLED panels, because now many local governments have begun to introduce the OLED panel project as a goal of industrial transformation and upgrading, BOE in The OLED project of Ordos' "empty gloves" also made AUO feel the opportunity.

However, for panel giants in Taiwan, OLED is not its strong point. At present, 90% of global OLED core patents are in the hands of giants such as Kodak, Toshiba and Samsung, although AUO has just displayed 32-inch OLED TVs at Yokohama Electronics Show in Japan. The sample, but Samsung's TV panel of this size has been in volume production in May this year, and has more than 90% of the global AM-OLED panel market, so Chi Mei, AUO will not only be involved in a new capital expenditure contest In the middle, but also may face the OLED patent blocking.