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Company News >> OLED panel: Behind the TCL scenery, Samsung and LG have to guard against 16th,March,2021
                                         As a "dead once" company, the success of TCL Technology (000100.SZ, hereinafter referred to as "TCL") is largely due to the decision of Chairman Li Dongsheng ten years ago: to switch to LCD (liquid crystal panel) in time.

Today, ten years later, TCL Technology has become one of the world's leaders in the field of LCD panels. The company was founded in 1982 and currently focuses on the semiconductor display and material industry chain. Its subsidiary TCL Huaxing Optoelectronics Technology Co., Ltd. (hereinafter referred to as "TCL Huaxing") is its main revenue source. Li Dongsheng has served as the chairman of the company for more than 20 years. He is the soul of TCL and the company's largest shareholder.

According to the performance forecast released by the company on January 12, the company's net profit attributable to the parent in 2020 will be between 4.2 billion yuan and 4.46 billion yuan, an expected increase of 60%-70%. Under this favorable stimulus, the company's stock price reached 10.25 yuan per share on January 18, and the market value exceeded 140 billion yuan to a record high.



Source: TCL announcement

However, the hidden crisis behind the praise has not dissipated, but is getting closer. Investors who are bearish even declared that "Samsung OLED's success and cost reduction is the beginning of the delisting process of BOE and TCL." What are the reasons for such "warranty" comments?

/ 01 /

Lessons from the past, familiar with each other

Before officially turning to liquid crystal panel (LCD) production in 2009, Li Dongsheng bet on CRT (cathode ray picture tube). The flat-screen large color TVs that 90 generations saw when they were young adopted this display technology.

In the 1990s, CRT display technology was the target of domestic manufacturers such as Changhong, TCL, Hisense, etc., and the production capacity of CRT displays increased year by year.

In 2000, China became the world's largest producer of color TV sets, and domestic manufacturers paid more attention to CRTs and continued to invest heavily. At that time, TCL, already ranked among the domestic color TV giants, went further and initiated a series of ambitious cross-border mergers and acquisitions.

In 2002, TCL acquired Schneider, a century-old German store. In 2004, TCL, which was listed as a whole, continued to run at full capacity, directly targeting French Thomson's global color TV business.

Thomson is the originator of traditional picture tube televisions, and produced the world's first color television. It was ranked among the top 500 in the world at that time and was much larger than TCL. At that time, Li Dongsheng stood up to the crowd and insisted on advancing this "snake swallowing elephant"-style merger and acquisition, which made TCL one of the top three in the global color TV industry. Since then, TCL has won the mobile phone business of another French company Alcatel.

That year, Li Dongsheng appeared on the cover of "Fortune" magazine and was awarded the title of "Asia's Most Influential Business Leader" of the year. He was also named "2004 World's Most Influential Business Leader" by the US "Time" and other media. 25 business leaders".

However, at the same time that Li Dongsheng added his glory, a revolution initiated by liquid crystal display technology (LCD) is quietly subverting the original huge market of CRT.

Around 2000, Japanese and Korean manufacturers were already developing LCD technology. In 2004, LCD TVs with selling points such as "ultra-thin" and "high-definition" quickly occupied the market as soon as they were launched. Traditional CRT manufacturers have been severely impacted, and TCL, which has invested heavily in this technology, has not been spared.

Li Dongsheng has long seen the general trend of technological iteration, but he did not expect the changes to come so quickly. In 2005, Li Dongsheng's fourth life year, the two companies acquired by TCL suffered huge losses. The company suffered its first loss in 20 years, with a loss of more than 2 billion yuan.

Li Dongsheng, who was suddenly in trouble, lost more than 20 catties in half a year.

In 2006, TCL continued to suffer huge losses. In 2007, TCL was put on ST, and the former star enterprise became the target of public criticism. The Chinese version of "Forbes" left Li Dongsheng the sixth place in the "Worst Boss of Chinese Listed Companies" that year.

As for the reason for the initial loss, Li Dongsheng believes that the main reason is the insufficient judgment of the speed of upgrading from CRT to LCD in the color TV industry. At the same time, he made mistakes in the two directions of LCD and PDP (plasma).

However, the reason why Li Dongsheng became the current Li Dongsheng is that he was not defeated, but achieved Nirvana rebirth. In the widely circulated article "The Rebirth of the Eagle", Li Dongsheng expressed this view: Either wait for death or go through a very painful process of renewal to complete the transformation.

Therefore, Li Dongsheng chose to catch up with the technological change of LCD panels. In 2009, TCL adjusted its business structure and jointly invested 24.5 billion yuan in the TCL Huaxing 8.5-generation LCD panel project with the Shenzhen Municipal Government. By 2012, TCL's LCD TVs were among the top three in the world for color TVs with a sales volume of 157.81 million units.



Image source: Cinda Securities

We look back at TCL's "death once" experience, not to tell the business inspirational story of Li Dongsheng, a big man. It is to compare with the past and discover the pros and cons of TCL's heavy bet on LCD in recent years.

Because, compared with the CRT of the year, the problems faced by LCDs that have been in development for two decades are familiar. Although the eagle is strong, it can only be reborn once.

/ 02 /

South Korean companies retreat and their performance increases

After getting rid of the crisis and gaining a firm foothold, TCL's subsequent performance has not been stable, and its net profit growth has fluctuated up and down.

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