The localization of panel materials and equipment needs to be accelerated, and TCL Technology's upstream layout is stable and progressing

my country has always been highly dependent on imports for new display materials and core equipment, and has been in a passive state for a long time. At present, with the increasing uncertainty in the progress of Sino-US trade and the impact of the epidemic on international import and export trade, the upstream of the panel supply chain has been dragged down to a certain extent, and the market has also put forward more urgent requirements for the localization process of panel materials and equipment.

In order to break through the core technology bottleneck of the panel industry as soon as possible and accelerate the transformation from a "panel power" to a "panel powerhouse", TCL Huaxing Optoelectronics Technology Co., Ltd. (hereinafter referred to as "TCL Huaxing") and San'an Semiconductor Technology Co., Ltd., a wholly-owned subsidiary of San'an Optoelectronics, recently signed an agreement, stating that the two parties will jointly develop Micro-LED display technology in the form of establishing a joint laboratory, so as to break through my country's passive situation in the field of Micro-LED display materials and equipment, and realize an ecological layout from materials, processes, equipment, production line solutions to independent intellectual property rights.

TCL Huaxing is a subsidiary of TCL Technology (000100.SZ) that manages semiconductor display and materials businesses. The cooperation with domestic semiconductor giant San'an Optoelectronics is another step forward for TCL Technology in its upstream material layout, and also an important attempt in the localization process of panel materials and equipment.

Promote the localization of panel equipment and materials

On June 7, TCL Technology and Sanan Optoelectronics both announced that they will officially start cooperation and jointly invest in the establishment of a joint laboratory, targeting the field of Micro-LED display technology, focusing on the key technologies of Micro-LED chip technology, transfer, bonding, colorization, detection, and repair in the engineering manufacturing of Micro-LED displays. At the same time, the joint laboratory will also engage in the research and development and trial production of wearable displays, in-vehicle displays, high-definition large-size displays, and ultra-large-size spliced ​​commercial display prototypes, forming a process solution for the commercial mass production of Micro-LED.

As a display technology with broad development prospects, Micro-LED has attracted much attention in the industry since its birth due to its advantages such as low power consumption, high brightness, high color saturation, small size, short response time and long service life. From the perspective of the manufacturing chain, Micro-LED and OLED have overlaps in equipment, materials, parts, processes, etc. However, OLED core materials and equipment are now almost monopolized by overseas companies. Domestically developed equipment and materials are far inferior to similar foreign products in terms of accuracy and service life.

Equipment and materials are the most basic core links in the semiconductor display industry, and are also a key barrier that upstream companies in the domestic semiconductor industry hope to break through as soon as possible. At present, my country's panel companies have dominated the production pulse of the global LCD industry and are the world's largest LCD production and assembly base. However, only by continuing to attack the upstream of the industrial chain can we achieve the transformation from a "panel power" to a "panel power", maintain our national advantages in the LCD industry, and better develop major new display technologies including Micro-LED.

Although the overall progress is slow, the localization of panel materials and equipment has never been shelved by the industry. Industrial Securities learned through in-depth industry research that at present, wafer foundries have accelerated the introduction of domestic equipment and materials, and the market has strengthened its attention to the cost-effectiveness and service advantages of domestic equipment and materials. At the same time, the capabilities of domestic equipment have expanded, and equipment related to advanced processes is also continuing to make breakthroughs. In addition, the research report of Guangzheng HSBC also shows that in recent years, many listed companies in China have gradually formed technological advantages in the fields of lasers, testing equipment and assembly equipment. The localization completion rate of module testing equipment from 2017 to 2019 is close to 50%, and it can basically replace imported equipment.

Today, TCL Huaxing and Sanan Optoelectronics have joined forces to target the currently popular Micro-LED display technology, which will not only help Chinese companies gain a foothold in the new display field, but will also effectively promote the localization of panel equipment and materials, once again sending out a positive signal.

TCL Technology Re-positioning

Since completing the reorganization and divestiture of smart terminals and supporting businesses in 2019, TCL Technology has made steady layouts around the three major sectors of semiconductor display and materials business, industrial finance and investment business, and other businesses. The cooperation with Sanan Optoelectronics in the Micro-LED field is also an important move for TCL Technology to achieve synergy advantages in the panel industry chain.

TCL Technology has always had a clear idea of ​​promoting the independence of the emerging display industry and enhancing the overall value of the industry chain. As early as the end of 2014, TCL Huaxing took the lead in entering the "no man's land" of new display technology and registered Guangdong Juhua Printing Display Technology Co., Ltd., laying out a complete industry chain with printing display technology as the core in advance.

In 2017, Guangdong Juhua obtained the support of governments at all levels in Guangdong Province and the approval of the Ministry of Industry and Information Technology of China to establish the "National Printing and Flexible Display Innovation Center". It is reported that as the only national innovation center in the display field in China, the National Printing and Flexible Display Innovation Center is building a printing display technology innovation system from foundation to application and then to achievement transformation. Yan Xiaolin, CTO of TCL Technology and Chief Scientist of Huaxing Optoelectronics, once said that material technology is the core competitiveness of printing display, and building an industrial cooperation R&D platform for printing display from materials, equipment to products, including the research and development of OLED and quantum dot materials, is an important task of Guangdong Juhua Company.

Liu Wenqiang, deputy director of the China Academy of Information and Communications Technology, once clearly stated in the "White Paper on the Development of New Display Industry (2019)": "To promote the high-quality development of the new display industry, it is recommended to vertically open up the manufacturing supply chain from materials, equipment, components to terminals, and encourage panel companies to take the lead and use market-oriented means to drive the development of upstream companies. Carry out multi-level and all-round industrial cooperation, strengthen talent attraction and training, and create an industrial cluster with international competitiveness." It can be seen that this view coincides with TCL Technology's idea of ​​building its own industrial chain ecosystem in the panel field.

On May 18, investment institutions under several well-known companies strategically invested in Shenghong Technology, a listed company in the PCB industry, and TCL Investment was one of them. PCB, or printed circuit board, is collectively known as the "three major components of the information industry" along with chips and panels. It is currently accelerating its development with the industrial upgrade brought about by 5G. From the perspective of industrial relevance, investing in Shenghong Technology is also a continuation of TCL Technology's main line of thinking to increase investment in the upstream key materials field.

It can be believed that with the support of the industrial collaborative resources opened up by TCL Technology, TCL Huaxing, one of the two major domestic panel manufacturers, will burst out with new industrial momentum and continue to maintain its comprehensive leadership in efficiency, products, technology and ecology as the panel industry reaches a turning point.