New display industry: supply and demand are becoming balanced and competition is becoming more complicated

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In 2013, my country's new display industry continued to maintain a rapid growth trend, and the full production of multiple high-generation lines enhanced the international competitiveness of my country's industry. The scale of the industry continued to expand, the global market share continued to increase, the self-sufficiency rate of panels gradually climbed, and the development of the industry entered a virtuous cycle. Looking forward to 2014, under the influence of policy guidance, market supply, technological innovation and industrial scale, the global new display industry structure will undergo major adjustments. Affected by this, my country's new display industry is facing problems such as continued price declines, lack of key supporting capabilities, increased intellectual property disputes, and the risk of duplicate construction caused by concentrated investment. There are also opportunities such as the improvement of the core competitiveness of leading enterprises, the increase in demand brought about by new applications, the development opportunities of supporting industries, and the increasing opportunities for international cooperation.

Supply and demand are stabilizing and the application of new technologies is accelerating

In 2014, the mass production process of new display technologies in my country will be significantly accelerated, and the global industry focus will shift to my country, but market competition will become increasingly complex.

Supply and demand tend to balance and market competition becomes more complicated

By the end of 2013, my country had 16 4.5-generation and above production lines completed and put into operation, including 4 4.5-generation lines, 6 5-generation lines (including 5.5-generation lines), 2 6-generation lines and 4 8.5-generation lines. Among them, 2 8.5-generation lines and 1 5.5-generation AMOLED production line were newly completed and put into operation. From the perspective of product supply and demand, the rapid development of the domestic industry has brought about a more balanced global supply and demand of panels. Taking large-size panels as an example, in 2013, the global demand for large-size panels was 116 million square meters, and the effective production capacity of large-size display panels was 119 million square meters. The global supply and demand of panels has approached the balance point. From the perspective of product structure, display panels are clearly differentiated. The growth of demand for large-size panels for monitors and TVs has slowed down, while small and medium-sized panels, mainly for tablets and smart phones, are in a period of rapid growth. The average annual growth rate will continue to remain above 20%, becoming the main driving force for industrial development.

In 2014, the continued slowdown in global economic growth will lead to a continued decline in TV demand in developed regions, sluggish growth in emerging markets, and the expiration of domestic policies such as "energy conservation and benefiting the people" will also affect the continued growth of my country's TV market. Therefore, the growth of the large-size panel market will slow down further and is expected to maintain a growth of about 4%. As my country's newly built production lines gradually reach full capacity, the global supply and demand of panels will show a structural surplus, and competition will become increasingly complex. It can be foreseen that competitors will use tariff trade methods such as ITA (expansion) and various non-tariff barriers such as price, patents, standards, energy efficiency, and environmental assessment to suppress domestic companies, creating obstacles in my country's industrial chain construction and overseas market development. Industrial competition will also be carried out from technology, production capacity and other levels to industrial chain, environmental protection, intellectual property rights and other aspects.

The process of new technology application has been significantly accelerated

As the overall growth of the global new display industry slows down, the industrialization of new technologies and the mass production of new products have become important driving forces for the development of the industry. In terms of TFT-LCD technology, after making breakthroughs in the production of high-generation LCD panels independently built, key enterprises have shifted their focus to the layout of new-generation display technologies, increasing investment in new technologies such as high resolution, wide viewing angle, low power consumption and narrow borders, and AMOLED technology has also made certain progress. A number of new products with independent intellectual property rights have been developed, and new technologies such as low-temperature polycrystalline silicon (LTPS), oxide semiconductors (Oxide), and four-pass masking processes have been gradually introduced into production lines. Products such as 110-inch 4K×2K, 98-inch 8K×4K, 65-inch oxide backplane large-size LCD TV panels, and 6-inch high PPI LTPS TFT mobile phone displays are at the forefront of the world. Ultra-high-resolution 55-inch 4K×2K LCD TV panels have been mass-produced, and samples of AMOLED panels over 30 inches for TVs have been successfully developed. The number of patent applications by local enterprises is nearly 5,000.

In 2014, the mass production process of new display technologies in my country will be significantly accelerated. A low-temperature polysilicon and oxide TFT-LCD production line will be put into mass production, and multiple AMOLED production lines will be completed and put into production. The layout of the touch display integration related industries is progressing smoothly, and my country's high-end panel production capacity will make significant progress.

The global industry focus continues to shift to my country

my country is at the forefront of the world in terms of the output of various electronic terminal products, and the panel market has huge demand. From the perspective of global overall supply and demand, affected by the economic crisis, international leading companies have slowed down their investment in production capacity in their own countries, and mainland my country has become the focus of global production line construction. Samsung, LGD and AUO have all invested in the construction of 8.5-generation lines in mainland China, among which Samsung's Suzhou 8.5-generation line was officially completed and put into production in 2013. The process of the global new display industry layout shifting to China is gradually accelerating, and the concentration of my country's new display industry has also further increased. The four major industrial clusters, including Beijing-Tianjin-Tangshan, Yangtze River Delta, Pearl River Delta, Chengdu-Chongqing-Hubei, have all had high-generation lines.

The overall policy environment for scale expansion continues to improve

In 2014, the scale of my country's new display industry will expand rapidly, and the introduction of new policies will promote the development of the industry.

In 2014, two new 8.5-generation lines will enter full production in my country, and the domestic panel production capacity will further increase. The overall scale of the industry will expand rapidly. On the basis of the industry revenue exceeding 100 billion yuan in 2013, it will continue to maintain rapid growth in 2014 and is expected to approach 150 billion yuan. Driven by the growth of panel supply capacity, the panel self-sufficiency rate is expected to exceed 45%, the trade deficit will be further reduced, and the industrial clusters will also make choices and have their own characteristics in terms of panel production lines and upstream and downstream layout of the industrial chain. BOE's Ordos 5.5-generation AMOLED panel production line and Hefei's 8.5-generation panel production line using metal oxide backplane technology will enter the mass production stage in 2014. The Bohai Rim and the Yangtze River Delta region will make great breakthroughs in the reserve and mass production process of the new generation of display technology. In the next two years, two 8.5-generation high-generation lines will be built and put into production in the Pearl River Delta region to further meet the panel demand of TV production bases such as Guangdong and Fujian and stabilize supply. The Sichuan, Chongqing and Hubei regions represented by Chongqing, Chengdu and Wuhan focus on the layout of small and medium-sized panels and touch screens, which will further improve the construction of the mobile smart terminal product industry chain in the region.

Looking ahead to 2014, relevant ministries and commissions will continue to take enterprises as the main body and market as the orientation, and further increase their support for the industry by strengthening planning and improving policies. First, the relevant industry support policies that have been implemented for three consecutive years will continue to be implemented. In addition to actively cultivating key enterprises to become bigger and stronger, improving the overall innovation ability of the industry and promoting upstream and downstream cooperation in the industrial chain will also become the focus of support. Second, the follow-up guiding documents of the "2010-2012 Flat Panel Display Industry Development Plan", which plays a key role in the development of the domestic display industry, are expected to be launched. The introduction of new policies will play an important guiding role in the development of my country's display industry under the new situation.

Prices continue to fall and key supporting capabilities are missing

Factors such as the continued decline in panel prices, the lack of key supporting capabilities, the lack of intellectual property reserves, and the surge in local investment enthusiasm will affect the development of the new display industry.

The continuous decline in panel prices has increased the operating pressure on enterprises

In 2014, the demand for panels will present a situation of structural oversupply, and panel prices will further decline. This is mainly affected by three aspects: first, the newly opened production capacity will increase the supply of panels, leading to a fall in prices. On the one hand, the change in market supply will drive terminal manufacturers to adjust their inventory, and panel prices will change accordingly; on the other hand, advanced companies will take the initiative to reduce prices to maintain their market share. Second, considering the slow pace of global economic recovery, the growth of the LCD TV market will remain conservative, and the sluggish demand in the terminal market will put pressure on panel prices. Third, new technology upgrades affect panel prices and production capacity. Panel companies increase product added value by launching new sizes and actively introducing new technologies to ensure profit margins. As the global LCD panel market gradually matures, the downward trend of panel prices this year is basically determined. Panel companies in South Korea, Japan and Taiwan may continue to lower panel prices by relying on the advantages of completed production line depreciation and complete industrial chain to ensure market share and corporate cash flow; they may also adjust the process to launch new display products with high added value to ensure high profit margins. Since my country's high-generation panel production lines were built in a short time and the production line depreciation pressure is huge, the trend of panel prices will have an important impact on corporate operations.

Lack of key supporting capabilities may affect industrial security

The foundation of domestic equipment, spare parts and materials is very weak. More than 90% of the process equipment and more than 70% of the spare parts and materials of the high-generation TFT-LCD panel production lines that have been built or are under construction still rely on imports. Key materials and core equipment have become the bottleneck restricting the development of my country's new display industry. In 2014, as my country's new display industry's global market share continues to increase, the lack of supporting capabilities for materials and equipment will become more prominent in restricting the development of the industry. In recent years, with the support and guidance of national policies, the local supporting capabilities have been continuously improved, and the local supporting rate of key enterprises has exceeded 30%. However, compared with advanced countries and regions in the world, the domestic supporting industry started late, the technical foundation is weak, the degree of dependence on imports is high, the core process equipment is monopolized by a few foreign manufacturers, and the supporting of upstream key materials such as substrate glass, liquid crystal materials, polarizers, and optical films is still subject to great constraints. my country's upstream supporting enterprises are basically small and medium-sized enterprises, with insufficient technology and capital accumulation, limited investment in technology research and development, and obvious disadvantages in competing with strong international manufacturers. How to solve problems such as being controlled by others for core technologies, small enterprise scale, lack of accumulation and unreasonable development environment is the key to determining whether my country's new display industry can develop healthily and sustainably in the next step.

Lack of intellectual property reserves has become a major concern for industrial development

In 2014, facing the shrinking market share, international companies are likely to use intellectual property rights as a weapon to curb the rapid development of Chinese companies. Foreign leading companies have a large number of patents in the display field. They have completed patent accumulation in mature technology fields and are also accelerating their layout in new technology fields. my country entered the new display industry relatively late, and there is still a large gap between patents and the world's advanced level. According to the "Liquid Crystal Display Industry Patent Analysis Report" issued by the State Intellectual Property Office, among the top 10 global patent applications for liquid crystal displays, there are 2 Korean companies, 7 Japanese companies, and 1 company in Taiwan, my country, and no company in mainland my country. More and more international companies use intellectual property rights or patents as a weapon to curb the development of competitors, including Chinese companies. my country's lack of reserves in the field of intellectual property rights has become a major concern for industrial development. Compared with the rapidly growing industrial scale, the construction of an intellectual property offense and defense system is imminent.

The surge in local investment enthusiasm may lead to duplicate construction

The State Council's decentralization has further stimulated market vitality. With the recent improvement in the profitability of key panel companies in China, the confidence of enterprises and local governments in industrial development has increased, and investment enthusiasm has increased significantly. The signs of disorderly launch of related projects have begun to emerge. At present, there are 8 AMOLED production line projects that have been built, built or announced to be built in China, and more than 10 provinces are involved in new display industry investment. Due to the huge driving effect of the new display industry on GDP and my country's status as a major manufacturer of terminal products, local governments have always favored investment in the display industry. However, the new display industry is a capital and technology intensive industry that requires strong corporate background support. In order to maintain the effective competitiveness of enterprises, the current new display industry developed regions tend to industrial agglomeration. There are no more than 4 major panel companies in South Korea, Japan and Taiwan, while there are dozens in mainland China. This form of dispersed investment entities is obviously contrary to the trend of global industrial agglomeration development. In order to avoid the appearance of "blooming everywhere", it is necessary for local governments and enterprises in my country's new display industry agglomeration areas to carefully conduct pre-evaluation of market scale, financial guarantees, construction plans, technical feasibility and other contents in new projects, and invest cautiously.

Focus on hot spots

1. Enhanced innovation capabilities will improve the core competitiveness of Chinese enterprises

As the overall growth of the global new display industry slows down, the industrialization of new technologies and the mass production of new products have become important driving forces for the development of the industry. In recent years, leading domestic enterprises have focused on strengthening the research and development of new technologies. BOE, Tianma, Huaxing Optoelectronics and other enterprises have reserves in 4K ultra-high definition, new backplane technology, transparent display, integrated display touch, flexibility and other new display technologies. Among them, BOE's global new product launch rate has exceeded 30%. The accelerated application of new technologies will drive the further optimization of corporate performance and increase the core competitiveness of enterprises.

2 Changes in terminal products lead to an increase in panel demand

Driven by mobile smart terminal products, the application process of new display technologies such as AMOLED, LTPS, Oxide, and four-layer mask process will be further accelerated, and the shipment volume of panels using new technologies will increase by double digits. The sales revenue of AMOLED display screens in small and medium sizes is expected to exceed 45%. Among them, the rapid growth of new product markets such as car computers and outdoor displays will play a positive role in expanding the market demand for new display panels.

3 Supporting industries usher in a golden period of development

Under the dual influence of policy support and market environment, upstream supporting industries will usher in a period of rapid development. The Chinese government has successively issued a number of policies to encourage the development of key supporting industries. Taking tariff policy as an example, the adjustment of glass substrate tariffs in 2014 will directly affect the supply of LCD glass substrates below the 6th generation line in China. The tariff increase is conducive to the rapid development of my country's glass substrate production enterprises. In addition, the construction of multiple high-generation lines in China will also drive the development of upstream industries such as raw materials, spare parts and related equipment.

4. Changes in the industrial structure bring opportunities for international cooperation

The release of panel production capacity in mainland China will gradually squeeze out the market share of overseas regions, and the cooperation between Chinese and foreign enterprises will be further strengthened, and the global new display industry pattern will change. Taking Korean enterprises as an example, in order to continue to maintain their market share in my country, Korean enterprises will further increase their cooperation with Chinese enterprises. Domestic enterprises with conditions will also actively strengthen cooperation with advanced overseas enterprises through various forms such as international cooperation, mergers and acquisitions, and equity participation to enhance their market competitiveness.

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