In our daily life, liquid crystal display (LCD) has always been the preferred display panel of consumer electronic products such as TV, computer, tablet and mobile phone. However, at present, a new display technology is quietly rising and welcomed by the new models of major smartphone brands. Samsung’s dual flagship s / Note Series, iPhone x, Xiaomi 10, Huawei P40 and other smart phones all use OLED displays.
OLED display panel can self emit light when powered on. It is light and thin, high brightness, low energy consumption and can be bent. It is widely sought after at one time. In contrast, the LCD screen itself cannot emit light, and an important component “backlight display module” is needed to present images. So, will LCD be eliminated by OLED technology soon?
Antarctic light is a domestic company mainly engaged in small and medium-sized backlight display modules. Its products are the core components of LCD panels and are applied in smart phones of Huawei, oppo, vivo, Xiaomi, Samsung, LG and other brands.
In the face of the “threatening” new OLED technology, can aurora australis still achieve sustainable growth? Under the market pattern of coexistence of new and old technologies, how does Antarctic light maintain its competitive advantage?
LCD still has an absolute advantage
Globally, the demand for LCD panels is still growing. IHS Markit data show that in 2018, the global LCD panel shipment area reached 199 million square meters, an increase of 9.94% over the previous year, especially in the field of large size. Before 2010, China’s large-size LCD panels were all imported, and now account for nearly 50% of the global production capacity.
At present, China has become a major producer and consumer of consumer electronic products such as LCD TV, computer and smart phone, and the LCD panel display industry, as its key supporting industry, is also accelerating its transfer to China. In the 2013-2018 year, the capacity of LCD panels in China has been gradually moving after a period of 3 years and 30% growth. It is estimated that by 2023, the total capacity of LCD panels in Chinese mainland will account for 55% of the total capacity of the world.
The demand of LCD panel directly affects the demand of backlight display module market. There is still room for development in the downstream market of Antarctic light.
Although OLED panel has advantages in performance, the foreign monopoly in the upstream link of production is serious, which brings challenges to its market promotion in China.
First, the high-end evaporation machine necessary for the production of OLED panels is monopolized by the Japanese company cannon Tokki. Due to the limited production capacity of cannon Tokki and its absolute advantages in technology, the yield of OLED panels using other evaporation machine production lines needs to be improved. In addition, domestic OLED panel manufacturers rely heavily on overseas procurement for organic light-emitting materials required upstream.
The upstream of the industrial chain is “stuck”, resulting in the investment cost of OLED production line being more than twice that of LCD production line. The resulting high depreciation and amortization limits the improvement of enterprise production capacity.
The main field of OLED replacing LCD is smart phone display. However, in terms of cost, LCD display still has obvious advantages. Due to the difference in production cost, the average price of 25.5-inch LCD smartphone panel is $15, while the average price of OLED smartphone panel of the same size is as high as $25. The price advantage of LCD products is obvious.
In addition, according to IDC statistics, the global shipments of medium and low-end mobile phones account for more than 80%. Due to price restrictions, the proportion of LCD screens is 80.56%; The penetration rate of OLED screen is low, which is mainly used in flagship models of major brands, with limited impact on the overall mobile phone market.
At present, unless the cost of OLED screen is reduced rapidly, LCD will still go hand in hand with OLED technology for a long time, and have more advantages in cost and production scale. In the mobile phone market, LCD and OLED technologies coexist; In the professional display market, LCD technology is dominant.
Therefore, as a manufacturer of LCD backlight, Antarctic light still has a broad market space.
Actively layout alternative products
Although the market dominant position of LCD will continue, the impact of new technologies can not be ignored. How can Antarctic light prepare for the potential threat of technology elimination?
First of all, Antarctic light makes full use of its technical and market advantages to consolidate its leading position in the field of LCD backlight.
Technically, Antarctic light has realized the independent research and development of the light guide plate, which is the key part of the backlight module. Its vacuum compression die technology is at the leading level in the industry, which can improve the precision and dimensional stability of product surface details, so as to improve production efficiency and yield.
In terms of market competition, beineng optoelectronics had an operating revenue of 30.1125 million yuan in 2016, which formed a competitive relationship with Antarctic light. In 2017, Antarctic light acquired beineng optoelectronics, effectively avoiding horizontal competition, improving economies of scale and expanding its overall market share.
More importantly, Antarctic light is actively developing alternative products of OLED technology to deal with the risk of market space being compressed. As a liquid crystal display industry chain enterprise, the cost of Antarctic light layout OLED is quite high. However, due to the good foundation of LCD technology, Antarctic light focuses on the miniled integrated structure technology. This technology can equal a series of performance of OLED, such as high brightness, ultra-low delay and ultra-large viewing angle. At the same time, it also has the advantage of long service life.
In 2017, Antarctic light invested more than 2.64 million yuan in the research and development of new miniled integrated structure technology project. With the emergence of curved screen trend, in 2019, Antarctic light invested about 2.29 million yuan in the curved backlight module project with new miniled structure to replace OLED flexible screen technology.
At present, OLED technology is mainly used in small and medium-sized screens, of which smart phones account for 71%; Followed by wearable devices, accounting for 10%. In the professional display fields such as vehicle mounted display, medical display, industrial control equipment display and home appliance display, LCD technology is still dominant, and the penetration of OLED panel is difficult.
Therefore, Antarctic light has started to develop professional display backlight products and continuously strengthen the development of customers in the field of professional display. Antarctic light has in-depth cooperation with midstream LCD manufacturers such as Juncheng electronics, Tianshan electronics and Akita micro, and its products are finally applied to many well-known brand products downstream, such as Haier, Midea, Honeywell and Panasonic. Professional display backlight products have also maintained an increase in revenue for Antarctic light for three consecutive years.
Relying on these initiatives, Antarctic light has maintained sustained and rapid growth in performance under the potential impact of new OLED technologies. From 2017 to 2019, the main business income of Antarctic light increased from 562 million yuan to 994 million yuan, an increase of
76.83%。 In 2019, the comprehensive gross profit margin of Antarctic light was 20.46%, which also exceeded the average value of comparable companies in the same industry by 18.51%.
Seize the new opportunity of “5g replacement tide”
In addition to maintaining the dominant position of the existing LCD backlight products, in the face of the upcoming 5g mobile phone replacement tide, Antarctic light does not “just defend but not attack”, it will also seize the opportunity to take the initiative to create a new growth point through 5g mobile phone back cover products.
Although the penetration rate of OLED screen is not high in the whole smartphone market, the utilization rate of OLED display panel is greatly improved in 5g mobile phones. During 2019-2020, all new models of major 5g mobile phone manufacturers choose OLED display. Once the 5g mobile phone production outbreak period comes, the original market share of Antarctic light may be greatly impacted.
At the same time, during the popularization of 5g mobile phones, the demand for new supporting products is sprouting.
In the 5g era, the number of smart phone antennas has increased, the function has been enhanced and the electromagnetic wave penetration ability has become weak. The metal body with the characteristics of shielding electromagnetic wave is no longer suitable, and the plastic back cover with excellent strength, good impact resistance, heat resistance, high hardness and aging resistance will become one of the ideal materials for the 5g smart phone back cover. This provides a good entry point for new products for aurora australis.
Technically, the 5g mobile phone back cover and the light guide plate in the backlight are injection molded parts. Their production processes are similar, and their core technologies and main production equipment are also the same. Therefore, the strengths of Antarctic light in the manufacturing process – mold manufacturing technology and compression mold technology are applicable to 5g mobile phone back cover, which can provide a strong guarantee for the R & D and production of new products.
In order to realize the landing of new products as soon as possible, Antarctic light cooperates with Huashi optoelectronics, which has strong financial strength. At present, it has begun to produce 5g mobile phone back cover products in small quantities.
In addition, Antarctic light will use the raised funds of 72.7265 million yuan to invest in the construction of 5g mobile phone back cover production base. After completion, the annual output can reach 40kk, which is expected to bring a net present value of 78.8246 million yuan to Antarctic light. Significantly increasing production capacity will help Antarctic light quickly seize the market opportunity.
For these new production capacity, Antarctic light also has a good digestion channel. At present, with in-depth cooperation, downstream manufacturers have applied their products to major mobile phone brands such as Huawei, oppo, vivo, Xiaomi and Samsung, and their 5g mobile phone back cover promotion has a good customer base. Antarctic light can use the resources and marketing system of existing end customers in the backlight field to track the market dynamics in time and produce mobile phone back covers that meet the needs of customers.
From the three dimensions of technology, capital and new capacity consumption, in the upgrading of 4G to 5g mobile phones, Antarctic light takes 5g mobile phone back cover as a new business growth point, and the conditions are ripe.
The display panel industry is still the coexistence of LCD and OLED for a long time. Antarctic light actively developed miniled integrated structure technology with price advantage to replace OLED, and made efforts to the special display field that OLED is difficult to penetrate, realizing the rapid growth of revenue and net profit for three consecutive years.
In the future, under the opportunity of 5g mobile phone replacement, in order to deal with the potential market impact brought by OLED screen, Antarctic light will take 5g mobile phone back cover as a new business growth point, and lay a solid foundation for its sustainable growth with years of technology and customer accumulation.