Text | AI Finance and Economics Mace Wang Can
Editor | Zhao Yanqiu
“We believe that the overall risk is controllable. "TCL Huaxing Senior Vice President Zhao Jun told AI Finance at a media communication meeting in early September when talking about whether there was a risk of China's panel industry being stuck.
The chip industry is hampered by the United States in key technologies, which has triggered domestic concerns about the domestic panel industry. After all, one screen and one core are the basis for many electronic products. Standard.
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What made Zhao Jun make the above judgment is that mainland China has become the global LCD industry core. In mainland China, the number of high-generation production lines capable of producing large-size LCDs of 32 inches or more will be completed by 2021, accounting for about two-thirds of the world's production line layout. In terms of production capacity share, mainland China accounted for 42% of the world's total in 2019, will reach 51% this year, and will continue to climb to 63% next year.
"China's semiconductor display industry and panel industry have become the main source of business for foreign companies in this field. They will not stick to their own necks." Zhao Jun said at the communication meeting explain.
On the other hand, an industry insider told AI Finance and Economics that the United States itself has not made efforts in the display industry and has relatively little influence in this field.
But just a few days ago, news came that Samsung and LG Display had stopped supplying high-end mobile phone panels to Huawei. The main reason was that the high-end display panel driver chips of the two manufacturers used American technology. Therefore, even if they are not American companies, they are not allowed to supply Huawei. This is a bad sign. The domestic display industry still relies on Japanese and Korean suppliers for key equipment and advanced materials.
Is there any risk of China’s panel industry being stuck? "It depends on whether the United States restricts Japanese and Korean companies through long-arm jurisdiction." An industry insider told AI Finance.
Relying on Japan and South Korea
Domestic display industry Some key equipment and advanced materials still rely on overseas suppliers, concentrated in Japan and South Korea.
In the field of OLED displays used in most mobile phones, vacuum evaporation machines are known as "lithography machines in the screen industry." Evaporation is the core link in the OLED production process. Just like the photolithography machine is to the chip, the evaporation machine holds the lifeblood of the global OLED industry. Xiao Song, a former engineer at BOE, told AI Financial News: "The evaporation machine is theoretically more difficult than the photolithography machine."
And this heart technology is in the hands of Japan's Canon . The high-end evaporation machines all come from a small factory in Japan called Canon Tokki. Tokki was acquired by Canon in 2007. Whether it is Samsung Display Department or domestic CSOT and BOE, if they want to mass-produce stable and reliable OLED displays, they cannot do without this company. However, the annual production capacity of Tokki evaporation machines is less than 10 units, and each unit sells for more than 100 million U.S. dollars, making it very expensive and popular.
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"It has basically been bought out by Samsung, and it is rarely available in China." Xiao Song said.
As an early customer of Tokki, Samsung persisted in cooperating with Tokki to help it survive its survival crisis in 2006. Later, the two parties signed an agreement, and all the equipment produced every year was supplied to Samsung.
This also gives Samsung a head start in OLED. It was not until Tokki's production capacity was increased in 2017 that BOE and CSOT obtained procurement quotas.
In addition to the "screen industry lithography machine", Du Feng, an industry insider who has conducted photoresist market research, told AI Finance News that BOE claims to be using lithography machines now. A considerable part of the glue is domestically produced and self-developed. "But it is actually Japan Synthetic Rubber Company (JSR) that provides its patent authorization and technology."
He explained: "To put it simply, it is to purchase ordinary raw materials domestically. , then mix it with some very low-proportion materials provided by Japanese companies, and make it into photoresist in a dust-free workshop. ”
Photoresist. It is a key upstream raw material for panel manufacturing. The related technology is monopolized by the United States and Japan. Japan dominates in finished products and upstream materials. "You definitely can't make it without other people's core raw materials." Du Feng said, "We have only completed a superficial localization, but in fact it is still a high-end assembly factory."
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In addition to photoresist, the key to making glass conductive and emitting light, and eventually turning it into a screen, is ITO target technology, which is also dominated by Japan. "ITO is used for electroplating on glass and is a transparent conductive material." Xiao Song told AI Financial News that the domestic consumption of ITO targets is more than 1,000 tons per year, and most of them, especially the high-end parts, are imported.
"Now ITO targets can be made domestically, but it is difficult to break through in size, and the output efficiency is far behind foreign countries." Based on his understanding last year, what can be made domestically The target length does not exceed 800 mm, while Japanese and Korean companies can achieve 3000 mm. The gap is obvious. Data show that China is the largest demander of ITO targets, accounting for 25% of the world's demand. According to statistics, before 2019, nearly 90% of domestic ITO targets relied on imports.
As for the "sintering furnace" production equipment for ITO targets, the top ones are basically all from Japan. It is said that such a device can easily cost tens of millions of yuan. The sintering process is a secret recipe that every company keeps behind the scenes and does not sell.
In addition, the domestic self-sufficiency rate of polarizer, the core material of the panel, is also at a low level and still needs to be imported in large quantities. At present, the global polarizer industry is mainly dominated by Japan's Nitto Denko, South Korea's Samsung and LG, and Taiwanese companies Chimei Materials and BenQ Materials.
In addition to Japan and South Korea, American companies have a greater say in high-generation glass substrates. Glass substrates are the most upstream of the panel industry, and most of the market share is divided up by several major manufacturers such as Corning of the United States and Asahi Glass of Japan.
“Every place where there is a BOE factory, there is a Corning factory.” Xiao Song told AI Finance and Economics that it is basically a supporting facility.
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AI Finance News learned that both BOE and CSOT have formed relatively stable glass substrates Supply matching. BOE mainly cooperates with Corning of the United States, while CSOT mainly provides supporting supplies from Asahi Glass of Japan.
"Corning is number one in the world, but others are far behind it, including Japan and South Korea." Xiao Song said. Corning has been involved in the Chinese market for more than 35 years and has established offices in 17 cities in China. It is also the main supplier of external screens for domestic mobile phone manufacturers. Its investments in China are huge. As of the end of 2019, Corning's investment in China has exceeded US$7 billion.
The United States has a certain say in the panel industry through Corning. However, Xiao Song analyzed that the possibility of the United States suppressing China through Corning is almost zero. The Chinese market is Corning's largest market outside of North America. Losing the Chinese market will cause irreparable losses to both parties.
"If the United States deliberately strikes, it depends on whether Japan and South Korea follow suit. For the United States alone, the impact will not be big. The impact brought by the United States is mainly related to trade." Xiao Song say.
The practical reasons that cause domestic enterprises to rely on foreign countries for key technologies are: on the one hand, in the past, everyone believed that the larger the enterprise, the more globalization it needs. Although the upstream materials and equipment must be localized, The rate is gradually increasing, but as a last resort, import costs are still low. On the other hand, the entire domestic chain does not pay enough attention to and invest in core technologies. Over the past few years, there have been many calls for lagging behind in key technologies, but little has changed.
Domestic duo structure
Although upstream materials and equipment Relying on overseas, it is undeniable that in recent years, China's LCD panel production has been at the forefront of the world, with huge advantages in terms of efficiency, competitiveness, and market response speed. Among them, China is already a global leader in large-size LCD panels. By 2023, China's production of large-size LCD panels will reach or exceed 70% of the world's output.
At the same time, Japanese and Korean companies are accelerating their withdrawal from the LCD panel business. Samsung and LG, the two major Korean manufacturers, both withdrew this year and focused on new industries represented by OLED. OLED displays are thinner, lighter and have better color display.
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Analysts told AI Finance and Economics that the rise of mainland China’s panel industry has intensified the increase in production capacity. Competition has kept LCD panel prices low, and the epidemic has added to the burden, which is an important reason for the withdrawal of Korean companies.
However, Xiao Song told AI Finance News that Samsung withdrew from LCD panel production because "all other LCD factories need to use Samsung's technology and equipment." "Samsung is using LCD technology to make money and then develop OLED." He said that Samsung's technology and equipment are not only limited to panel production, but the upstream of panel production also relies on it. "Liquid crystal is still profitable for Samsung."
The withdrawal of Samsung and LG Display has further concentrated LCD panel production capacity in mainland China. Many analysts have expressed concern about BOE. , China Star Optoelectronics has a bullish attitude. "With the increase in the market share of the two leaders in panels, the industry cyclicality has been significantly shortened, panel price fluctuations will be greatly slowed down, and the pattern is promising in the long term." Cinda Electronics Research believes that this round of panel boom upward cycle will last for 1-2 years Year.
On August 28, TCL announced that it would acquire a 60% stake in Suzhou Samsung Electronics Liquid Crystal Display Technology Co., Ltd. and a 100% stake in Samsung Display Co., Ltd. for approximately US$1.08 billion, thereby acquiring 8.5% generation LCD production line.
"BOE still has the highest shipment volume of LCD TV panels, but after we merged and acquired those production lines, the scale is basically the same." TCL Huaxing Optoelectronics LCD Development Center General Manager Zhao Bin told AI Financial News. The two companies rank first and second respectively in global LCD TV panel shipments and shipment area. The establishment of the two-hero pattern is conducive to further enhancing the absolute voice of mainland China's panel display industry.
"China Star is more like a supporting company of TCL, with a sense of self-sufficiency." Xiao Song said that BOE has more advantages in scale.
"Judging from the current technical landscape of LCD panels, the two sides do have to compete." Zhao Bin said that the two companies are from different technical schools, and Huaxing Optoelectronics uses VA. BOE is IPS, and both are common panel types for LCD displays, but CSOT is more similar to Samsung, and BOE is more like LG.
The two sides will also penetrate each other in the future competition. Huaxing Optoelectronics previously acquired a factory of China Electronics Information Industry Group, which has a similar technology to BOE. BOE had also previously hoped to join the bidding for the Suzhou Samsung factory. "The two parties may have a process of technological integration." Zhao Bin said.
According to AI Financial News, Huaxing’s technical route can provide better contrast and faster response speed for TV panels. Products from Samsung and Sony all belong to this camp. . BOE is another method with wider application. In terms of investment, BOE is more diversified and CSOT is more focused.
Next-generation technology competition begins
Large-size LCD Panels have become the domain of Chinese manufacturers, but a BOE LCD production line employee expressed pessimism to AI Finance: "It's going to be scrapped." He has been with BOE for more than five years, and recently he has increasingly felt that "LCD has no future."
OLED replacing LCD seems to be the general trend. Samsung has taken over 80% of the OLED market share by virtue of its first-mover advantage. Chinese companies still need time to catch up.
This is the intuitive feeling from front-line workers. But corporate managers have a completely different view. TCL Zhao Bin believes that the next generation of display technology will be relatively mature in 4-5 years, but product commercialization may have to wait until ten years later. "LCD should still be the mainstream in this decade."
But the competition for the next generation of display technologies - printed OLED and Micro LED has already started in advance. Currently, domestic companies involved in the R&D and production of new technologies include panel companies represented by BOE and China Star Optoelectronics, and traditional LED chip manufacturers. LCD replaced CRT, and the LCD TV market ushered in decades of vigorous development. At present, LCD technology has reached a development bottleneck. The industry believes that innovative display technologies such as printed OLED and Micro/Mini LED are the future of the display industry.
There are two main manufacturing processes for OLED panels. One is the evaporation process mentioned above, and the other is inkjet printing, which is printing OLED. The latter is believed to greatly improve the utilization rate of organic materials, reduce costs, and is more suitable for mass production.
CSOT launched the layout of printed OLED in 2015. In 2016, it built the first domestic test line for the G4.5 generation. This year, it cooperated with Japan's TJP to use its Carry out the development of OLED mass production screens at Japan's production lines.
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According to Zhao Jun, between 2022 and 2023, Huaxing will invest in building the second An 8.5-generation printed OLED factory. "If it can be realized, I believe it will be the world's first high-generation flexible printing OLED production line." Zhao Jun said.
Micro LED is considered the "ultimate form" of display technology, which generates color directly from pixels, thereby improving color performance. According to media reports, Huaxing has completed the shipment of mini backlight product samples and is expected to produce them next year. Mini LED is considered a transitional product to Micro LED.
BOE has also continued to invest in printed OLED, conducting comparative evaluations of technology, process, mass production efficiency, and cost on the experimental line in Hefei. However, according to Gao Wenbao, CEO of BOE's EVP and display and sensor business groups, he mentioned in a reply to investors' questions that BOE has not determined the final technical route and has no relevant production capacity construction plans for the time being. In terms of Mini LED technology, BOE is also developing it and is expected to mass-produce and ship it in the fourth quarter of this year.
Analysts predict that the scale effect of Chinese panel companies will bring rapid profit growth in the future. With financial support, China will have opportunities in more advanced microLED panel technology Catching up with Korean panel companies.
(At the request of the interviewee, Xiao Song and Du Feng are pseudonyms in the article)