Recently, Mitsubishi Electric announced that its subsidiary Melco display technology (mdti) will stop producing TFT-LCD LCD modules before June 2022. It is understood that this is another foreign enterprise withdrawing from LCD panel production after LG and Samsung. Industry insiders believe that with the gradual withdrawal of panel production capacity in Japan and South Korea, LCD industry center will accelerate the transfer to China.
Foreign enterprises withdraw from LCD panel Market in succession
On June 15, Japan’s Mitsubishi Electric announced that due to intensified competition, its subsidiary mdti, which focuses on industrial and automotive small and medium size LCD business, will end production of TFT-LCD modules (panels) in June 2022.
Mitsubishi Electric said that although mdti has advantages in products with high display performance and reliability, it is difficult to maintain the competitiveness of the products because the global price competition is more intense than expected. Therefore, the company decided to terminate the LCD business and transfer the management resources related to LCD business and mdti to power equipment and other business departments that promote growth.
It is understood that Mitsubishi Electric began mass production of LCD panels in 1996, and the revenue of the LCD business (excluding LCD TV) to be withdrawn this time is about 28.5 billion yen (1.88 billion yuan) in 2019. At present, Mitsubishi Electric’s LCD panel for TV is purchased by external enterprises. After the production of the above medium and small size LCD panels is stopped, the medium and small size panels required by Mitsubishi Electric’s own products will also be purchased from external enterprises.
This is not the first foreign company to terminate its LCD business in the near future. Panasonic, a Japanese company, said in November last year that PLD, its subsidiary responsible for LCD panel production, will end its LCD panel production business in 2021. As for South Korean enterprises, in January this year, LG display CEO Jeong Ho Young said that due to falling LCD prices and global oversupply, LG display would stop production of LCD TV panels in South Korea by the end of this year. In May, Samsung display said it would stop producing LCD products at its factories in South Korea and Suzhou, China, in view of the sluggish LCD market and the resulting large deficit.
Industry insiders generally believe that it is foreseeable for foreign enterprises to accelerate their exit from the LCD market. Since the fourth quarter of 2017, panel prices have been falling. With the continuous decline of prices, the profitability of each panel factory continues to decline. After entering 2019, there will be a general operating loss in the whole industry, and the loss rate of TV panel business will reach 35% – 40%.
The rise of LCD industry in China
China’s LCD industry has developed rapidly in recent years, with panel companies such as BOE, csot and Tianma rising rapidly, according to CITIC research. In 2013, Chinese mainland TFT-LCD panel revenue accounted for about 10% of the world’s total, and the Chinese mainland’s mainstream TFT-LCD panel manufacturers accounted for more than 40% of the world’s revenue.
According to the survey data of omdia, a global market research company, Samsung’s LCD panel market share in the global market last year was 10.9%, down 7.1% compared with 2016, and LG’s LCD panel market share also fell in the same period. The market share of BOE, CLP panda, Huaxing electronics and other Chinese enterprises has increased rapidly, among which BOE has surpassed LG display with 18.9% market share for the first time, becoming the world’s largest LCD panel supplier.
According to the prediction of Korea semiconductor display Association, by 2023, the market share of Chinese enterprises in the global panel market will reach 58%, and the LCD panel market will enter the “Chinese era”. According to the prediction of Korea semiconductor display Institute, 19 large-scale panel factories with 8-10.5 generation lines will be set up in China before 2022. After China establishes a panel factory with 8.5-10.5 generation lines, the production cost of products will only be 1 / 3-1 / 5 of that of Korea series factories.
Wu jisen, an analyst at new era securities, believes that China’s LCD industry benefits from the exit of foreign companies, and the cycle reversal has been set, which will usher in a wave of rising cycle. Affected by the epidemic, the global LCD supply and demand will be more tense, and the LCD price will accelerate to rise. BOE A and Huaxing optoelectronics, the leaders of China’s display panel industry, are expected to usher in the long-term profit dividends brought about by the improvement of industry concentration and cyclical weakening after the cold winter.
According to IHS, a UK market research firm, in January this year, China showed that the size of the panel shipped by the panel manufacturers accounted for 52.9% of the total shipment area, while the Korean and Taiwanese shares were 24.8% and 21.9% respectively (the shipment area of Chinese mainland Taiwan manufacturers included SHARP). Among them, BOE and csot ranked the top two with 21.3% and 14.5% respectively. Looking forward to the full rise of Chinese mainland panel industry in the coming years, it is expected to become the last industry winner.