Transformation Of Panel Pattern: Supply And Demand Tend To Balance In 2021

In 2020, the panel industry will be booming in the industry and capital market. The acquisition and integration of domestic leading BOE and TCL technology began to push forward, and Samsung and LG, the major international manufacturers, delayed their withdrawal from the LCD market, and a new round of competition began.

From the background, the panel faced a complex situation last year. On the one hand, in the first half of the year, the outbreak of new crown pneumonia had an impact on the semiconductor display industry, resulting in a short-term suppression of terminal consumer demand; on the other hand, it also led to the delay of the semiconductor display industry cycle recovery, and the panel price fluctuated at the historical bottom. However, since the second quarter of last year, the panel industry has gradually entered a business cycle, prices have begun to rise, and the performance of enterprises has also improved.

According to the statistics of sigmaitell, the mainstream size price of TV panel has been rising from the lowest point in the second quarter, of which the price of small and medium-sized panel has increased most obviously. The price of 32 inch has doubled, and the cumulative increase of 43 inch has reached 75%. Among the large panels, 55 inches gained the most. It is expected that the price of LCD TV panel will continue to rise in the first quarter of 2021, and the price will be stable in the second quarter.

Correspondingly, from the small cycle point of view, the panel industry also ushered in a profit inflection point in the third quarter. From the perspective of the large cycle, the panel capacity is further concentrated in China. Li Yaqin, general manager of group intelligence consulting, pointed out that with global display entering the third stage of multi technology coexistence, China's panel factories should focus on expanding value-added market segments and further consolidating their leading position in the market. Enterprise strategy, local industrial chain and user demand will be the "troika" for Chinese display enterprises to consolidate their competitiveness.

Counter cyclical acquisition, expansion and exit

Looking back on 2020, counter cyclical acquisition has become a strategy for many large panel factories. Taking TCL technology as a representative, the news of investment and production expansion throughout the year. First, it invested in Japanese panel joled, and then took over Zhonghuan group, and then it took Samsung's 8.5 generation line in Suzhou.

The capacity of new members and old investment of TCL technology is forming a superimposed effect. For example, it acquired 60% equity of Suzhou Samsung Electronics and 100% equity of Suzhou Samsung display. The two production lines can provide 120K LCD monthly production capacity and 3.5m display module monthly production capacity, and its panel capacity accounts for 4% of the global total capacity. The T7 production line of mass production is the second ultra-high generation line of TCL technology, with a design capacity of 90K /In addition, TCL technology is preparing to add an 8.5 generation line with a production capacity of 60K / month. The product is positioned in the IT market and further expand its market share and competitiveness in the IT field.

After investing heavily in the hospital, BOE acquired some shares of Nanjing CLP panda Display Technology Co., Ltd. (hereinafter referred to as "Nanjing G8.5 company") and Chengdu CLP panda Display Technology Co., Ltd. (hereinafter referred to as "Chengdu g8.6 company"). This means that BOE plans to steer the 8.5-generation LCD production line in Nanjing and the 8.6-generation LCD production line in Chengdu. After the acquisition, BOE will have 5 8.5 generation lines, 1 8.6 generation lines and 2 10.5 generation lines, ranking first in domestic production capacity.

At the same time, the Founder Securities report shows that small and medium-sized manufacturers such as Huike and Caihong shares also show a certain willingness to expand production in the medium term driven by the industry boom. It mainly includes the expansion of production from Xianyang g8.6 to 170k, Huike Chuzhou g8.6 to 180K, and Mianyang g8.6 to 150k. Meanwhile, Foxconn sharp Guangzhou g10.5 also plans to climb the production line to 90K.

While domestic big fish eat small fish and expand further, South Korean manufacturers are shrinking their battle lines, planning to gradually withdraw from the LCD industry and focus on OLED and other display technologies. Recently, however, Samsung and LG decided to postpone the shutdown plan of LCD panel production line.

Zhang Hong, research director of group intelligence TV, told 21st century economic news: "the original plans of Korean factory to close the line are delayed. Among them, the G7 of Samsung (SDC) will be closed in the first half of this year, and one of the G8.5 will remain active until the fourth quarter of 2021. Driven by the delay of the closing line of the Korean factory and the continuous climbing of the capacity of the new production lines, it is estimated that the global LCD TV panel production area will increase by 6% in 2021

However, Samsung and LG still have a limited share of LCD production capacity. Founder Securities believes that with the obvious head centralization trend of TV panel supply, the capacity adjustment of leading manufacturers still plays a leading role in the overall supply and demand, and the possibility of significant adjustment of TV panel price is still low in the medium and long term. The overall return schedule of the Korean factory is still in line with the expectation. Samsung's delay in production mainly comes from the requirements of downstream Samsung Electronics and other customers. Due to the shortage of material stock, the module capacity is limited. In 2021, Samsung's display capacity supply is very limited.

At the same time, after the capacity reduction of the Korean factory, the possibility of recovering and improving the production capacity is extremely low. On the one hand, the number of labor has been reduced. On the other hand, it takes a long time to upgrade production capacity. Secondly, the new supply is not conducive to the maintenance of prices and the profitability of other production lines. Therefore, the overall capacity shutdown of Korean factory is still a deterministic trend.

Cyclical fluctuation: panel supply and demand tend to balance in 2021

At the same time, the supply and demand cycle has become the focus of attention. Can the price rise of the panel continue? Has the increase in 2021 been overdrawn in 2020? When will the next cycle come? On the whole, after the tense supply relationship last year, supply and demand will start to balance in 2021, and the Matthew effect of domestic panel enterprises will be more obvious.

According to the report of Founder Securities Research Institute, in the current cycle from 2018 to 2020, the dimension reduction of 11 / 8.5 generation line will hit the 7-generation line of South Korea, and the result is that South Korea's production capacity will exit. Its essence is that a large number of 8.5/11 generation lines of BOE, TCL and Huike clear the backward production capacity of South Korea. The efficiency of 65 / 75 inch of 11 generation WEDM is 94% / 94%, while the efficiency of 65 / 75 inch of 7 generation WEDM in Korea is 53% / 72%. As a result, the backward cost structure of Korean panel industry will lose some competitiveness. The clearance of low efficiency and backward plant energy is determined by Pan Moore's law, which is an irreversible law of industrial economics and will not be changed by short-term price fluctuation.

But at present, due to the continuous impact of overseas epidemic since 2020, the progress of equipment installation in Japan and South Korea, as well as the exchange of engineers and personnel, have been affected to varying degrees. Including the shortage of 10.5 generation line glass substrate, the progress of Foxconn sharp Guangzhou production line is also affected. Guyuan has plans to increase production capacity, and the completion schedule is uncertain. It is estimated that the new mass production lines TCL Huaxing T7 and Huike Changsha g8.6 in 2021 will also be extended to 2022. In addition, BOE g10.5 also plans to expand its production. TCL Huaxing plans to build a new IT product line. However, the capacity expansion of large factories such as BOE and TCL Huaxing is mainly based on the order requirements of downstream customers. The overall capacity demand visibility is high, and the progress is relatively controllable, which has a strong influence on the overall market supply and demand and price.

Zhang Hong told reporters that from the perspective of supply and demand, according to the supply and demand model of group intelligence consulting, the global LCD TV panel market supply-demand ratio will be 5.3% in 2021, and the overall supply and demand will be balanced. However, the supply and demand in the first half of the year is tight, and the supply-demand ratio is expected to expand in the second half of the year.

Founder Securities also pointed out that the next cycle will be 2023-2025. Looking forward to the future, it is expected that the dimension reduction of 8.5 generation it line will hit the 6-generation line of China's Taiwan, and the result may be the withdrawal of Taiwan. Based on the success of Chongqing B8 line, BOE has occupied 28% of the global IT screen market, with the market share ranking the first in the world. Meanwhile, Taiwan Youda and Qun Chuang did not expand production after 2013, and the production capacity was concentrated in the 6 / 7 generation line, avoiding the large screen TV market and focusing on it screen. We believe that although the TV large screen LCD market will tend to be stable after this cycle, a similar memory industry of Samsung + Haili will be formed However, based on the unchangeable law of global semiconductor industry, the final round of industry liquidation may take place in 2025.