Japanese Media: China Striding Toward A Strong Mobile Phone Panel

Panels for smartphones have always been the headquarters of Japanese and Korean manufacturers, but the presence of Chinese panel makers is becoming stronger. China established eight mobile phone panel factories within two years, and more than five new factories are scheduled to be put into operation in the next two years. China's panel factories will not only increase production capacity, but also increase the rate of finished products. Chinese manufacturers' market share already accounts for 30%. In the event of deteriorating market conditions, in order to catch up with Japan and South Korea, Chinese panel companies continue to invest in equipment with a sense of loss.

"From the beginning of a year ago, the rate of production has greatly improved. We have finally realized full-load operation and component orders have reached a high level," a salesman at a Japanese company was relieved. This company supplies liquid crystal panel components to China Tianma Microelectronics' Xiamen plant.

It is reported that the factory that was put into operation at the end of 2016 was initially in trouble with mass production of high-definition LCD panels and was returned by some Chinese mobile phone manufacturers. The Tianma Group deployed technical personnel from NEC's liquid crystal division acquired in 2011. The plant has accumulated production technology and increased its yield.

According to the IHS Markit survey, the shipments of Tianma's small and medium-sized LCD panels (2017 actual results) were US$3.7 billion, a substantial increase of 66% year-on-year. Boeing Technology Group (BOE) also increased by 26% year-on-year. The market share of Chinese panel makers has reached about 30%, and it has rapidly increased to the level comparable to Japanese companies such as Japan Display (JDI) and Sharp.

With regard to LCD panels, Japanese manufacturers such as Sharp and Casio Computer have started technological competition and their use has expanded from monochrome computers to color TVs. Around the year 2000, South Korea and other companies developed rapidly. Japan’s IBM sold the business to Taiwanese companies in 2001. With this as an opportunity, major Japanese electromechanical companies have started to reduce their related businesses.

In Japan, JDI and Sharp, formed by six electromechanical companies, are engaged in the liquid crystal business. Compared with the large-sized panels used in televisions, small- and medium-size panels for mobile phones, personal computers, and automotive applications have a technical threshold in high-definition. Japanese manufacturers have gradually shifted from large sizes to medium and small sizes. Nowadays, under the strong support of government funds, Chinese manufacturers that continuously increase the market share in the large-size panel sector are also pressing harder and harder in the small and medium-sized panel area.

South Korea's Samsung Electronics has shifted its focus from LCD to a new generation of organic EL panels long ago. However, Chinese companies such as BOE and CSOT also set up LCD and organic EL panel factories, closely followed by Samsung.

"The actual investment burden on Chinese companies is only about 20%," said the technical personnel from the Japanese-funded electromechanical company to Huaxing Optoelectronics. In China, local governments provide financial support through investment funds to build the most advanced factories. From LCDs for mobile phones and mobile phones to organic EL factories, it is said that it can provide hundreds of billions of yen in funding "subsidies." The

However, Chinese panel makers also have weaknesses. Because the major customers are Huawei mobile phone makers and other domestic manufacturers, the technical strength to achieve stable volume production has become a barrier and it is difficult to be adopted by Apple’s iPhone in the United States.

Previously, the Chinese smartphone market continued to grow, and Chinese mobile phone manufacturers with high market share also developed rapidly. The panel as a basic part of the mobile phone, BOE and Tianma and other panel makers also increased shipments. However, the Chinese smart phone market, which has driven the development of mobile phone manufacturers and panel makers, has been lower than the previous year's level for four consecutive quarters. Chinese panel makers who have successively built new factories also worry about oversupply. How to increase sales to Japan, the United States, South Korea and other overseas mobile phone manufacturers in the future will become the key to growth.

The technology of the panel industry has spread from Japan to South Korea, Taiwan, and now it is spread to mainland China. With huge amounts of money as the background, Chinese mainland manufacturers with the advantage of late start to master production technology, Japanese, Korean and Taiwan manufacturers will be unable to ensure technological advantages.