Half of the capacity of divine soldiers 4 provides upstream support to other enterprises

The long-standing wish of China's color TV enterprises is to independently produce LCD panels, as the screen accounts for 60% of the total cost of a TV set. Without screen panels, there would be no product pricing power, which is equivalent to being constantly strangled by upstream suppliers.

On August 8, CSOT, a subsidiary of TCL Group, announced the start of production for its 8.5th generation LCD project, making TCL the first domestic company to own full LCD industry chain capabilities. This is undoubtedly cause for celebration, but with BOE, CEC-Panda Sharp, and AU Optronics Kunshan’s LCD panel production lines coming online since last year, China's panel industry has encountered an "oversupply" dilemma right after breaking through previous bottlenecks.

Currently, China's annual color TV sales volume is about 40 million units. However, after the full production of just two 8.5th generation lines from BOE and TCL, they can annually produce approximately 14 million and 17.5 million TV modules respectively. The problem is that the global color TV industry structure has undergone profound changes. After flat-screen TVs have completely replaced CRT TVs, they are gradually entering a "zero growth" period. The late-arriving local panel companies can be said to have missed the last train.

According to a survey released by AVC Consulting, it is certain that both the sales volume and amount of China's color TVs fell in the first half of the year. In the first half of the year, the domestic retail market cumulatively sold 19.37 million color TVs, only completing 46.3% of the annual expectation. Sales amounted to 73.66 billion yuan, decreasing by 0.6% and 2.3% respectively compared to last year, far below the previously expected 10% increase. On one side, the demand for LCD TVs has significantly slowed down; on the other side, LCD screen factories continue to come online. The situation of oversupply will undoubtedly further intensify.

On the other hand, the profit prospects of China's LCD panel industry are also concerning. So far, global panel giants have not been able to escape the fate of significant losses. Since the second quarter of last year, global LCD panel prices have entered a new round of decline. By August this year, prices have fallen continuously for 14 months. Meanwhile, almost all panel giants entered a loss cycle starting from the fourth quarter of last year. In the latest quarterly reports published this year, LCD panel giants have again announced massive losses. Under the pressure of exacerbated oversupply, large-size panel prices dropped universally by 5% at the beginning of August. This means that the third-quarter performance of panel giants may also not escape the fate of losses. "The LCD panel industry is losing its previous characteristics as a capital-intensive and high-profit industry. In the future, LCD panels might sell for 'cabbage prices,'" remarked Luo Qingqi, a senior director of Palar Consulting.

In response, Li Dongsheng, chairman of CSOT, stated that producing screens is a must for China's color TV enterprises. He has prepared for CSOT to potentially incur losses for 1-2 years, believing this is a stage that companies must go through during their development phase. "After the mass production of the 8.5th generation LCD line at CSOT, half of the capacity will be internally digested by the TCL brand, while the other half will provide upstream support to other enterprises. The company will gradually expand its external sales share."

Information Times reporter Liu Li

> Related Reports: Panel tariffs may increase, Guangzhou 8.5th generation LCD panel project will restart. No signs of recovery in panel prices in the third quarter, mainland LCDs born at the wrong time.

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