OFweek smart home network news Korea LG Display Company announced on July 25 that it will build a joint venture factory in Guangzhou to produce large-size OLED panels. Its panels are mainly used for television and electronic billboards.
This joint venture plant is located in the Guangzhou Development Zone. It is adjacent to the 8.5-generation LCD panel factory that was formally put into production in 2014 and has now officially started construction. According to the LG official website, the registered capital of the joint venture factory is approximately RMB15.7 billion, and LG will hold 70% of the shares.
The Caixin reporter learned that the other 30% of the shares of the joint venture factory are held by Guangzhou Kaide Technology Development Co., Ltd. (hereinafter referred to as Katech). People close to Kay Tech revealed to Caixin reporter: The total investment of this project is about 45 billion yuan, and 15.7 billion yuan is only the initial registered capital. As of the time of Caixin’s press release, the company’s information on the cooperation between the two companies has not been shown in the national enterprise credit information registration system.
The cooperation between LG and Kayder Technologies has long originated. Kaide Technology was established in 1998 and is wholly invested by Guangzhou Kaide Holdings Co., Ltd., which is a wholly state-owned enterprise established by Guangzhou Development Zone to support high-tech development and asset management. When LG invested in the aforementioned 8.5-generation LCD panel factory in Guangzhou in 2012, Kade Technology was one of LG's partners and held 20% of the shares. Another partner of this LCD panel project is Skyworth, which holds 10% of its shares.
The OLED panel is a flexible screen. Compared with the current liquid crystal panel, the OLED panel can be bent and can even be folded. This feature makes the industry recognized: OLED panels will replace the LCD panel, becoming the mainstream of the future mobile phones, televisions and other screens.
The OLED industry is erupting. According to IHS Markit, a British investigation company, the amount of OLED panels shipped to TVs and smart phones in 2017 will reach US$25.2 billion, a substantial increase of 63% year-on-year.
LG holds an important position in the OLED industry. At present, many companies in the world have been able to produce OLED small screens for mobile phones; however, only LG can mass-produce OLED large screens for televisions.
Inside LG, large-sized OLED screens are also more important than small screens. LG’s second-quarter report released on July 25 showed that in the quarter, LG’s net profit was 4.5 billion yuan; in the screen sales, television screens accounted for 46%; desktop computer screens accounted for 17%; notebooks Tablets account for 15% of the screen; mobile screens account for 22%.
LG is also continuously expanding the shipment of OLED large screens. According to public information, LG announced that it plans to produce 1.8 million OLED TV panels in 2017, which is double the output in 2016.
LG's joint venture plant in Guangzhou to produce OLED large-size panels has attracted much attention. Liang Zhenpeng, an analyst in the home appliance industry, said in a telephone interview with Caixin: The bottleneck of the OLED industry development was the serious shortage of large panel production capacity.
According to panel search researcher Display Search, in LG's announcement that it could mass-produce OLED large screens in 2014, OLED TVs sold in the global market at 77,000 units, and the market totaled 284 million US dollars. In 2015, the OLED TV panel market grew 10 times to reach 770,000 units. The agency expects that by 2021, global OLED TV panel shipments will reach 16.5 million, and the market size will reach more than US$7 billion.
Liang Zhenpeng and another household appliance analyst Liu Buychen emphasized to Caixin reporter: This is the first time that LG has established an OLED large panel joint venture factory in a country other than South Korea, which shows that it is optimistic about the Chinese market.
According to the LG official website, LG decided to establish a new production line in Guangzhou, responding to the global demand for OLED TVs. This is not just because of the geographical location of Guangzhou, but also because China is the world's largest TV market.
Ove Cloud Network data shows that in China, OLED TV will maintain a 400% growth rate in both 2016 and 2017. IHS Markit also pointed out that by 2018, China’s OLED TV market share will stabilize at around 20%, and China will become the world's largest OLED market.
The landing of the joint venture factory in Guangzhou will also agitate the OLED panel industry in China. Guohai Securities's research report on July 14 shows that: Chinese mainland panel makers have already built and planned 12 small-sized OLED panel lines, and large-size OLED panel lines have also been included in the investment plans of BOE and Huaxing Optoelectronics. However, the core technologies related to production equipment are still in the hands of Japan and South Korea, and the domestic market is still in the research and development stage.
According to the research report, 70% of the LCD panels and OLED panels can be connected in the production process. In the long run, the future production capacity of OLED panels in mainland China is quite impressive. Liu Buchen also said in an interview with Caixin reporter that LG is now bringing mature technologies to mass production of OLED panels in China, and it also has a strategic need for “card positionsâ€.
“LG is the first foreign-funded enterprise to come to China to lay out OLED panels; this joint venture is also the first factory in China to produce OLED panels.†Liu Buchen said.
Guangdong Province is now building a highland for display industries. In the second half of 2016, the production line of the LCD panel of the 10th generation line of Huaxing Optoelectronics' 11th generation line and Foxconn's president Guo Taiming invested in Guangdong. The total investment of these two projects exceeded 100 billion.
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