BOE plans to expand TFT-LCD production line with RMB 3.775 billion to meet the demand for large-size display products

On March 22, BOE issued an announcement stating that in order to meet customer needs and enhance industry competitiveness, Wuhan BOE plans to expand production capacity in the existing Wuhan BOE factory using self-raised funds of 3.775 billion yuan, taking into account the favorable condition of having reserved factory space for 25,000 glass substrates per month in the initial stage of construction.

It is understood that Wuhan BOE is a subsidiary of BOE Group, which currently holds 23.08% of Wuhan BOE's shares. The other two shareholders are Hubei Changbai Industrial Investment Fund Partnership (Limited Partnership) and Wuhan Linkong Port Economic and Technological Development Zone Industrial Development Investment Group Co., Ltd., with shareholding ratios of 30.77% and 46.15%, respectively. In 2019 and 2020, the company achieved operating income of 130 million yuan and 1.775 billion yuan; the corresponding net profits were -13 million yuan and -156 million yuan, respectively.

BOE believes that with the advent of new technologies such as 5G, the Internet of Things, and big data, the next five years will be the golden age for the development of 4K/8K ultra-high-definition display technology, and technological upgrades will promote the continued shift of display consumer products to high-end medium and large sizes. In addition, due to the impact of the epidemic, new applications such as online education and video conferencing have exploded, and the corresponding demand for display products will continue to be strong, causing the global small and medium-generation production lines to adjust their product structure, increase the proportion of IT panel production capacity, and relatively reduce the production capacity of medium and large panels such as TV, resulting in a continuous imbalance in supply. It is expected that the demand for medium and large-sized panels will continue to grow in the next five years, and the demand for 65-inch and 75-inch products, which are the economic cutting sizes of the 10.5-generation production line, will usher in a substantial increase. In order to meet the incremental needs of customers, lay a solid foundation for long-term and in-depth cooperation with various brand customers, and further seize the incremental market for medium and large-sized panels, Wuhan BOE needs to implement production line expansion projects to expand the production capacity of corresponding medium and large-sized panels and ensure competitive advantages.

而武汉京东方是京东方集团第二条10.5代产线，是公司实现大屏显示战略的关键一步。在公司大屏显示战略规划的指导下，武汉京东方通过对工艺技术、厂房、设备规格等进行充分评估和论证后，进行本次产能扩产项目。武汉京东方在建厂初期预留2.5万张基板/月的厂房空间，通过产能扩产，可以将已有厂房空间充分利用，避免空间闲置。同时，本项目除了购买新增设备外，还充分考虑了现有设备的产能挖潜，制定了设备产能最大化的一系列方案，最大化地提升现有设备的运营效率。基于现有厂房的利用和设备的产能挖潜，本次扩产单位新增产能所需的投资金额远低于新建工厂，项目实施完成将显著提升武汉京东方的盈利能力和竞争优势。

BOE said that from the perspective of market demand and competitive advantages, the incremental demand for future products will be far greater than the production capacity of Wuhan BOE after the expansion; and when the market is down, Wuhan BOE can use the extreme cost and technological advantages after the expansion to seize market share and ensure maximum profits.