The localization of LCD panels with a production value of ne 2015-06-23 Guide: Recently, the flat panel display supporting industry in Chinese Mainland has made two breakthroughs: first, Shenzhen Qingyi Optoelectronics 8.5 generation TFT mask successfully went offline, breaking the technological monopoly of foreign enterprises in the field of large size TFT mask; Secondly, Dongxu Optoelectronics will invest 3 billion yuan to build 3 fifth generation color filters (CF) for TFT-LCD production Recently, the flat panel display supporting industry in Chinese Mainland has made two breakthroughs: first, Shenzhen Qingyi Optoelectronics 8.5 generation TFT mask successfully went offline, breaking the technological monopoly of foreign enterprises in the field of large size TFT mask; Secondly, Dongxu Optoelectronics will invest 3 billion yuan to build three fifth generation TFT-LCD color filter (CF) production lines, smoothly entering the upstream key raw material color filter field of the panel industry. Although China's flat panel display supporting industry has achieved certain results in recent years, it still faces significant obstacles in key technologies, core patents, and market development. With the rapid development of flat panel display industry in Chinese Mainland, can the upstream supporting industry break the monopoly pattern for a long time and achieve "overtaking at a curve"? The mainland has achieved phased results with an output value of nearly 100 billion yuan The upstream supporting output value is nearly 100 billion yuan. After years of layout, the construction of supporting industrial chain in Chinese Mainland has achieved phased results. In recent years, the flat panel display industry in Chinese Mainland has developed rapidly. According to preliminary statistics, Chinese Mainland has built and plans to build more than 15 advanced LCD panel production lines, making it the second largest panel production base in the world after South Korea. Such large-scale investment greatly drives the huge demand in the upstream of the industrial chain, and drives the development of upstream industries such as substrate glass, liquid crystal materials, polarizers, color filters, optical films, touch screens, backlight sources, and related raw materials, components, and related equipment. According to Professor Gao Hongjin from Tsinghua University, after 2016, China's TFT-LCD industry will require at least 250 tons of liquid crystal materials, 100 million square meters of substrate glass (including color film glass), 100 million square meters of polarizing film, 50 million square meters of color filters, billions of square meters of optical films, hundreds of millions of backlight components, and billions of driver ICs annually, with a total value of nearly 100 billion yuan. Zhao Yong, Vice President of Huaxing Optoelectronics, told reporters that from the procurement situation of panel matching, glass substrates are in the first place, followed by polarizing films, and liquid crystal materials are in the third place. Therefore, achieving localization of liquid crystal materials is of great significance for industrial development. After years of layout, the construction of supporting industries in Chinese Mainland has achieved phased results. A reporter from China Electronics News learned in an interview that substrate glass accounts for about 20% of the cost of TFT-LCD raw materials. Two companies in China, Rainbow and Dongxu (including China Optoelectronics), have started supplying G5 and G6 substrate glass in bulk. Rainbow is expected to start investing in the G8.5 substrate glass project by the end of 2015. The optical film used in backlight modules accounts for about 15% of the total cost of LCD panels. In recent years, manufacturers such as Yuxing Corporation, LeKai Film, and Kangde Xin have achieved mass production of their base films. Polarizing film accounts for about 10% of the cost of TFT-LCD panels, making it one of the most difficult materials for localization progress. At present, only the TAC film of TN-LCD has been localized, and Shengbo Optoelectronics and Sanli Spectrum are conducting research and development in this field. Although LCD materials only account for about 3% of the total cost of LCD panels, they are crucial core raw materials for LCD panels. In China, Chengzhi Yonghua and Jiangsu Hecheng can supply TFT hybrid LCD to LCD panel factories. Foreign companies settle in mainland China, while local enterprises face challenges in their layout Optimistic about the market prospect of Chinese Mainland, foreign giants have set up factories and production lines, posing more serious challenges to Chinese local enterprises. Although China's supporting industries have made some progress, the reality that we have to face is that almost all LCD supporting industries are dominated by oligopolistic monopolies. In recent years, with the rapid development of the LCD panel industry in Chinese Mainland, these foreign giants have changed their strategies and set up factories and production lines in Chinese Mainland, which, to a certain extent, poses more severe challenges to the localization process of China's LCD accessories. From a global perspective, substrate glass is mainly divided among four manufacturers, with Corning accounting for about half of the market share, Japan's Asahi Glass and Electric Glass accounting for 25% and 21% of the market share respectively, and Anhalt (formerly known as Nippon Glass NHT) accounting for 4%. The global substrate glass industry's profits of one or two billion US dollars are mainly shared by these American and Japanese companies. In terms of optical base film, over 80% of the global production capacity is contributed by Mitsubishi Resin, Toray, Teijin, DuPont, Kelon SKC、 It is monopolized by several giants such as Toyo Textile. The market share of liquid crystal materials in the global market is still limited, and the huge TFT material market is dominated by foreign companies. In 2013, Merck from Germany, JNC from Japan, and DIC from Japan had a global market share of up to 96% in the liquid crystal materials market. In the largest LCD TV polarizer market, Nitto Electronics holds 33%, Sumitomo Chemical holds 28%, and LG holds 27%. The combined market share of these three companies in the overall TV polarizer market is 88%. Although these foreign-funded supporting enterprises have already gained an absolute advantage in the global market, DIC and Merck have respectively opened their own hybrid factories in Qingdao and Shanghai to supply Chinese LCD panel enterprises nearby due to their optimism about the huge market demand in China in the future; Nippon Electric Corporation Limited will set up its third base plate glass factory in Chinese Mainland in Nanjing; Corning also opened its first research and development center in Chinese Mainland in Shanghai. Hu Chunming, director of the industry research department of the LCD branch of the China Optics and Optoelectronics Industry Association, told reporters that the settlement of foreign-funded supporting enterprises in Chinese Mainland can accelerate the development of supporting industries, but also challenges local supporting manufacturers. On the one hand, foreign-funded enterprises investing in mixed crystal factories in China vigorously promote their contributions to localized supporting industries and call for them to enjoy the same policy benefits as mainland enterprises. On the other hand, the initial market strategy of mainland enterprises is often to try to open up the market at lower prices. Faced with competition from mainland enterprises, foreign enterprises generally choose to compete in price wars, which can significantly reduce their profitability. For manufacturers in Chinese Mainland, in order to avoid malicious price competition, they should seek breakthroughs in key common technologies and actively deploy the intellectual property attack and defense system. Joining forces to support localization and improve gross profit margin of LCD panels The upstream supporting industry is the most profitable link in the entire TFT-LCD industry chain. The localization of liquid crystal materials and equipment plays a crucial role in improving the gross profit margin of panel manufacturers. In the "smile curve" of the profit structure of the LCD industry chain, the upstream supporting industry is at the highest gross profit margin position and is the most profitable link in the entire TFT-LCD industry chain, while the LCD panel is at the bottom. The localization of LCD materials and equipment plays a crucial role in improving the gross profit margin of panel manufacturers. This is also the main reason why China must accelerate the development of the LCD panel supporting industry. However, the development of supporting industries in Chinese Mainland is facing huge obstacles under the situation that foreign-funded enterprises occupy a strong position in the industry. Taking liquid crystal materials as an example, even a slight problem with the liquid crystal material can affect the performance parameters and production yield of the entire panel. When panel companies adopt domestically produced materials, they are concerned about the product performance of the liquid crystal material and the consistency of the quality of each batch; On the other hand, there are also concerns about patent issues. Many panel manufacturers have stated in interviews with reporters that they have been warned by Merck due to the use of domestically produced liquid crystal materials. Regarding this, Gao Hongjin told reporters that solving the localization of raw materials and components is not only the responsibility of upstream supplier enterprises, but also the responsibility of component enterprises. They are a community of shared interests in this matter. Powerful device companies have a responsibility to support upstream raw material and equipment manufacturing enterprises, extend a helping hand, rather than passively waiting. The practical application of materials often requires a lengthy certification stage, which requires close cooperation between supply and demand, and strong support from device companies is essential. In recent years, panel manufacturers such as BOE, Huaxing Optoelectronics, and Longteng Optoelectronics have continuously increased the proportion of domestic procurement for upstream supporting industries, hoping to support the development of domestic supporting industries. Recently, Dongxu Optoelectronics announced the construction of a 3 billion yuan color film production line, with early customers locking in Longteng Optoelectronics and BOE. According to the Strategic Cooperation Agreement signed between Dongxu Optoelectronics and Longteng Optoelectronics, Longteng Optoelectronics' 5th generation TFT-LCD panel production line alone can absorb more than 70% of Dongxu Optoelectronics' 5th generation color film production line's capacity. At the same time, Dongxu Optoelectronics and BOE signed a 5-year strategic cooperation agreement, fully entering BOE's supply system and jointly promoting the localization of LCD panel production equipment. Longteng Optoelectronics spokesperson Cai Zhicheng told reporters that in 2014, Longteng Optoelectronics' raw material procurement ratio had reached 73%, of which the proportion of LCD material matching reached 70%. When China's liquid crystal material industry is in a weak situation, the panel enterprises in Chinese Mainland should support them and give more growth opportunities to upstream manufacturers. 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