Foreign companies have abandoned the LCD panel business, and the LCD industry center has accelerated its transfer to my country
Recently, Mitsubishi Electric announced that its subsidiary Melco Display Technology (MDTI) will stop producing TFT-LCD liquid crystal modules by June 2022. It is understood that this is another foreign company that withdrew from LCD panel production after LG and Samsung. The industry believes that with the gradual withdrawal of Japan and South Korea's panel production capacity, the LCD industry center will accelerate its transfer to my country.
Foreign companies have withdrawn from the LCD panel market
On June 15, Mitsubishi Electric Corporation of Japan announced that due to increased competition, its subsidiary MDTI, which focuses on small and medium-sized LCD businesses in industry and vehicles, will end the production of TFT LCD modules (panels) in June 2022.
Mitsubishi Electric said that although MDTI has an advantage in products with high display performance and reliability, it is difficult to maintain the competitiveness of products because the fierce global price competition exceeds expectations. Therefore, the company decided to terminate the LCD business and transfer the management resources related to the LCD industry business and MDTI to business units such as power equipment that promote growth.
It is understood that Mitsubishi Electric began mass production of LCD panels in 1996. The planned liquidation of the LCD business (excluding LCD TVs) in 2019 will be about 28.5 billion yen (1.88 billion yuan). Mitsubishi Electric's current LCD panels are purchased through external companies. After the above-mentioned small and medium-sized LCD panels are discontinued, the small and medium-sized panels required for Mitsubishi Electric's own products will also be purchased from external companies.
This is not the first foreign company to terminate its LCD business in the near future. Japanese company Panasonic stated in November last year that its subsidiary, PLD, which is responsible for LCD panel production, will end LCD panel production in 2021. For Korean companies, in January this year, LG Display CEO Jeong Ho-young stated that due to the drop in LCD prices and global oversupply, LG Display will stop producing LCD TV panels in Korea by the end of this year. In May, in view of the sluggish LCD market and the resulting large-scale deficit, Samsung Display stated that it would stop producing LCD products in its South Korea and Suzhou-based factories in China.
Industry insiders generally believe that the accelerated withdrawal of foreign companies from the LCD market is foreseeable. Since the fourth quarter of 2017, panel prices have been declining all the way. With the continuous price decline, the profitability of various panel makers has continued to decline. After 2019, the entire industry has experienced a general operating loss, and the TV panel business's loss rate has reached 35%-40%.
The rise of China's LCD industry
CITIC Research reported that China's LCD industry has developed rapidly in recent years, and panel companies represented by BOE, Huaxing Optoelectronics, Tianma, etc. have risen rapidly. In 2013, mainland China's TFT LCD panel revenue accounted for about 10% of the world's revenue. Currently, mainland China's TFT-LCD mainstream panel manufacturers' revenue accounts for more than 40% of the world's revenue.
According to research data from global market research company Omdia, Samsung’s LCD panel market share in the global market was 10.9% last year, down 7.1% from 2016; LG Display’s market share also fell to a certain extent during the same period. The market share of Chinese companies such as BOE, CLP Panda, and Huaxing Electronics has increased rapidly. Among them, BOE surpassed LG Display for the first time with a market share of 18.9% and became the world's largest LCD panel supplier.
According to the prediction of the Korean Semiconductor Display Society, by 2023, in the global panel market, the market share of Chinese companies will reach 58%, of which the LCD panel market will enter the "Chinese era." The Korean Semiconductor Display Society predicts that China will set up 19 large-scale panel factories of generation 8-10.5 before 2022, and after the establishment of a panel factory of generation 8.5-10.5 in China, the production cost of the product is only 1/1/ 3-1/5.
Wu Jisen, an analyst at New Era Securities, believes that the Chinese LCD industry has benefited from the withdrawal of foreign companies. The cycle reversal has been fixed and will usher in a wave of upswing cycles. Affected by the epidemic, global LCD supply and demand will become more tight and LCD prices will accelerate. China's display panel industry leaders BOE A and Huaxing Optoelectronics are expected to usher in long-term profit dividends due to increased industry concentration and cyclical weakness after the winter.
According to data from IHS, a British market research organization, in January this year, mainland Chinese display panel manufacturers accounted for 52.9% of the global shipment area of large-size panel shipments, while South Korea and Taiwan accounted for 24.8% and 21.9%, respectively (Taiwan, China (Ship area of regional manufacturers includes Sharp). Among them, BOE and Huaxing Optoelectronics ranked the top two in terms of shipment area, with 21.3% and 14.5% respectively. Looking forward to the next few years, China's panel industry will rise in an all-round way and is expected to become the final industry winner.
Foreign companies have withdrawn from the LCD panel market
On June 15, Mitsubishi Electric Corporation of Japan announced that due to increased competition, its subsidiary MDTI, which focuses on small and medium-sized LCD businesses in industry and vehicles, will end the production of TFT LCD modules (panels) in June 2022.
Mitsubishi Electric said that although MDTI has an advantage in products with high display performance and reliability, it is difficult to maintain the competitiveness of products because the fierce global price competition exceeds expectations. Therefore, the company decided to terminate the LCD business and transfer the management resources related to the LCD industry business and MDTI to business units such as power equipment that promote growth.
It is understood that Mitsubishi Electric began mass production of LCD panels in 1996. The planned liquidation of the LCD business (excluding LCD TVs) in 2019 will be about 28.5 billion yen (1.88 billion yuan). Mitsubishi Electric's current LCD panels are purchased through external companies. After the above-mentioned small and medium-sized LCD panels are discontinued, the small and medium-sized panels required for Mitsubishi Electric's own products will also be purchased from external companies.
This is not the first foreign company to terminate its LCD business in the near future. Japanese company Panasonic stated in November last year that its subsidiary, PLD, which is responsible for LCD panel production, will end LCD panel production in 2021. For Korean companies, in January this year, LG Display CEO Jeong Ho-young stated that due to the drop in LCD prices and global oversupply, LG Display will stop producing LCD TV panels in Korea by the end of this year. In May, in view of the sluggish LCD market and the resulting large-scale deficit, Samsung Display stated that it would stop producing LCD products in its South Korea and Suzhou-based factories in China.
Industry insiders generally believe that the accelerated withdrawal of foreign companies from the LCD market is foreseeable. Since the fourth quarter of 2017, panel prices have been declining all the way. With the continuous price decline, the profitability of various panel makers has continued to decline. After 2019, the entire industry has experienced a general operating loss, and the TV panel business's loss rate has reached 35%-40%.
The rise of China's LCD industry
CITIC Research reported that China's LCD industry has developed rapidly in recent years, and panel companies represented by BOE, Huaxing Optoelectronics, Tianma, etc. have risen rapidly. In 2013, mainland China's TFT LCD panel revenue accounted for about 10% of the world's revenue. Currently, mainland China's TFT-LCD mainstream panel manufacturers' revenue accounts for more than 40% of the world's revenue.
According to research data from global market research company Omdia, Samsung’s LCD panel market share in the global market was 10.9% last year, down 7.1% from 2016; LG Display’s market share also fell to a certain extent during the same period. The market share of Chinese companies such as BOE, CLP Panda, and Huaxing Electronics has increased rapidly. Among them, BOE surpassed LG Display for the first time with a market share of 18.9% and became the world's largest LCD panel supplier.
According to the prediction of the Korean Semiconductor Display Society, by 2023, in the global panel market, the market share of Chinese companies will reach 58%, of which the LCD panel market will enter the "Chinese era." The Korean Semiconductor Display Society predicts that China will set up 19 large-scale panel factories of generation 8-10.5 before 2022, and after the establishment of a panel factory of generation 8.5-10.5 in China, the production cost of the product is only 1/1/ 3-1/5.
Wu Jisen, an analyst at New Era Securities, believes that the Chinese LCD industry has benefited from the withdrawal of foreign companies. The cycle reversal has been fixed and will usher in a wave of upswing cycles. Affected by the epidemic, global LCD supply and demand will become more tight and LCD prices will accelerate. China's display panel industry leaders BOE A and Huaxing Optoelectronics are expected to usher in long-term profit dividends due to increased industry concentration and cyclical weakness after the winter.
According to data from IHS, a British market research organization, in January this year, mainland Chinese display panel manufacturers accounted for 52.9% of the global shipment area of large-size panel shipments, while South Korea and Taiwan accounted for 24.8% and 21.9%, respectively (Taiwan, China (Ship area of regional manufacturers includes Sharp). Among them, BOE and Huaxing Optoelectronics ranked the top two in terms of shipment area, with 21.3% and 14.5% respectively. Looking forward to the next few years, China's panel industry will rise in an all-round way and is expected to become the final industry winner.
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