2022年8月10日-12日， IMID 2022 Korea Display Exhibition在韩国举行，CINNO Research创始人暨总经理陈丽雅（Sally Chen）受邀出席，并发表了题为《China Display Market Development Trend》的演讲，演讲采用英文，以下是演讲全文：
Hello, everyone. I'm Sally from CINNO.
Thanks for inviting me to attend Display Business Forum.
Due to the impact of the epidemic, I am unable to come to Korea. It’s a pity and you are welcome to contact me by email sallychen@cinno.com.cn.
In the three years，the COVID-19 has a deep impact on the whole world, and also on the Display Industry.
How about China display panel makers’ status now?
and What about the competitiveness of our supply chains?
What’s the strategy of China government for display industry?
To give these answers, I would share our views and point out the future opportunities in China market in my presentation.
In the first part, let’s review the market status of China Mainland Display Panel Market status.
According to the statistics of CINNO Research, in 2020, China Mainland became the world's largest TFT-LCD panel production base with 54% of the market share. In 2021, the LCD panel production capacity in China Mainland accounted for about 64% of the global. And we estimated that it will occupy 78% of the global market share by 2025. The reason for the share increasing is combined with the LCD plants shut down by Korea panel makers and some new plants plan by China panel makers.
According to statistics from CINNO Research, the global share of OLED display panel production capacity in China Mainland has exceeded 40% in 2021. Except PMOLED, there are 11 OLED display panel plants in production and they are all generation under G6 in China Mainland. And base on the investment plan of the new high-generation OLED production line in the future, the OLED panel production capacity in China Mainland is expected to exceed 50% in 2025, and may become the world's largest OLED panel production base. Well, it is a very positive assumption. Till now, there are still so many problems with large size OLED display technology in Material, Equipment, and Process for China Display Panel Makers.
Including LCD&OLED, statistics from CINNO Research show that in 2021, the shipment area of major applications of display panels from China Mainland has ranked No.1 in the world. Especially, the shipment area of TV panels from China Mainland accounted for 59%, for IT panels accounted for 46%, for Smartphone panels accounted for 56%, and for Automotive panels accounted for 43%. China Mainland has become the Major Supplier. The high market share with the high utilization in last year, China Mainland display panel makers could make a good profit. However, if in downturn season, they would also suffer a lot. The competition in the future would be more and more fierce.
From 2020 to 2021, major brand chose to stock up materials due to the rising prices of panels and semiconductors, rising global shipping costs, and other factors, while in the second half of 2021 and 2022, the impact of the COVID-19, global inflation continued to be worse, seriously hit the end consumer market demand. As a result, brands have had to reduce or suspend purchase orders for panels and other materials, reduce inventory and find ways to bring back capital to improve business. CINNO Research expects major brands to revise down their purchasing plans for LCD TV panels by about 15% this year. Due to weak demand and increasing production capacity, the panel oversupply situation occurred in last year and further expanded in 2022. For example, LCD TV panel prices began to decline from Jul.21’. At present, all TV size panel prices have fallen below the previous (May.20’) low, compared with the peak in Jul.21’ was down by 50~70%, some product prices were decreased below the cash cost. And not only LCD TV panels, all the panel prices of consumer electronics are falling.
As to settle down the tough situation, global panel makers began to reduce production in Q2’22, and try to reduce the inventory. According to CINNO Research, the utilization of TFT-LCD panel production lines in worldwide base decreased to 78% in Q2'22, and the number of China Mainland was 83%. Global base has further fallen to under 70% in Jul.22’. The average utilization rate of LCD panels in China Mainland dropped to 76% in Jun.22’, down 9 percentage points from 85% in May. While the reduction in G10.5/11 line was relatively small. CINNO Research estimates that from the third quarter of 2022 to the first quarter of 2023, China Mainland LCD panel utilization rate will remain below 80%. The glass input area in the second half of this year is expected to be reduced by about 10% compared with the first half. There is still a certain gap with the brands 15% revision, so the utilization rate may drop to 70% in the short term.
The weak global economy is also affecting demand for OLED displays. Both OLED TV and Smartphone demand were weaker than expected. In the first half of 2022, the global market shipped about 278 million OLED smartphone panels, down 10.5% from the same period last year, and the shipments in the first and second quarters continued to decline both quarter-on-quarter and year-on-year. According to the survey data of CINNO Research, the utilization rate of global OLED panel production line in Q2'22 has decreased to 67%, while China Mainland has been less than 40%, especially for the flexible OLED panel lines, the utilization rate was lower than rigid OLED lines.
The inventory amount of panel makers in China Mainland (including finished goods/WIP/raw materials, etc.) hit a record high in Q1'22, reaching nearly 65 billion RMB, up 8.6% from the end of 2021.However, considering the changes in panel capacity and ASP, the inventory amount of China panel makers in Q1'22 actually increased by 15% compared with the end of 2021. The high inventory pressure of China panel makers can only be adjusted by keep reduction in the utilization rate. According to CINNO Research simulation data, if the global panel utilization rate remains below 75%, the panel inventory has a chance to decline to a relatively healthy level in Q4 '22, and will have a chance to be fully digested in Q1' 23.
According to CINNO Research, global panel makers’ revenue hit a new record high in 2021, reaching US$156.5 billion. And also, this is the first time, the revenue from China Mainland ranked No.1 in the world, with a share of 42%. Well, under this worse situation, we estimated that global panel revenue would decline 25 percent to US$120 billion in 2022. It will be hard to get back to the 2021 highs in the next two to three years.
What could we do in such kind of down turn season? What about China supply chain status? We would share these points in the Part 2.
Along with the scale up of China Mainland panel market, China own brands are also growing. They have built a good ecosystem for upstream. The process of localization in China Mainland display industry is accelerated in recent three years.
For example, Liquid crystal material for TFT-LCD is a pure independent research and development by China mainland manufacturers themselves. According to CINNO Research industry statistics, in 2021, the market demand of liquid crystal materials in China Mainland has exceeded 500 tons. And the localization rate of liquid crystal materials market in China Mainland in 2021 is about 65%, and increased 5 percent compared with 2020. It gives a good example for chemical makers, if they could be dedicated into one field, maybe they could gain the market share.
Also, there are other ways to improve the localization rate. They are financial methods. Through the independent R&D and Investment, the Polarizer Film industry is developing fast these years in China Mainland. According to the industry statistics of CINNO Research, in 2021, the Polarizer Film market in China Mainland exceeded 400 million square meters, and the localization rate of it reached about 60%. China Polarizer film makers are desire to upgrade their technical levels and improve the penetration for upstream materials. The improvement of the localization rate of display panel direct materials such as liquid crystals and polarizers will help to accelerate the development progress and localization of their upstream industries.
Besides the traditional LCD materials, China material makers are more willing to develop new ones, such as Quantum Dots, OLED Emitting materials, UTG glass. According to CINNO Research industry statistics, the global Quantum Dot material market grew to nearly 10 tons in 2021, and may increase to over 17 tons in 2025, China Mainland QD material suppliers are share the new incremental market with global leading players. And in OLED field, also lots of vendors are developing different materials to find their market opportunities.
For display equipment supply chain, we use the AMOLED panel market as an example, according to CINNO Research statistics, the localization rate in China Mainland of equipment has continued to increase in the past three years, especially for module equipment, laser equipment, wet process equipment and baking equipment. Among them, the localization rate of Cell/Module Test has reached 82%. And Module Test equipment almost realized 100% vendors from China local vendors, only some Cell Test equipment is still being used by Korean vendors. And Wet Process equipment has the highest localization rate in Array process, we got 30% penetration rate.
Except material and equipment, the Driver IC industry is also growing rapidly. According to the statistics of CINNO Research, in 2021, the DDIC localization in China is increased to 16% by up 6 percentage point from 2020. We found a number of highly competitive China Mainland DDIC suppliers have been grown up. Such as Chipone and ESWIN, they have grown into leading companies in the field of large-size DDIC players in China Mainland. The market for OLED DDIC is very competitive, and it still need some time for China Mainland DDIC design companies to make a big breakthrough.
Let’s move to the 3rd part and to find what’s the trend in China Display industry and for China companies.
The China government is no longer encouraging new LCD capacity and OLED capacity under G6. According to CINNO Research statistics, in 2022-2025, the new capacity of TFT-LCD panels in China Mainland is about 85 million square meters, which is down 26% compared with 2018-2021. New OLED panel capacity in China Mainland will be over 24 million square meters in the next four years (2022-2025), and increase 20% compared with The previous four years (2018-2021). Meanwhile, the China government does not support old display panel production lines and equipment. Compared with new line projects, it is difficult to find suitable financial support for these old production line factories in China. They would face more challenges in operation. Recently, just one panel factory in China that specializes in old production lines entered legal proceedings.
With the new construction and expansion plan of China Mainland display panel plants, CINNO Research forecast data show that the 2022-2025 TFT-LCD market will bring nearly 180 billion RMB for new equipment market orders, and about 244 billion RMB orders for new OLED equipment. We believe that display technology upgrades will become a major growth engine in the equipment market after 2025.
Original display supply chain manufacturers are looking for new market opportunities in the future. According to the statistics of CINNO Research, in the first half of 2022, the investment amount in China Mainland for the five emerging technologies, the New Energy industry accounted for 71%, Semiconductor accounted for 17%, PCB and Displays accounted for about 4% respectively, and Consumer Electronics accounts for about 3%. By contrast, the share of investment in display industries has been very small. It shows that the display industry will enter a period of low investment before technology completed upgrading.
According to the statistics of CINNO Research, 92% of the investment in China Mainland for the five emerging technologies in 1H’22 came from own funds. The continuous impact of the COVID-19 over the past three years, combined with the influence of global political and geopolitical factors, has greatly affected the investment of overseas companies in China. The method of economic development that relies on foreign capitals for China industries is difficult to recover. Encourage independent innovation and enhance the technical upgrading, it has become the main development strategies for China companies in the future.
According to the statistics of CINNO Research, in the 1H’22, the number of companies involved in the Display field investment is more than 100, the investment amount is over 260 billion RMB. There were 45% capitals still input into Display panel factories, and 19% was invested for individual module factories, 17% was invested by different kind of material players, Mini LED/MicroLED was accounted for 16%, and only 2% for equipment side. When display investment enters the second stage of technology battle, the localization of supply chain becomes the main topic of China display industry.
OK. That's all I have for today. I hope the content shared today can be a reference for you. Thank you so much for your time. I am looking forward to having more opportunities to communicate with you. Especially when you are just thinking and making business plans in China, you are welcome to link with us at any time. Thanks again, see you next year.
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CINNO于2012年底创立于上海，是致力于推动国内电子信息与科技产业发展的国内独立第三方专业产业咨询服务平台。公司创办十年来，始终围绕泛半导体产业链，在多维度为企业、政府、投资者提供权威而专业的咨询服务，包括但不限于产业资讯、市场咨询、尽职调查、项目可研、管理咨询、投融资等方面，覆盖企业成长周期各阶段核心利益诉求点，在显示、半导体、消费电子、智能制造及关键零组件等细分领域，积累了数百家大陆、台湾、日本、韩国、欧美等高科技核心优质企业客户。
