In recent years, with the continuous decline of LCD panel prices, the operating ability of panel manufacturers has been greatly affected, and Samsung Display, LGD and other companies have also announced their withdrawal from the local LCD production line in South Korea. Industry insiders believe that the relationship between supply and demand of the LCD panel industry is expected to improve due to the withdrawal of Korean manufacturers and the end of the expansion of mainland panel manufacturers.
At the same time, the competition in the global large-size LCD panel market will also shift from the confrontation between China and South Korea to the dominance of Chinese Mainland. As industry giants, BOE and TCL Technology are expected to seize more market share with their own advantages. In addition, domestic panel manufacturers are actively introducing domestic materials, which is also expected to accelerate the domestic substitution of upstream materials. The glass substrate will usher in its own trend.
The market capacity of glass substrate is inclined from South Korea to China
With the gradual release of the domestic high-generation LCD production capacity, the pressure on the overall panel market has squeezed the original gross profit space. Under the continuous loss and huge investment, the panel manufacturers have to make a quick decision in the alternative. Before that, LGD and Samsung successively closed their LCD panel factories and turned to OLED and QD-OLED. In response, Yoshio Tamura, deputy president of DSCC Japan, said recently that Korean TV manufacturers will increase the demand for LCD panels in China next year to cope with the shortage of domestic capacity.
It is an indisputable fact that the traditional LCD production capacity center has been transferred from South Korea to China, but in emerging technologies such as OLED, major manufacturers are still scrambling to increase their technical reserves. At BOE IPC2019, BOE exhibited the world’s first 55-inch 8K printing OLED, and JOLED’s world’s first printing OLED mass production line was also completed recently. After the upstream production capacity is fully equipped, OLED may usher in an explosion in different sizes, flexibility and other application scenarios, and enter the market at a lower price.
The accelerated transfer of global LCD panel production capacity to Chinese Mainland has also led to the rapid increase of TFT-LCD panel shipments of BOE, TCL CStar and other domestic manufacturers, and gradually occupy the international leading position, while the upstream material industry is also expected to usher in new development opportunities.
New Material Intelligence NMT | Hotspot | Korean Factory Exit Chinese Enterprise Connecting Glass Substrate Air Inlet
New trends in LED market
Because of the inflection point at the supply end of the industry. After considering the new capacity, the capacity month-on-month/year-over-year growth decreased significantly. From the perspective of industry concentration and competition pattern, since 2013, along with the substantial expansion of domestic manufacturers, the concentration of TOP5 in the large-scale LCD industry has been scattered, with BOE and CSOT rising the fastest, while Samsung, Youda and other companies falling the fastest. We expect that with the reshuffle of the industry structure and the further growth of domestic production capacity, the industry concentration will converge again. The leading position of BOE and CSOT will be further strengthened.
According to the data of CITIC Securities, the LCD material market in Chinese Mainland totaled 74.3 billion yuan in 2017, including 45/112/274/143/16.9 billion yuan for liquid crystal materials, polarizers, backlight modules, glass substrates, and color filters, which is expected to grow to 103.4 billion yuan in 2020, with a compound growth rate of 11.6%, and the corresponding material market size is 62/156/382/199/23.5 billion yuan respectively. In addition, masks, targets and photoresists used in panel manufacturing have a market of 10 billion yuan.
At present, LED industry chain and LED chip manufacturers have begun to actively expand production to medium-high end products such as Mini LED. As the core of the fifth largest display technology, Mini LED display effect is close to OLED, but its price is cheaper than OLED, and its low power consumption and long service life. The technology has matured, and is approaching the stage of large-scale mass production.
Domestic capital is expanding the layout of glass substrate
In the short term, the capacity withdrawal effect of Korean factories has gradually emerged, while the new capacity in the mainland is limited. The overseas economic recovery is superimposed on the industry peak season in the third quarter. Under the condition of strong demand and reduced supply, the subsequent panel price increase is more sustainable. In the long run, the ramp up of new production lines of Chinese Mainland panel plants has led to continuous growth of capacity, the capacity of South Korea and Taiwan, China has continued to withdraw, and there are opportunities for capacity restructuring. The substantial improvement of the supply side has driven this round of industry cycle upward. We believe that in the medium and long term, the market share of manufacturers in Chinese Mainland will further increase, and the panel pattern is expected to usher in a medium and long term improvement.
New Material Intelligence NMT | Hotspot | Korean Factory Exit Chinese Enterprise Connecting Glass Substrate Air Inlet
Focusing on the subdivision field, the commercialization of folding screen is expected to drive the screen replacement tide and promote the development of flexible OLED industry. At the same time, domestic capital and enterprises have also increased their market layout. Recently, Shanshan Co., Ltd. plans to invest US $770 million to acquire 70% of the LCD polarizer business and related assets of LG Chemical in South Korea. Before that, LG Chemical sold liquid crystal color photoresist assets to Siyang International, a subsidiary of China Yake Technology. It can be seen that with the help of domestic panel manufacturers, the domestic substitution of upstream materials is expected to accelerate.
In addition, the state has also issued relevant policies to boost the development of the display industry chain. After the State released the Action Plan for the Development of Ultra High Definition Video Industry (2019-2022) last year, Guangdong, Shanghai, Anhui and other provinces have successively issued landing measures to promote the rapid development of the display industry chain.
Qiao Yueshan, director of the Department of Electronic Information of the Ministry of Industry and Information Technology, once said that he would support the collaborative innovation of the advantageous panel enterprises and supporting enterprises, form a close cooperative relationship, jointly improve the technical level and supply capacity of key materials and core equipment, and form a healthy and sustainable industrial ecosystem.