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>> Korean panel companies' losses are expanding, it is difficult to cope with the competition of Chinese panels 25th,July,2019
The second-quarter results released by South Korean panel company LGD showed that the net loss increased from 63 billion won in the first quarter to 550 billion won, and the loss increased nearly eight times. The analysis believes that this is mainly due to the oversupply of global LCD panels and the continuous decline in prices. Towards, compared with China's two major panel companies BOE and Huaxing Optoelectronics, it has shown that in the global LCD panel market, Korean panel companies have been unable to cope with China's challenges.
Korean panel companies have lost money and it is difficult to cope with Chinese panel competition
Chinese panel companies come to the fore
Before the mid-1990s, Japan was the world's largest producer of LCD panels. By the end of the 1990s, South Korea replaced Japan as the world's largest producer of LCD panels. Since then, two major panel companies in Korea, LGD and Samsung, have been ranked among the top two in the global LCD panel market.
In 2003, China's BOE acquired the modern 3.5-generation LCD panel production line. After nearly six years of digestion, BOE began to build an 8.5-generation LCD panel production line in 2009. In the same year, TCL and a number of companies set up Huaxing Optoelectronics in Shenzhen to start building 8.5 generations. LCD panel production line, which keeps up with the production technology of LCD panels abroad.
During that time, I saw that China's LCD panel companies began to build advanced LCD panel production lines. Previously, overseas LCD panel companies such as Sharp and LG, which are stagnation with China's joint venture to build advanced LCD panel production lines, quickly finalized joint ventures with Chinese companies to build LCD panels. The production line, but only a limited investment plan that became a reality later became a reality.
After BOE and Huaxing Optoelectronics opened the 8.5-generation LCD panel production line, they rapidly expanded their production capacity. Currently, they have built the world's most advanced 10.5/11-generation LCD panel production line. With the rapid growth of their LCD panel production capacity, they have become global in 2018. The top five LCD panel manufacturers, of which BOE surpassed LGD for the first time last year to become the world's largest LCD panel manufacturer.
With the rapid increase in the production capacity of China's LCD panel companies and the replacement of LCDs by more advanced panel technology OLEDs, Samsung's OLED panel shipments in the small and medium-sized panel market surpassed BOE in the first place; in the high-end TV market, QLED and OLED TV has become the mainstream, and LCD TVs are mainly developed in the low-end market. This has led to overcapacity in the global LCD panel, resulting in LCD panel prices continuing to fall from 2018.
Chinese and Korean panel companies compete
In fact, a few years ago, Korean panel companies saw that the rise of Chinese panel companies had made it difficult to compete with the latter. For this reason, Samsung has been continuously closing the LCD panel production line to reduce production capacity, and in the large-size panel market, it mainly pushes QLED. In the small and medium-sized panel market, OLED is the main push; while LGD continues to maintain the existing LCD panel production capacity, it continues to increase the capacity of large-size OLED panels.
After China's panel companies laid the foundation in the LCD panel market, they certainly realized the importance of technology. BOE took the lead. It started building small and medium-sized OLED panel production lines a few years ago. It officially started production at the end of 2017. Last year, it began to supply small and medium-sized OLED panels for Huawei. By the first quarter of this year, it has occupied the small and medium-sized OLED panel market. Nearly 10% of the market share, the market is second only to Samsung.
Under the competition of Chinese panel companies, Korean panel companies are beginning to face an unfavorable situation. Before 2018, the panel business was Samsung's second largest source of profit, but in the first quarter of this year, due to competition from Chinese panel companies in the LCD panel market and the small and medium-sized OLED panel market, its panel business experienced its first loss in 7 years. . LGD regards the large-size OLED panel business as its future. However, the business has not been profitable for many years, mainly relying on LCD panels to make profits. However, as the price of LCD panels continued to fall, there was a loss last year. More signs of a loss increase.
The loss of Korean panel companies is related to their high production costs. China's labor and land costs are lower than that of Korean panel companies, and the more advanced LCD panel production technology of Chinese panel companies is also conducive to reducing costs, which makes China Panel companies are in a good position to compete. The results of the first quarter of this year show that BOE and TCL have achieved 1.052 billion yuan and 779 million yuan respectively, which proves that Chinese panel companies are much more profitable than Korean panel companies.
At present, Korean panel companies have no interest in the LCD panel market. They hope to gain advantages in more advanced panel technology and hope to compete with Chinese panel companies with leading panel technology, among which Samsung is the most radical. Samsung is mainly promoting OLED in the small and medium-sized panel market. In addition to pushing QLED in the large-size panel market, it is also developing microLED and QD-OLED. It has launched microLED TV for the home market on this year's CES2019, highlighting its in-panel technology. There is indeed a unique advantage.
Baiming Technology believes that Chinese panel companies have gained rich experience and technology in the LCD panel industry, and the rich revenues they receive are sufficient to support their development of more advanced panel technologies. In particular, BOE has a place in the small and medium sized OLED panel market. China's panel companies will gradually catch up with Korean panel companies with advanced panel technology.
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