After several days of fermentation, the situation seems to be getting worse and worse for BOE- Cook, who has always had strict requirements and a strong desire to control the supply chain, and can never accept the behavior of suppliers changing parameters privately.
However, the closure of this business has completely different impacts on both parties. From Apple's point of view, I believe Cook is not comfortable with the fact that Samsung failed. According to LEC report, 20 million of BOE's 30 million iPhone 14 screen orders will be given to Samsung, and 10 million will be given to LG. The game between Apple and these two manufacturers may last for a long time.
From BOE's point of view, the economic and reputation losses are visible to the naked eye. According to the current market, the total price of 30 million screens of iPhone 14 is close to10 billion yuan.
However, BOE's efforts to join the "fruit chain" will not be in vain: years of saturated investment have helped BOE build the most mature organic light-emitting diode production line with the strongest mass production capacity in China. Even without Apple, they won't lack new customers.
Compared with Apple that may be missed, the rise of domestic competitors, the price reduction and overcapacity faced by the OLED panel market are also worthy of BOE's attention.
After several days of fermentation, there is still no hope for a peaceful solution to the tug-of-war between JD.COM and Apple.
Prior to this, according to foreign media reports, BOE may cancel its iPhone 14 OLED screen order because it changed Apple's screen specifications without permission. According to the previous public information, BOE has accepted more than 30 million screen orders from Apple's iPhone 14, which is of great significance to its performance.
A hole in the wind is not without cause. Based on various reports, it is obvious that the root cause of this controversy is that BOE changed the width of TFT circuit privately in order to reduce the resistance and improve the yield. After this set of operations, BOE's profit margin will undoubtedly be significantly improved, but the side effect is that the brightness and power consumption of the panel are different from Apple's design, which may have a negative impact on the final product quality.
More importantly, Cook, who has always been strict with the supply chain and has a strong desire for control, absolutely cannot accept the behavior of suppliers changing parameters without permission.
AAC Technologies, another famous fruit chain company, has previously said, "In principle, all the links in the production line are controlled by Apple except the equipment and workers are AAC." Among them, the control software and computer system are Apple's, and the ERP system is also Apple's. Even the engineers in the production line have Apple factory employees. ...
In Cook's management philosophy, strengthening supply chain control is the key to ensure Apple's dominant position and product quality, and it is also the bottom line that cannot be challenged.
For Apple and BOE, if they can cooperate seamlessly, it is undoubtedly a win-win situation. But now there is a crack in the cooperative relationship, which may bring different degrees of influence to both sides.
For Apple, the impact of the breakdown of this cooperation on its supply chain system is moderate-especially in the face of the fact that Samsung failed, I believe Cook is not comfortable.
The foreign media LEC, which first broke the news, categorically stated that Apple would transfer the 30 million iPhone 14 screen orders originally given to BOE to Samsung and LG. There is no lack of irony in the report.
As we all know, the reason why Apple included BOE in the list of iPhone 14 panel suppliers was not only to ensure production capacity, but also to counter Samsung and reduce the supply risk brought by a single supplier.
According to Bloomberg's previous report, Samsung Display Company and LG's panel manufacturer LGD supplied 1. 1 100 million OLED panels to Apple in the past year, which were mainly used for the newly released iPhone 12 and iPhone 13 series models last autumn. You know, in the past year, Apple only purchased 65.438+0.7 billion panels, and Samsung and LG have accepted 64% of the orders.
Among them, the high-end versions of iPhone 13 Pro and iPhone 13 Pro Max panels are exclusively supplied by Samsung, and the role and status of the latter can be seen.
In view of this, Apple has been committed to expanding the list of panel suppliers in order to restrict Samsung and improve its bargaining power.
But unfortunately, Apple's wishful thinking may fail this time. According to LEC report, 20 million of BOE's 30 million iPhone 14 screen orders will be given to Samsung, and 10 million will be given to LG. The game between Apple and these two manufacturers may last for a long time.
From BOE's point of view, the economic and reputation losses are visible to the naked eye.
According to the current market, the total price of 30 million screens of iPhone 14 is close to10 billion yuan. In the last fiscal year, BOE's revenue reached 2 1, 93 1 billion yuan, up 6 1% year-on-year, and broke through the 200 billion mark for the first time in history. At first glance, without Apple's 65.438+000 billion order, it would not be a bone-breaking thing for BOE.
However, it should be noted that the order of iPhone 14 represents more than 10 billion transaction volume-this is behind BOE's long-simmering upgrade and transformation, and its determination to go to war with Samsung and LG.
According to the financial report data, the net profit of BOE in the last fiscal year was only 2583 1 100 million yuan, which was greatly improved compared with the past, but the net interest rate of 65.438+03.88% and the gross profit rate of 28.87% were not outstanding. In contrast, Samsung's profit margin has remained above 20% for a long time, and its operating profit margin in the third quarter of last year was as high as 26.8%, almost twice that of BOE.
As we all know, BOE's current revenue still depends on LCD business, but compared with organic light-emitting diodes, the profit gap of the former is obvious. Winning the Apple order and gradually upgrading the LCD business to organic light-emitting diodes is a transformation route planned by BOE for itself. Now the plan has been disrupted, which will definitely have a certain impact on its short-term performance.
It is undeniable that in the past few years, BOE has made a lot of efforts to break into the "fruit chain".
As early as 20 17, BOE reported that it was expected to join the fruit chain to produce mobile phone screens for Apple, but it failed because of technical and capacity problems. After that, BOE strengthened these two weaknesses and increased R&D investment while expanding the production line.
The data shows that the R&D investment of BOE 20/KOOC-0/7-202/KOOC-0/is 6.97 billion, 7.23 billion, 8.75 billion, 9.44 billion and/KOOC-0/243.6 billion respectively, and the year-on-year growth rate is also rising. By the end of last year, the total number of BOE R&D personnel reached 6,543.8+900,000, accounting for 24.8% of the total number of employees. In the past year, 9000 new patents were applied, 90% of which were invention patents.
After years of saturated investment, BOE finally has the confidence to wrestle with Samsung and LG.
In terms of production capacity, BOE's investment is also huge.
At the end of last year, JD.COM Fang Hao invested 46.5 billion yuan to build the sixth generation flexible AMOLED production line, which began to enter the mass production stage, and the production capacity has started to climb. In addition, according to media reports, JD.COM also plans to adjust the third-phase production line of B 12 factory to take orders for Apple iPad.
On the surface, BOE has invested a lot of money to expand production capacity and upgrade technology. If you can't squeeze into the "fruit chain" in the end, it is really a loss. However, the Value Research Institute believes that everything should be viewed from two sides: these sunk costs invested in the early stage have helped BOE build the most mature organic light-emitting diode production line with the strongest mass production capacity in China. Even without Apple, they have no shortage of new customers.
According to DSCC statistics, since 20 19, the smartphone market has shown a high-end trend, and Xiaomi, OPPO, vivo and Independent Glory have all made it clear that they will make efforts in the middle and high-end market. With this east wind, the permeability of the organic light-emitting diode board has also been greatly increased. The report shows that in 20021year, the penetration rate of organic light-emitting diode mobile phone panels was 52%, accounting for half of the country, and it is expected to reach 57% by the end of 2022.
According to the report of IHS Markit, the global market revenue of organic light-emitting diode display panels in 20021year was $68 billion, nearly double the $36.7 billion in 200219. Outside the "panel kingdom", China has become the second largest OLED panel supply market in the world.
Turn your eyes back to Beijing East. With the gradual improvement of OLED screen production capacity, the operating efficiency of Wuhan BOE Optoelectronics has also been comprehensively improved. In the first quarter of last year, this important subsidiary of BOE achieved its first positive profit in the past five years, with a net profit of 360 million yuan. The profit in a single quarter has exceeded the total net loss in the past four years.
When 2 1 announced a capital increase of nearly 20 billion yuan in June last year, BOE's layout and future planning in the AMOLED market surfaced. At present, mobile phone manufacturers including Glory, OPPO and Motorola have reached cooperation with BOE, which is still trying to develop VR/AR hardware, smart medical care, car screens and other markets.
The broad market prospect even allows BOE to continue to launch capacity expansion plans, especially the upgrade of high-end screen production lines.
The latest development is that in March last year, Wuhan BOE, a subsidiary of BOE, announced that it would expand the production capacity of its existing factory. The expansion plan is expected to invest 3.775 billion yuan, which is mainly used for the production line of 10.5 generation TFT LCD panel.
It is worth mentioning that, in response to the news that Apple may cancel the iPhone 14 screen order, BOE responded to investors on May 23 that it would not comment, and stressed that the company's annual target in the field of organic light-emitting diodes has not changed, and related businesses are still progressing in an orderly manner.
Through the above analysis, the value research institute believes that BOE's response is not tough or bureaucratic, but they do have their own confidence and consideration.
What's more, compared with Apple that may be missed, the rise of domestic competitors, the price reduction and overcapacity faced by the OLED panel market may be more worthy of BOE's attention.
According to the statistics of Omdia, a well-known research institution, the share of China manufacturers in the OLED panel market is expected to rise to 27% in 2022, nearly doubling from last year's 15%. With the increasing shipments of folding screen mobile phones and mid-to-high-end smart phones, the demand for OLED panels is expected to continue to rise, and this China manufacturer provides an upper-level opportunity.
In addition to BOE, TCL Huaxing Optoelectronics and Shentianma are also strong competitors of domestic panel manufacturers.
In terms of mass production capacity, market share and output, the pursuers behind BOE have made remarkable progress in recent years.
According to public information, BOE currently has five organic light-emitting diode production lines, and the production capacity of Chengdu, Mianyang, Chongqing and Fuzhou can reach nearly 50,000 pieces/month, which is the strongest among domestic manufacturers.
The advantage of Shentianma lies in the monthly mass production of 750,000 pieces of 4.5-generation line in its Shanghai factory, which is the strongest OLED panel production line in China, not inferior to LG and Samsung. But the problem is that its production capacity is too concentrated in Shanghai, and the 4.5 and 5.5 generation lines have mastered more than 95% of the production capacity. If there are two large-scale epidemics of this magnitude recently, the production capacity will drop like a cliff.
Huaxing Optoelectronics, another organic light-emitting diode manufacturer with high hopes from the industry, has similar problems. The 6th generation line of Wuhan, which was put into production on 20 19, has a monthly production capacity of over 450,000 pieces, and is the most important production line of TCL Huaxing Optoelectronics at present.
Of course, seeing the market gradually increasing, these head players are also actively increasing their production capacity. At the end of last year, TCL announced the establishment of T8 flexible OLED panel production line in Guangzhou. In June this year, 5438+ 10, the T5 production line with a total investment of1500 million also completed the capping of the module workshop and the comprehensive power station.
According to the industry law, it usually takes about two years from preparation to formal mass production of organic light-emitting diodes. In other words, the mass production capacity of BOE, TCL and Shenzhen Tianma will reach a new height around 2024.
However, while fully expanding production capacity, BOE should be alert to two crises: one is the short-term fluctuation of panel demand, and the other is the defect of core technology.
Although the industry is very optimistic about the application prospects of OLED panels, due to the international situation, economic recession and other factors, the cyclical off-season has begun to show its power. According to foreign media reports, Apple expects to reduce orders for iPhone SE and iPad in the second quarter of this year. Samsung has a similar plan to cut orders, and it is expected to design the production capacity of nearly10 million organic light-emitting diodes.
At present, Samsung has stopped some panel production lines in Vietnam and is preparing to withdraw the production line to South Korea and readjust its layout in Southeast Asia.
The value research institute believes that only the manufacturers with the highest output and the most stable production skills can be recognized by upstream customers in the case of volatile market demand. On the other hand, after cutting off some internal demand, Samsung and LG can also take more orders from external customers, which is not a good thing for local manufacturers such as BOE and TCL.
According to DSCC statistics, at present, LG's yield in organic light-emitting diode panels has been ahead, and has been stable at around 90% since 20 17. Samsung has also passed this threshold in the last two years, and the yield of some new production lines once reached the highest level of 95% in the industry.
In contrast, the data released by BOE is that the yield of mature products in AMOLED production line is above 80%, which is already the highest level of domestic manufacturers. The production capacity of Shentianma, which is closest to BOE, has just passed the 60% mark at 202 1, and TCL Huaxing Optoelectronics is also hovering around 60%.
In the final analysis, the core technology that determines the yield is still in the hands of Samsung and LG, which is a difficult problem that BOE must solve.
For example, Hitachi has the best production technology of FMM metal material, which is essential in the evaporation process of the most critical backplane part. Samsung reached an exclusive agreement with Hitachi early in the morning. Another example is the integrated circuit market driven by organic light emitting diodes. Samsung LSI and LG LX Semicon monopolize 90% of the market, and their dominant position is unshakable.
BOE has overcome the obstacles of mass production, and now it is time to find ways to overcome the technical difficulties.
With the advent of iPhone 4 as the demarcation point, Apple and even the entire smartphone market have ushered in an incomparably brilliant decade. However, after 2020, the outbreak of the epidemic, the global economic downturn and the escalating supply chain crisis accelerated the farewell of the smart phone market to the golden age.
Apple is undoubtedly still the world's leading consumer electronics giant. iPhone orders are still opportunities for all supply chain companies to get rich, but I am afraid that they no longer have the influence to decide the life and death of a company or an industry.
It is worth noting that since the second half of last year, BOE supply chain enterprises including Qingyi Optoelectronics, 800 million Time and Space, Grinda, Shangluo Electronics, Antarctic Light, etc. have successively successfully landed in A shares, and enterprises such as Ling Guangyun, Luwei Optoelectronics and Suzhou Tianlu have also started the IPO process. BOE, which may have missed the "fruit chain", has quietly cultivated an equally strong supply chain and driven the upstream and downstream of the industrial chain to prosperity.
In the business world, no one who leaves will surely fall down, and no order from Apple is not the end of BOE. As for whether the loss and impact can be minimized, it is necessary to test the hard power of BOE.