Shenzhen Enrich Electronics Co.,Ltd

 

Industry views, it is due to the rise of China's LCD industry outbreak, to completely break the previous market stability of the profit and loss cycle, but at the same time accompanied by China, Japan, South Korea, the three countries long-term market competition and price competition, and during this period of time, we are also in the bitter simmering.

 

But with the "factory of the world" to go than the scale and cost is obviously not sensible, in the long-term losses, Japan and South Korea have been clearing LCD production capacity and business. At present, China's panel makers have mastered nearly 70% of the world's LCD panel production capacity, in this context, the industry's supply pattern has been significantly improved.

 

Cycle dissipation, the industry no longer LCD production line investment projects

 

As we all know, in recent years, the global LCD production capacity oversupply, industry inventory is high. It is understood that, in order to the normal development of the global display industry chain, China's mainland officials have no longer approved new large-scale LCD investment projects.

 

Supply chain rumors, China's mainland official approval of the last LCD panel investment case should be the Tianma 8.6 generation line (TM19), when the application documents or to "benchmark small and medium-sized products - the production of IT product panels" and narrowly passed. Although the TV and IT panels quite a transition from LCD to OLED flavor, but its market penetration rate is less than 5%, and there are MLED in the eye of the tiger, so China's mainland off the LCD panel investment in the industry's medium- and long-term development, is still more favorable.

 

In fact, BOE Chairman Chen Yanshun has publicly stated in 2019 that BOE will stop investing in LCD production lines in the future, focusing more on OLED and the emerging Mini LED and Micro LED fields.

 

Generally speaking, the supply and demand ratio of LCD panels, if more than 10% will form a structural overcapacity, which will lead to a "price war" resulting in mergers and acquisitions. Donghai Securities has said that the next three years, the LCD panel industry capacity is expected to increase mainly from TCL Guangzhou T9 production line and the deep Tianma TM19 production line.

 

In the past the panel industry, many competing companies, and many production lines in mainland China in the process of commissioning and climbing, in order to reduce amortization, as well as to expand the market share, often hold full production and full sales obsession. But with our country completely grasp the LCD panel industry's production capacity of the right to speak, coupled with the network rumors officially announced capacity capping, today's panel factory has begun to give up the market share to chase, but the pursuit of operating profits, when the market is highly concentrated, it will be easy to form a crop rate of the regulation of the consensus.

 

By the middle of 2023, China's mainland panel makers have formed a mature "sales to production" market-oriented model. Therefore, in the foreseeable future, the display panel industry will be fixed by the past large and strong cycle gradually transformed into a small and slow cycle regulated by the market, the amplitude will be significantly reduced, or even directly dissipated.

 

Not afraid of OLED, LCD still dominates!

 

In the panel industry, a set of data shows that nearly 70% of the industry's capacity will be used to manufacture TVs, nearly 13% of the capacity used to manufacture displays, nearly 10% of the capacity is used to manufacture cell phones. It is worth mentioning that in the global TV, laptop and tablet PC market, the penetration rate of OLED has not exceeded 5%; and in the smartphone panel as the current OLED's largest sinking market, its penetration rate is only close to 50%.

 

In addition, the OLED upstream industry chain presents a high degree of monopoly, the industry threshold is high, which is quite unfavorable to the large-scale supply of OLED panels, and there are relatively few OLED players in the global market. It can be bluntly said that in the medium and long term, the threat of OLED's substitution for LCD is relatively small, and LCD panels still dominate the display market.

 

It is worth mentioning that, due to the global geopolitics, health events and its trade war prolongation, China's LCD panel industry is in a weak cycle throughout the year in 2022, so this year's overall market is slowly recovering in the midst of the winter. But the panel manufacturers in the middle of the display industry chain in order to accelerate the return of temperature, has reached a "production on demand, dynamic production control" business philosophy, so the price of China's LCD panels, especially large-size TV panels have been rising for more than half a year.

 

But artificial price control is unlikely to be maintained for too long, the factory's crop rate is not possible to keep running at a low level for years, which for the social workers and enterprises are subject to pressure, so once the demand falls again, LCD panel prices will be difficult to control. The fourth quarter of this year is expected to reduce demand for LCD panel purchases, the trend of price increases may also stop, the final price is likely to be in the upstream and downstream manufacturers in the game with the end of the last quarter flat.