[Overcapacity leads to continued price cuts in LCD panels AUO shuts down Shanghai plant] Taiwan-based panel makers are adjusting their capacity maps in the mainland. Recently, AU Optronics, one of the leading panel makers, announced that it will shut down the Shanghai Songjiang plant and gradually transfer this capacity to the Suzhou plant. This is also the first time AUO has shut down its mainland plant. It is understood that Songjiang Plant is a module factory that produces TFT-LCD, and its products are mainly used in IT monitors such as computers and notebooks.
In terms of market share, AUO’s market share in both IT panels and TV panels ranks in the top five globally. With the shrinking demand for PC products, the rise of mainland display panel companies, and the increase in manufacturing costs, AU Optronics Also began to reduce some of the production capacity.
On May 9th, an employee of the AUO Songjiang plant told the 21st Century Business Herald reporter: “Now the factory has stopped work and compensated with N+2. AU Optronics had already talked with the factory supervisor about compensation. Grassroots employees knew later that the company posted a relocation notice in the past two days. At the same time, some factory employees think that the compensation amount is insufficient and unreasonable.
AU Optronics issued a clarification announcement on May 9: “In order to optimize the overall production efficiency and focus on mobilizing and serving customers, the company will carry out production line scheduling for module factories (module factories) in the East China region.†The announcement also mentioned At present, the number of employees in the Songjiang plant is about 800. The company will arrange for the transfer of manpower across the factory site. For those employees who cannot be transferred, the employees' rights and benefits will be guaranteed.
For employees, there are many discomforts with unemployment or transfer, but the fact of shutting down the factory is irreversible. Some analysts pointed out to reporters that the news of AUO's withdrawal from the factory had already spread in the industry, and the module plant equipment had been resold. This was also the elimination of low-end production capacity.
Close the module factory
AUO's manufacturing base in East China mainly includes factories in Songjiang, Suzhou and Kunshan. According to the AUO's introduction, the Kunshan plant produces small-size LTPS products; the Suzhou plant base has a relatively large scale, and large and medium-sized module products are produced; and the Songjiang plant's products are based on desktop display panel modules. In addition, in 2009 and 2010, AUO also established a module plant jointly with Sichuan Changhong and TCL.
Among them, the Songjiang plant's profitability has been good, but the external environment "deterioration" has also allowed AU Optronics to respond.
“Now in the display panel market, IT applications—displays, notebooks, and tablet PCs—have been declining every year since 2015, and have been impacted by changes in the mobile Internet and consumer habits, and overall demand is shrinking.†General Manager Li Yaqin analyzed the reporters of the 21st Century Business Herald. “The Songjiang factory mainly manufactures these products, such as helping Dell and Hewlett-Packard to do OEM. Therefore, closing factories is also reasonable.â€
According to a report released by research firm Gartner, global sales of PCs (mainly desktop computers, notebook computers, and variant books, etc.) in 2017 were 262.5 million units, down 2.8% from 277.1 million units in 2016; and in the first quarter of 2018, global The shipment volume of the PC market was approximately 62 million units, and the market scale shrank slightly by 1.4%.
The continuously declining PC market also affected upstream panel suppliers, and the sluggish demand caused panel companies to reduce production capacity. From the perspective of market share, IT's panel makers have also seen brand concentration. According to statistics from Quzhi Consulting, in the first quarter of this year, BOE ranked first in shipments of 22.4 million units, Innolux ranked second with 16 million units, and AU Optronics shipped 15.60 million tablets, ranking third.
Obviously, BOE has become a powerful competitor. Ya-Qin said: "BOE's panel shipments are basically ranked first, and BOE itself is also doing OEM. It is an integrated model of the industry chain and will have some impact on the Taiwanese system. The rise of China's mainland panel makers will also drive downstream OEMs. Not only is the panel capacity going to the mainland, but the mainland companies that are OEMs are also rising.â€
At the same time, Li Yaqin also pointed out that the production capacity of foreign capital is decreasing, and labor-intensive manufacturing of OEMs is shifting to Southeast Asian countries. From the recent examples of foreign-funded closure of factories, the shifting trend can be seen. Shenzhen Samsung Electronics Communications Co., Ltd. will be cancelled recently. It is understood that the production base has been transferred to Vietnam; Japanese optical giant Olympus also closed down the camera factory in China. The production of digital cameras may move from China to Vietnam.
Overcapacity period is coming
The display industry in Taiwan has already passed its peak period. Once the panel "Taiwan Panel Five Tigers" - AU Optronics, Chunghwa Picture Tubes, Guanghui Electronics, Chi Mei Optoelectronics, Haoyu Caijing, has undergone reshuffle purchases. Now it is mainly The backbone is AU Optronics and Foxconn's Innolux.
In 2002, China’s Taiwan launched a “two trillion binary†plan to vigorously support Taiwan’s semiconductor and display panel industries. It also ushered in the golden era of Taiwan’s display industry, but now production capacity has been undertaken by mainland companies.
From the perspective of Apple's supply chain, since 2017, Taiwan's panel makers have been squeezed out of the ranks of suppliers, AUO has officially withdrawn, and BOE alone has provided MacBook Air with a 13.3-inch panel for Apple.
At the same time, China's support for display panels continues. At the 2018 Cross-strait (Nanjing) New Display Industry Summit Forum opened on May 8, Tsinghua University professor Zhang Baizhe talked about the three-year action plan from 2018 to 2020, that is, in the next “Transcendence Planâ€. The goals achieved are: total industry sales revenue will reach RMB350 billion; strive for the scale of the two key enterprises to enter the global top four; one of them will reach the top in the world; panel shipments by area will account for more than 50% of the world's total, TFT-LCD panels With a global market share of more than 60%, the global market share of AMOLED panels exceeds 25%, and it accounts for 80% of domestic display terminal market demand.
The market share of mainland panel makers will further increase, squeezing the share of Taiwanese companies and Korean companies. However, at present, whether it is Taiwan enterprises or mainland enterprises, panel makers need to face a new round of price reduction cycles.
Sigmaintell predicts that IT panels and TV panels will continue to decline in the second quarter. In particular, TV panels, in terms of size, global panel TV market in the second quarter of the full surplus, panel prices continued to fall. For example, the supply and demand ratio of 32-inch panels in the second quarter will reach 10.6%, 38.5 inches-43 inches, and the supply-demand ratio will reach 10.8%. Both supply and demand will be severely surplus. At the beginning of the second quarter, the size of some of the declines have increased, and as prices gradually fall below the total cost, it is expected that the decline in TV panel prices at the end of the second quarter will gradually narrow.
Since the fourth quarter of last year, the low tide of the panel has seen the trend from the financial reports of major leading companies. The revenues and profits of AU Optronics, BOE, and LGD have declined. The performance of the first quarter of 2018 is not optimistic. According to financial reports, AUO’s net profit for the first quarter of this year was approximately RMB 920 million, a decrease of 54.5% year-on-year.
Li Yaqin told the reporter: “At present, due to the demand side of this year, the speed of large-sized production has slowed down and has not reached expectations. The sales volume of emerging countries is relatively good, such as India, Southeast Asia, and South America, but due to purchasing power, it is still small and medium-sized. Due to its size, the number of purchases is increasing, but the speed of large-sized production has slowed down, and new production capacity has been increasing. Therefore, the increase in demand area cannot keep up with the increase in industrial area. This is also the main contradiction, resulting in overcapacity. The situation is more severe and the price reduction will last at least until the third quarter."
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