Korean panel maker LG Display continues to gamble on large-size OLED (Organic Light Emitting Diode) panels.
On July 10, LGD announced that its investment plan for the establishment of the 8.5-generation OLED panel production line in Guangzhou, China has been officially approved by the State Administration of Market Supervision of China. The total investment amount is 5 trillion won (about RMB 29.7 billion). It is expected to be completed and put into production in the second half of 2019.
LGD's first large-size OLED panel production line is behind Guangzhou. China has become the largest market for LGD. But in this market with the fastest growth of OLED TVs in the world, it is more common for more panel manufacturers to build high-generation LCD panel lines. select.
The first large-size OLED panel line
The significance of Guangzhou 8.5-generation OLED panel line is that it will be China's first large-size OLED panel production line, and this is the first large-size OLED panel production line established by LGD outside Korea.
According to the "China Times" reporter, Guangzhou 8.5-generation OLED panel line is jointly built by LG Display and Guangzhou Kaide Technology Development Co., Ltd. in a 7:3 ratio. It mainly produces UHD ultra-high-definition 55-77-inch TV OLED panels. Kaide Technology is 100% owned by GDD Financial Holding Group Co., Ltd. In addition, LGD also has a module factory in Guangzhou, and a 8.5-generation LCD panel production line with Kaide Technology and Skyworth.
From the announcement of the project to the final approval, the 8.5-generation OLED panel line in Guangzhou lasted for one year. According to the reporter of China Times, LGD announced in July last year that it plans to build an OLED 8.5 generation line in Guangzhou. In December of that year, the investment won the Korean government. Conditional adoption. Ovi panel analysts believe that this involves the issue of OLED technology confidentiality, and the approval time is later than the outside expectation is the final result of compromise.
Guangzhou 8.5 generation OLED panel line will be LGD's fourth large-size OLED panel production line.
LGD China related person confirmed to the "China Times" reporter that, in addition to this panel line, LGD also has a total investment of more than 10 trillion won in Paju, South Korea, and will be mass-produced in the second half of 2019, the Paju P10 plant, and E3, E4 Two already produced OLED 8.5 generation lines.
LGD also announced that with the capacity of the Guangzhou plant, its total OLED panel production capacity will reach 130,000 in the second half of 2019. Among them, the E3 and E4 plants have a monthly capacity of 70,000. The Guangzhou 8.5-generation OLED panel production line is mass-produced. After that, the monthly production capacity is 60,000 glass substrates, and the maximum production capacity will reach 90,000 glass substrates. This means that Guangzhou 8.5-generation OLED panel production line will assume nearly half of LGD's OLED panel shipments.
Behind this, China has become the largest market for LGD. The first quarter of 2018 reported that LGD's current revenue in the Chinese market was about 3.6 trillion won, more than 60% of total revenue. LGD also said that The establishment of production lines in the Chinese market will not only reduce logistics costs, but also provide stable supply.
Behind the overweight capacity
Behind the increasing OLED production capacity, OLED panels are gaining more and more favor from TV manufacturers.
According to the reporter of China Times, after the participation of local TV manufacturer Hisense, the OLED camp has expanded to 14 in the world. The forecast data of IHS also shows that China's OLED TV sales will increase by 115.5% in 2018 compared with 2018. China will also become the only region in the world with OLED TV sales growth exceeding 100%.
But compared to the huge TV market, the occupancy rate of OLED TV is still not high.
LGD executive Li Tinghan once told reporters such as China Times in November last year that LGD's OLED panel production could meet 1.7 million TV sets, accounting for less than 1% of the global market demand. He also told reporters that the world More than 220 million TVs are shipped every year. At present, the resources of OLED panels are very limited, and the capacity of the entire market is very different.
In addition to market demand, LGD expands OLED panels to achieve scale effects.
According to LGD, the sales of OLED TV panels will exceed 3 million in 2018. This figure is almost twice the sales of OLED TV panels in 2017. LGD also said that with the sharp increase in sales, LG Display OLED business unit will be under this year. It will be profitable for the first time in half a year.
One issue that needs attention is that LGD almost monopolizes the world's large-size OLED panels, which is in the seller's market. The price of OLED panels is much higher than that of LCD panels. Why did LGD's OLED business not be profitable for a long time?
Zhang Bing, research director of IHS China, believes that the new products have economic benefits. As a new technology, the initial yield of OLED panels and the return on investment will take a long time. He told the China Times reporter that the OLED panel Supply chain maturity and technology maturity are not as high as LCDs. There are not as many manufacturers and materials involved, and the yield is definitely lower than LCD. He said that the yield of LCD panels is generally 92%. Yan also told the "China Times" reporter that although the price of OLED panels is expensive, LGD is still selling money, and subsidizing with LCD money.
In November last year, Li Tinghan also told reporters such as the China Times that OLED TVs are still limited by size. He said at the time: 'If the annual output of OLED TV panels reaches 6 million units, the price should be half cheaper. '
He also told the China Times and other media reporters that the annual production of LGD's OLED panels will reach 6 million to 6.5 million OLED TVs by 2020-2021. 'After 2020, LG Display's OLED panel production will account for 50% of the total. %. '
Opponent calm
Compared with LGD's gambling in the field of OLED large-size panels, other panel makers have remained relatively cool.
More panel makers are keen to invest in higher-generation LCD panels in China. In May 2018, Huaxing Optoelectronics announced that it will raise nearly 43 billion yuan to build a second 11-generation LCD panel line in Shenzhen. In April, investment of 46 billion Yuan's BOE Wuhan 10.5 generation line started. According to the "China Times" reporter, BOE's 10.5-generation LCD panel production line in Hefei has been mass-produced in March this year. In April this year, Chongqing Huike also announced plans to build in Zhengzhou, Henan. On behalf of the LCD panel production line, and Hon Hai invested in 6 billion yuan in the Zengcheng Industrial Zone in Guangzhou, the 10.5 generation LCD panel production line is expected to be put into production in 2019.
The increasing production capacity of LCD panels in the Chinese market has also affected the performance of LGD.
In April of this year, LGD released its first quarter earnings report for 2018. The financial report showed that the current LGD operating income was 5.68 trillion won, a year-on-year decrease of 19.6%. The operating loss was about 98 billion won and the net profit after tax was 49 billion won. It should be mentioned that this is the first time LGD has suffered losses in the 20 quarters. LGD Chief Financial Officer Don Kim said that the company underestimated the impact of China's new supply. It is reported that the price of large-size LCD panels in the first quarter of this year It fell about 10%.
He told the China Times reporter that mainland China and other mainland panel makers such as BOE have just achieved some advantages in liquid crystal. Their strategy is still to take advantage of LCD. After OLED technology is more mature, it will be transformed. It is also believed that other panel manufacturers have not chosen to gamble with LGD, mainly for strategic considerations, and there are also relatively large technical bottlenecks. 'The basic display materials are different. In addition to the overlapping parts of the backlight, display technology materials to panel manufacturers In terms of it, it is all new. ' He told reporters.
In March this year, the Japanese media reported that Japan Display Corporation (JDI) was considering a plan to delay the mass production of OLED screens. According to the reporter, JDI announced last year that it has the technology to mass produce low-cost OLED screens and is expected to start production in 2019. Samsung, a Korean panel maker with a monopoly on small and medium-sized OLED panels, has not been able to replicate its advantages on large-size OLED panels.
According to the reporter of China Times, Samsung tried to produce 55-inch and 65-inch large-size OLED screens for commercial use several years ago, but it failed. But the Korean media reported in July this year that Samsung is working hard to build a The 8th generation QD-OLED production line of experimental nature. Zhang Bing told the China Times reporter that unlike the white light OLED technology of LGD, Samsung's current OLED technology is blue OLED technology plus quantum dot (QD), which is more efficient. In theory, it takes at least three years to achieve.