Panel Giants Will Increase Production And Compete For Supremacy

Similar to the market reaction after BOE announced the fixed increase, TCL technology also encountered investors' foot voting on April 12, with the intraday decline of more than 5%. Large volume fixed increase has always been regarded as short-term bad, and investors will passively accept the diluted equity of listed companies, especially in the face of "burning money" panel industry, the market is very sensitive.

But from the industry point of view, this fixed increase seems to be necessary. Under the background of the long-term supply and demand pattern brought by the withdrawal of Korean manufacturers from LCD industry, the production capacity is further concentrated in domestic leading manufacturers, and the continuous shortage of LCD industry has almost become the consensus in the industry.

So expanding production has become the only choice for the panel giants.

According to the fixed increase plan, TCL technology plans to raise 12 billion yuan, of which 9 billion will be invested in the 8.6 generation oxide semiconductor new display device production line project, and 3 billion will be used to supplement working capital. The former project will mainly produce medium size high value-added it displays.

It is worth mentioning that TCL's entry into it display field is more "meaningful" in the industry.

Previously, BOE successfully acquired CLP panda, which was able to enter the IT market and improve its product line. TCL technology, which failed in the acquisition, is believed to find another way. Under the situation that the medium size it panel market continues to be hot, it is urgent for TCL technology to expand the market with heavy money. This fixed increase adds a fire to the competition between the two domestic panel giants.

35 billion into it panel

On the evening of April 9, TCL technology released a series of announcements after the close of the market, throwing out a huge fixed increase of 12 billion yuan.

According to the plan, 9 billion of them will be invested in the 8.6 generation oxide semiconductor new display device production line project (hereinafter referred to as "T9 project"), the implementation subject is Guangzhou Huaxing, and the remaining 3 billion is used to supplement working capital.

The T9 project is jointly invested by TCL technology and Guangzhou municipal government, with a total investment of 35 billion yuan. The initial registered capital of Guangzhou Huaxing is 500 million yuan. After the implementation of the process, the state-owned enterprises coordinated by Guangzhou Municipal People's government and Guangzhou Development Zone Management Committee participate in the investment of T9 project by increasing capital and shares in the project company. After the completion of the capital increase, the registered capital of Guangzhou Huaxing is 17.5 billion yuan. TCL Huaxing holds 55% of the shares. The state-owned enterprises coordinated by Guangzhou Municipal People's government and Guangzhou Development Zone Management Committee hold 45% of the shares.

After completion, the design capacity of the production line will reach 180000 pieces / month. It will focus on medium size and high value-added it display panels (including monitor, notebook, flat panel), on-board display, medical, industrial control, aviation and other professional displays, and commercial display panels.

The construction period of the project is not more than 24 months. After calculation, the after tax internal rate of return is 10.94%, and the after tax static investment payback period is 8.54 years.

From the background of the project, this is the timely move of TCL technology under the growth of market demand.

Under the influence of the epidemic, the demand for distance education, online entertainment and home office is booming, and the global sales of medium size it products are experiencing explosive growth. The construction of T9 project will enable TCL to effectively match the development trend and market capacity of global high value-added it and commercial display products.

At a deeper level, in terms of its own layout, TCL technology's fixed increase is to make up for the short board of medium size.

Lin Zhi, chief analyst of wit display, said in an interview: "TCL China Star, a subsidiary of TCL technology, has already taken a leading position in the large-scale panel market. The small and medium-sized panel market is actively catching up, but the layout of medium-sized panel market is relatively lagging behind. This fixed increase is mainly used for the construction of Guangzhou 8.6 generation line. This production line mainly produces it panel, which can make up for the shortage of TCL Huaxing in it panel business, and increase the production capacity of notebook computer panel, tablet computer panel and display panel, so as to better meet the growing market of online business and online education. "

TCL also said frankly that "medium size field will break through rapidly".

According to the public information, TCL technology has established efficiency and scale advantages in the large-scale field of semiconductor display industry. The market share of TV panel has risen to the second in the world, the 55 inch product share is the first in the world, the 32 inch product share is the second in the world, the 65 inch and 75 inch product share is the second in the world, and the interactive whiteboard shipping volume is the first in the world; small size field is accelerating to catch up, LTPS Mobile phone panel shipment is the third in the world, and AMOLED's folding screen and hyperbolic screen have been shipped in mass production.

Expand production and compete for supremacy

Interestingly, in January, another panel giant, BOE, also released a fixed increase of 20 billion yuan, which attracted wide attention in the market.

According to the plan, BOE's 20 billion net fund-raising will be used for "acquiring 24.06% equity of Wuhan BOE", "increasing capital to Chongqing BOE and building the 6th generation AMOLED (flexible) production line project of BOE in Chongqing", "capital increase and construction of 12 inch silicon-based OLED project for Yunnan chuangshijie Optoelectronics", "capital increase and construction of Chengdu BOE hospital project" and "repayment of welfare" The amount of funds raised was 6.5 billion yuan, 6 billion yuan, 1 billion yuan, 500 million yuan and 3 billion yuan respectively, and another 3 billion yuan was used to supplement working capital.

It is not difficult to see from the raised investment projects that the two directions are not consistent.

"The fixed increase of TCL technology is mainly to expand the production capacity of it LCD panel, while BOE is mainly engaged in OLED and large-scale LCD panel business." According to Sima Qiu, senior analyst of magirror research, "TCL technology makes up for the shortage of it panel, and BOE strengthens OLED and large-size LCD panel business to lead the industry. The fixed increase project of TCL technology includes igzo production capacity, which helps to make technical preparation for large-scale OLED layout. "

In fact, in terms of it display business, BOE and TCL technology have been secretly superior in the acquisition of CLP panda.

In June last year, media reports showed that CLP panda would sell its three LCD panel production lines. BOE, TCL technology, Huike, AVIC international and other enterprises all wanted to participate in the competition and expand the panel production capacity. At that time, some analysts said that the most likely enterprises to win these three lines were BOE and TCL csot.

In the end, BOE spent 10 billion yuan to collect CLP panda. TCL technology missed the opportunity to enter the it display industry through CLP panda.

However, TCL technology has other layout. The acquisition of Suzhou Samsung project initiated by the company last year has been completed at the end of March this year. It is said that the production capacity of Suzhou Samsung production line will be mainly used for the production of medium size panel, and its advantages in capacity and technology will help TCL technology quickly enter the supply chain of medium size panel and enhance its competitiveness. The medium size panel is mainly concentrated in the field of IT products.

After Samsung and LG of South Korea quit LCD production capacity, Youda and Qun Chuang, the two giants in Taiwan, which together account for about 15% of the total capacity, are also the next potential substitutes. According to the industry, BOE and TCL technology actively increase the production capacity of medium size, and it is Taiwan's it panel business that they are scrambling for.

With the construction of Guangzhou production line, TCL technology further complements the short board in the field of medium size. With the further release of LCD production capacity, it is expected to form a global dual male pattern of BOE and TCL technology.

Panel prices continue to rise

Another important market background of fixed increase and expansion is the continuous rise of panel prices.

According to wits view, the average prices of 32 / 43 / 55 / 65 inch LCD panels in the first ten days of April were 77 / 128 / 206 / 256 US dollars, up 2 / 2 / 4 / 4 US dollars respectively compared with the last ten days of March.

From the perspective of market analysis, there are mainly two reasons: the supply side, the limited short-term new capacity of LCD panel, and the shortage of upstream chips lead to further shortage of supply. On the demand side, the trend of large-scale TV screen will increase the shipping area. In addition, the Olympic Games and European Cup in 2021 will strongly boost the demand for panels. It is estimated that LCD will still be in a state of insufficient supply in 2021, and the panel price will remain at a high level.

The 21st century economic report reporter learned from the organization investigation in mid March that TCL technology said: "the market demand is relatively strong, the inventory level of the end customer manufacturers is relatively low, and the demand for panel is still very strong. At present, the overall market demand is still in short supply, and the market price continues to maintain It is expected that this situation will continue for a period of time, and the relationship between supply and demand will enter a relatively balanced situation

However, it should be noted that the panel industry technology iteration is very fast, and belongs to the technology intensive and capital intensive industry. Japanese and Korean manufacturers withdraw from LCD production line and mainly focus on OLED panel field. If the latter's display technology completely replaces LCD, the huge investment of LCD production line in the early stage will face huge losses.

TCL technology said that in terms of technology, the printing and printing OLED and microled of the next generation display technology have a layout. At the same time, with the production of the world's highest generation lines T6 and T7, CStar's scale, efficiency and technical advantages are further highlighted. With the continuous improvement of future production capacity and operating net cash flow, the company also has a solid and solid industrial integration and investment ability.

It is worth noting that in addition to the T9 project, TCL technology also plans to demonstrate the construction of a Guangzhou Huaxing 8.5 generation flexible windable OLED display panel production line (hereinafter referred to as "T8 project") with a monthly processing capacity of 2200mm × 2500mm glass substrates, which will mainly produce and sell 32-95 inch 4K / 8K ultra-high-definition large-size printed coilable oledtv, it and high-tech Value added commercial display products.

Among them, the T9 project will be started first. After the technical demonstration is mature, all parties will start the cooperative investment of T8 project after consensus.

Which segment of panel industry will be the most competitive in the future?

Nyingchi believes that: "the competition in the field of small and medium-sized OLED panels will be very fierce. BOE has an early layout and large production capacity, and it has the first mover advantage; TCL CStar OLED technology has made rapid progress and can keep up with the market demand."

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