The closure and shutdown of major panel factories, looking back at the battle of LCD panels.

According to reports, the panel giant, Innolux Nanjing Module Park, plans to close, and the equipment will be transferred to the Ningbo factory. The company is currently laying off employees in batches, affecting 2,395 people. Innolux is committed to the research and development of TFT-LCD technology and product manufacturing. The Nanjing factory was once the world's largest small and medium-sized TFT panel manufacturing base.

On April 10, this news was confirmed in a statement by Innolux Optoelectronics. The company stated that it is committed to improving production configuration and overall operational efficiency, adjusting some production lines and products at the Nanjing factory, and optimizing and adjusting the workforce structure to strengthen the group's development.

Recently, there have been reports that due to the downturn in the LCD panel business, the Japanese company Sharp has decided to suspend the production of some large LCD panel products by its subsidiary, Sakai Display Product (SDP).

For the past few decades, the competitive landscape of LCD panels has been constantly changing. In recent years, with the withdrawal of South Korea and Japan from the LCD field, China's competitive advantage in this field has become increasingly apparent.

Rise of LCD display technology

In the late 19th century, scientists discovered liquid crystals. It wasn't until 1960 that an American company began using liquid crystals for display technology. In 1962, George H. Heilmeier, a doctoral student at Princeton University, invented the liquid crystal display technology while working as a part-time assistant researcher at the RCA Research Center in the United States.

It wasn't until 1968 that RCA produced the world's first liquid crystal display model and held a press conference in New York, where Japanese companies learned about this new technology. In order to achieve mass production, RCA established a dedicated liquid crystal business department, with the main work being led by the semiconductor department of RCA and its team, focusing on almost every aspect of LCD manufacturing, including developing new processes for manufacturing room-temperature liquid crystal materials on a larger scale and improving the process technology for filling and sealing displays.

Although RCA invented the liquid crystal display technology, the display speed was too slow and the color was too monotonous, far from being able to produce color televisions. Over time, RCA abandoned the continued development of this technology. Subsequently, other American companies also abandoned the development of liquid crystal display technology for similar reasons.

Defeating European and American companies, the rise of the Japanese LCD industry

The Japanese who saw the new technology at the RCA press conference showed a strong interest in liquid crystals. The first to act was the Japanese watch company Seiko. In 1973, Seiko introduced the world's first digital LCD wristwatch with six digits (06LC). In 1975, they launched the world's first digital LCD multifunctional chronograph electronic wristwatch.

With continuous investment, liquid crystal technology became more and more mature, gradually solving problems such as slow display speed and monotonous colors. After that, the rise of Japanese companies became unstoppable, quickly defeating the American companies that invented the liquid crystal display technology. In 1988, companies such as Sharp, Toshiba, and NEC had the technology to produce large-size LCD screens. By 1990, 90% of the world's LCD screens were produced in Japan; in 1991, Sharp was the first to start production of large-size LCD screens. In 1992, IBM introduced the ThinkPad laptop series, with its first product, the 700C, using a 10.4-inch color LCD screen. After that, the LCD display market exploded. Sharp, NEC, Fujitsu, and other Japanese companies responded to market demand and built second-generation LCD production lines to produce laptop displays.

By the mid-1990s, 95% of the world's LCD production capacity was in Japan, almost monopolizing the entire industry chain. After that, European and American companies failed in competition and successively withdrew from the competition.

Counter-cyclical investment—the rise of South Korean companies

After Japan monopolized the LCD industry, the application of LCDs gradually became widespread. With the maturity of the laptop market, the LCD industry ushered in a new wave of prosperity. However, the crisis of overcapacity followed. In 1993-1994, LCD production entered the first cycle—prices fell and profits plummeted. Japanese companies reduced production due to losses. During this process, a large number of industry chains and talent reserves were sold or unemployed. South Korea seized this opportunity, broke through various barriers, and hired a large number of Japanese engineers. When South Korea mastered the relevant technology, counter-cyclical investment became the skill to defeat Japan.

As Japanese companies' investment willingness declined, South Korea took advantage of the Asian financial crisis to heavily invest in the panel industry. In 1995, Samsung and LG each built their own LCD production lines. In 2001, Samsung and LG invested in 5th generation production lines. After production, South Korean companies completely surpassed Japanese companies. Samsung and LG's market share ranks first and second in the world, with a combined share of nearly 50%, becoming the new overlords of the panel, leaving Japanese companies unable to resist. The chaebol model in South Korea provided strong financial support to companies, allowing South Korea to have the ability to produce larger-size production lines and continuously impact the LCD panel market. When larger and clearer panels were launched, it activated many previously nonexistent market demands, allowing South Korea to dominate the competition.

After that, Japanese companies took measures to skip the 5th generation production line and directly put into operation the larger 6th generation production line, but it was too late. In 1998, Japanese companies that failed in capacity competition turned their attention to the least affected Chinese Taiwan region after the financial crisis, and instead supported Taiwanese companies, signing technology transfer contracts with Taiwanese manufacturers and charging high patent fees, while using the low-cost production capacity of Chinese Taiwan to target South Korea. As expected, the panel industry in Chinese Taiwan quickly rose and became one of the four major pillar industries.

However, in 2008, the financial crisis hit the Taiwanese panel factories hard, with downstream demand declining and upstream overproduction, which also led to the collapse of the Japanese panel industry. In 2009, NEC shut down its LCD panel factory in Kagoshima. Two years later, Sony sold its LCD panel business to Samsung, and Mitsubishi Electric also withdrew from the panel business. In 2016, Sharp was also acquired by Foxconn.

Chinese companies enter the LCD market and break the monopoly

South Korea, relying on its strong financial strength, defeated Japanese companies with counter-cyclical investments, and the huge funds in the LCD panel industry made other latecomers hesitate. But with the rise of China's comprehensive national strength and economic power, a new variable has emerged to break the Korean monopoly.

The earliest domestic companies entered the industry by importing foreign LCD production lines and products. In January 2003, BOE officially announced the acquisition of a liquid crystal production line from Hyundai in South Korea for $380 million. At the same time, they also planned to build a 5th generation LCD production line in Beijing. After 2009, BOE started the construction of the first independently designed and built 8.5th generation TFT-LCD production line in mainland China, with a total investment of 28 billion yuan. In the same year, China Star Optoelectronics independently started an 8.5th generation TFT-LCD production line. Several domestic panel companies embarked on the path of independent innovation, and the panel industry in China rapidly expanded.

In 2015, domestic companies BOE Chongqing B8, China Star Shenzhen T2, and Panda Nanjing C2 launched three high-generation domestic lines, significantly increasing LCD panel supply. Faced with the expansion of mainland China's LCD production capacity, Korean manufacturers Samsung and LG reduced some of their LCD production capacity and instead expanded their OLED production capacity. In 2016, Samsung/LG withdrew 3.98 million square meters of production capacity (equivalent to 240K/M on an 8.5th generation line, roughly equivalent to the expanded production capacity of Chinese companies). After 2018, BOE Hefei B9, BOE Wuhan B17, China Star Shenzhen T6, China Star Shenzhen T7, and Sharp Guangzhou 10.5 were successively put into operation.

With the continuous efforts of mainland Chinese panel manufacturers to invest in and build production lines, companies such as BOE, HKC, and Rainbow have quickly caught up. Currently, mainland China's panel production capacity accounts for nearly 70% of the global market share.

In 2020, China Star Optoelectronics took over Samsung's Suzhou factory and subsequently acquired Samsung's LCD patents in the United States and South Korea; BOE acquired the 8.5th generation line capacity of China Electronics' Panda.

In 2021, BOE's revenue was 219.3 billion yuan, with a net profit of 25.831 billion yuan, a year-on-year increase of 412.96%; another panel manufacturer, China Star Optoelectronics, had operating income of 163.5 billion yuan, with a net profit of 14.96 billion yuan, a year-on-year increase of 195.3%. Even the second-tier company, Visionox, also achieved outstanding performance, with a revenue growth of up to 32.32%.

With the explosive performance, after nearly 30 years of fierce competition with Japan and Chinese Taiwan, the Koreans have exited this brutal game. According to market research company Omdia, last year's LCD TV panel shipments reached 258.27 million pieces, with Chinese manufacturers accounting for over 60%. China's largest panel manufacturers, BOE, China Star Optoelectronics, and HKC, shipped 601.8 million, 484 million, and 390 million pieces, respectively, while LG Display only shipped 133.4 million pieces.

Japan, South Korea, and Taiwan gradually exit the LCD market, and South Korea fully shifts to OLED

With the rise of China's LCD panel industry, the LCD industry in Japan, South Korea, and Taiwan has gradually declined.

The South Korean media "Asian Economic Daily" published an article stating that the "LCD battle" initiated by the rise of Chinese displays has come to an end. Following Samsung Display's exit from the LCD business, LG Display also began considering selling its last remaining LCD TV panel production line.

In fact, after 2008, the panel industry began to decline, and some Korean companies began to reduce their investments in LCD production capacity. Panel factories in Chinese Taiwan were also affected. In March 2010, Chimei Innolux, Chi Mei Optoelectronics, and TPO merged, marking the largest merger in the history of the panel industry.

In 2022, Samsung's 8.5th generation factory completed its final production run and was completely shut down, ending 30 years of operation in the LCD panel business. In the first quarter of 2023, LG Display was rumored to be considering selling its last 8.5th generation LCD production line in Guangzhou. In addition, Japanese display company JDI and Panasonic also announced the cessation of LCD panel production. On August 2, 2023, Panasonic announced the liquidation of its LCD panel business subsidiary PLD (Panasonic Liquid Crystal Display Co., Ltd.) before March 2025. On the same day, JDI announced that it would stop LCD panel production at its Tottori factory in Japan before March 2025.

With the complete disappearance of the South Korean LCD supply chain, Korean companies that failed in the LCD field chose to bet on the OLED industry and shifted their focus to OLED (organic light-emitting diode) panels.

According to media reports, by 2026, Samsung Electronics will invest $3.14 billion in the production of advanced OLED displays for tablets and laptops, betting on the future of tablets and laptops. Currently, Samsung Display is the first and only company in the industry to invest in the 8th generation OLED. From the current progress, Samsung Display's investment in the 8th generation OLED production line has accelerated significantly. In April 2023, at the new investment agreement ceremony held in the Yashan Park area of South Korea, Samsung Display announced that it would invest 4.1 trillion won (approximately RMB 21.5 billion) to build the world's first 8.6th generation OLED production line for IT use. In June, after a period of stagnation in price negotiations for the 8.6th generation OLED evaporation equipment with Japan's Canon Tokki, Samsung Display plans to finalize the supply contract as soon as possible and start the test production line as soon as possible.

The vice president of Samsung Display, Cui Quanrong, stated that Samsung Display plans to focus its investment on small and medium-sized OLED panels for IT equipment and high value-added flexible OLED panels to enhance the company's profitability.

As the liquid crystal display (LCD) panel market enters a mature stage, it may face a wave of closures. Starting from the second half of 2021, with the slowdown in the growth of display panel consumption and the concentrated release of new production capacity on the supply side, the demand for LCD display panels has cooled down, leading to price fluctuations. According to WitsView data, the global shipment of large-sized LCD panels in 2022 was 8.88 billion pieces, a year-on-year decrease of 9.71%; the shipment area of global large-sized LCD panels was 2.19 billion square meters, a year-on-year decrease of 5.70%.

With the upgrading of consumer demand and the increasing demand for high-end televisions, the shipment volume of high-end LCD panels such as Mini LED is expected to experience rapid growth. As display technology advances and the demand for high-end TVs intensifies, the commercialization of OLED display technology in emerging electronic consumer products such as wearable devices, curved screen smartphones, and VR devices continues to increase, injecting new development momentum into the flat panel display industry. In recent years, with process improvements, OLED display panels have continuously improved in performance while effectively controlling costs, further enhancing the market competitiveness of OLED products and increasing market share.

Currently, LCD panels have obvious disadvantages compared to OLED in terms of display effect, power consumption, thickness, and flexibility. LCD panels are facing fierce market competition and technological challenges. This is also a major reason for South Korean companies to shift to OLED technology. The current LCD market has entered a mature stage, and with the monopoly of industry giants and market contraction, future industry enterprises may face a wave of closures.

Although the LCD era has passed, Chinese companies such as BOE are also focusing on new display technologies such as OLED. According to capacity data compiled by Omdia, the market share of Korean manufacturers in the OLED market has decreased from around 84% in 2018 to around 60% in 2022, and OLED capacity is accelerating its transfer to mainland China.