The Chinese flat panel display industry is facing a route choice

With the successive commissioning and mass production of various domestic high-generation LCD panel lines represented by BOE and CSOT's 8.5-generation lines, the Chinese mainland has completely ended the history of lacking chips and screens, greatly improving the long-term dependence on foreign core components in the color TV industry. Data shows that although the Chinese mainland developed the liquid crystal display industry later than Japan, South Korea and other countries, it has surpassed Japan in the liquid crystal display industry due to seizing the opportunity. It is expected to surpass Taiwan, China and South Korea within the next 10 years and become the world's number one.

However, compared with Japan and South Korea, the key materials and equipment of China's flat panel display industry are still controlled by others. What is even more serious is that flat panel display technology is once again on the eve of a major transformation. OLED (Organic Light-Emitting Diode) display technology and HLP (Holographic Laser Projection) display technology are on the verge of replacing liquid crystal (LCD) display technology.

Industry insiders point out that if China does not promptly take strong measures, appropriately concentrate its efforts and strive to avoid repeating the mistakes of the past 20 years, but continues to be in a passive "introduction" state in international competition and cannot independently master core technologies, the development of China's national economy and science and technology will face serious losses in the future.

China's flat panel display industry has entered a critical period of "growing from weak to strong"

Wang Dongsheng, the chairman of the Liquid Crystal Branch of the China Optoelectronics Industry Association, said at the recent "China?" event. It was stated at the "2012 Beijing International Flat Panel Display Industry Summit Forum" that China has become an important base for the global flat panel display industry and is currently entering a critical stage of "growing from weak to strong".

It is understood that by the end of 2011, a total of 12 production lines in China's flat panel display industry, including two 8.5-generation lines and above, had been put into operation. There are still 8 high-generation lines under construction or planned, with an estimated total investment of over 200 billion yuan. Once all of them reach full production capacity, they will account for more than 20% of the global production capacity. It has covered all product specifications of the full range from 2 inches to over 55 inches, basically changing the supply and demand pattern where all medium and large-sized display screens relied solely on imports. The proportion of domestic materials has increased significantly, and the degree of domestic production of equipment has also improved to a certain extent. Despite this, China's flat panel display industry still faces huge growth pressure. Panel prices keep falling, and global panel enterprises are in a difficult situation. Although the situation has improved recently, the difficulties and challenges faced by the industry have not passed.

Chen Yanshun, the president of BOE Technology Group Co., LTD., previously pointed out in an interview with the media that the global flat panel display industry is currently in a period of "lack of transition" : on the one hand, the display panel industry has passed the rapid growth period and entered the mature stage after three market application waves of notebook computers, monitors and televisions. On the other hand, new market demand has fallen short of expectations, and the prices of global display panel products are still continuously declining. He believes that the competition in the current flat panel display industry has taken on a new trend. It has escalated from the scale competition among enterprises in the past to the competition of industrial chain integration among countries, from the past "price war" to the "patent war", and in the future, it may even escalate to the "green war" and the "standard war".

Starting from April 1st this year, China has adjusted the provisional import tariff rates for four tariff items including liquid crystal display panels. The import of 32-inch and above liquid crystal display panels without backlight modules will no longer be subject to the previous provisional tariff rate of 3%, but will resume the most-favored-nation import tariff rate of 5%. According to this adjustment plan, the import cost of 32-inch and above liquid crystal display panels without backlight modules will increase by 2 percentage points. At present, the tariff on liquid crystal panels has been adjusted back from 3% to 5%. However, the 5% tariff on panels is still relatively low. TCL has applied for another increase in the tariff on panels to protect domestic panel enterprises. Li Dongsheng, chairman of TCL Corporation, said. In fact, as early as April when the state announced the adjustment of tariffs, there were widespread rumors in the industry that the import tariff on panels might be further raised from the current 5% to 8% to 12%. TCL's application this time is aimed at further strengthening the competitiveness of domestic panel enterprises.

In this regard, industry experts believe that policy support is one aspect, but domestic panel enterprises should also transform towards high-end products. Zhang Yu, vice president of BOE, said, "In the fields of LED panels and 3D panels, domestic panels are still absent." Domestic enterprises need to take a diversified route and enter the fields of 46-inch, 55-inch, 3D and LED panels.

The panel supporting industry has pricing power only when it has a certain scale

At present, China's flat panel display industry mainly has four problems: the overall scale of the industry is relatively small, and the investment entities are relatively scattered; The local R&D strength is insufficient and the core technology foundation is weak. The localization level of key supporting facilities is low, and the market competitiveness of enterprises is weak. The construction of the talent team urgently needs to be strengthened. In China? Diao Shijing, deputy director of the Department of Electronics and Information Technology of the Ministry of Industry and Information Technology, said at the "2012 Beijing International Flat Panel Display Industry Summit Forum".

Diao Shijing believes that currently, China's flat panel display industry has three core tasks to complete: First, it should focus on innovation and promote the research and development of new products and technological improvement in the existing liquid crystal display industry. Encourage enterprises to break through the technological bottlenecks in the flat panel display industry through international cooperation, mergers and acquisitions, and taking stakes in advanced foreign enterprises, etc., by means of introduction, digestion and absorption. Second, increase support and attach importance to the research and development and industrialization of the new generation of display technologies. Establish a technological innovation system that combines "industry, academia, research and application" with enterprises as the leading force. Third, improve the supporting facilities and accelerate the localization of materials, spare parts and equipment.

Diao Shijing particularly emphasized the significance of the panel supporting industry. He cited a smile curve table of the liquid crystal panel industry chain. In this curve table, the gross profit margin of the liquid crystal panel industry was -5% to 0% before localization, while it was 10% to 15% after localization.

The leader of the flat panel display industry chain is the panel. In recent years, the establishment of various high-generation liquid crystal panel lines in China has greatly driven the demand for upstream materials and equipment, promoting the localization process of materials and equipment such as glass substrates, liquid crystal materials, backlight components, polarizers, and ics. At present, the domestic material matching rate of China's flat panel display industry is about 30%, while the domestic equipment matching rate has increased to about 15%. However, compared with Japan and South Korea, the key materials and equipment of China's flat panel display industry chain are still controlled by others.

According to industry insiders, a large part of the investment in the construction of liquid crystal panel production lines comes from equipment. To build an 8.5-generation line, the equipment investment needs to reach about 15 billion yuan. Unfortunately, most of these devices need to be imported. For instance, almost all the exposure machines used for liquid crystal panels worldwide come from Nikon and Canon of Japan. Other equipment such as sputtering machines and photoresist coating machines are also mainly from Japan. In addition, many raw materials required in the production process of liquid crystal panels also need to be imported.

The upstream material supply in our country must reach a certain scale in order to have the power to set prices. Professor Zhang Baizhe from the Engineering Technology Center of Liquid Crystal Technology of Tsinghua University said. As most domestic enterprises do not master core technologies and pricing power, this objectively greatly compresses the profit margins of enterprises. In this regard, many industry insiders have stated that by seizing the key link of panel manufacturing and providing support for the localization of key materials and equipment, it will thereby drive the construction and improvement of the entire industrial chain.

Gao Hongjin, honorary chairman of the Liquid Crystal Branch of the China Optoelectronics Industry Association and a professor at Tsinghua University, said, "At present, enterprises' recognition of domestic materials is not high enough. The state should encourage enterprises to innovate and provide policy support for the localization of materials, and offer assistance to the development of the upstream materials industry."

Zhang Jianjun, the chairman of Shenzhen Sanlipu Optoelectronic Technology Co., LTD., a polarizing film manufacturer, suggested that the state and industry authorities should, from a strategic perspective and to protect the domestic industry, offer relevant tax preferential policies and certain financial support to accelerate the research and development speed of various materials and improve the industrial chain as soon as possible. Meanwhile, under the government's leadership, efforts should be accelerated to form a flat panel display industry alliance to prevent upstream and downstream enterprises from fighting alone.