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>> LCD display faces new OLED technology, Antarctic continues to grow its odds of winning 31th,July,2020
In our daily lives, liquid crystal screens (LCD) have always been the preferred display panels for consumer electronic products such as TVs, computers, tablets, and mobile phones. However, currently, a new display technology is quietly emerging and is welcomed by new models of major smart phone brands. OLED displays are used in smart phones of Samsung's dual flagship S/Note series, iPhone X, Xiaomi 10, and Huawei P40.
OLED display panels can self-illuminate when energized, and are light and thin, high in brightness, low in energy consumption, and can be bent. They are widely sought after for a while. In contrast, the LCD screen itself does not emit light, and an important component "backlight display module" is needed to present images. In view of this, will liquid crystal displays be eliminated by OLED technology soon?
Nanjiguang is a domestic company with small and medium-sized backlight display modules as its main business. Its products are the core component of liquid crystal display panels and are used in smart phones of Huawei, OPPO, VIVO, Xiaomi, Samsung, LG and other brands .
In the face of the "menacing" new OLED technology, can Antarctic continue to grow? In a market where new and old technologies coexist, how does Antarctic maintain its competitive advantage?
Liquid crystal display still dominates
From a global perspective, the demand for LCD panels is still growing. According to IHS Markit data, the global LCD panel shipment area reached 199 million square meters in 2018, an increase of 9.94% over the previous year, especially in the large-size field. Before 2010, my country's large-size LCD panels were all dependent on imports, and now they account for nearly 50% of global production capacity.
China has now become a major producer and consumer of consumer electronics products such as LCD TVs, computers, and smart phones. The LCD panel display industry, as its key supporting industry, is also accelerating its transfer to the country. From 2013 to 2018, China's LCD panel production capacity has gradually stabilized after a period of rapid growth of about 30% for 3 years. It is estimated that by 2023, the total LCD panel production capacity in Mainland China will account for 55% of the total global production capacity.
The demand for LCD panels directly affects the demand for the backlight display module market.
The downstream market of Antarctic still has room for development. Although OLED panels have superior performance, foreign capital monopolization in the upstream production links is serious, which brings challenges to their promotion in the Chinese market.
First, the high-end vapor deposition machine necessary for the production of OLED panels is monopolized by Japanese company Cannon Tokki. Due to the limited production capacity of Cannon Tokki, it has absolute advantages in technology, and the yield rate of OLED panels using other evaporation machine production lines needs to be improved. In addition, domestic OLED panel manufacturers rely heavily on overseas purchases for organic light-emitting materials required in the upstream.
The upstream of the industry chain is "stuck", resulting in the OLED production line investment cost more than twice that of the LCD production line, and the high depreciation and amortization caused by this restricts the increase in enterprise production capacity.
The main area where OLED replaces LCD is the smart phone display. However, in terms of cost, LCD displays still have obvious advantages. Due to the difference in production costs, the average price of a 25.5-inch LCD smart phone panel is 15 US dollars, while the average price of an OLED smart phone panel of the same size is as high as 25 US dollars. The price advantage of LCD products is obvious.
In addition, according to IDC statistics, global mid-to-low-end mobile phone shipments account for more than 80%. Due to price restrictions, the proportion of LCD screens is 80.56%; the penetration rate of OLED screens is low, mainly used by major brands The flagship model has limited impact on the overall mobile phone market.
At present, unless the cost of OLED screens is rapidly reduced, liquid crystal displays will continue to go hand in hand with OLED technology for a long time, and will have more advantages in cost and production scale. Among them, in the mobile phone market, LCD and OLED technologies coexist; in the professional display market, LCD technology is the dominant one.
As a result, as an LCD backlight manufacturer, Antarctic still has a relatively broad market space.
Actively deploy alternative products
Although the dominant position in the LCD market will continue, the impact of new technologies cannot be ignored. How can Antarctic prepare for the threat of potential technological elimination?
First, Nanjiguang makes full use of its technological and market advantages to consolidate its leading position in the field of LCD backlights.
In terms of technology, Nanjiguang has realized the independent research and development of the light guide plate of the key part of the backlight module, and its vacuum compression mold technology is at the leading level in the industry, which can improve the precision and dimensional stability of the product surface, thereby improving production efficiency and yield.
In terms of market competition, Beneng Optoelectronics' operating income in 2016 was 30.112,500 yuan, which constitutes a competitive relationship with Antarctic. In 2017, Nanjiguang acquired Beineng Optoelectronics, effectively avoiding competition in the industry, and at the same time improving the economies of scale and expanding its overall market share.
More importantly, Antarctic is actively developing alternative products for OLED technology to cope with the risk of market space being compressed. As a liquid crystal display industry chain company, Nanjiguang's OLED layout is quite expensive. However, due to the good foundation of LCD technology, Nanjiguang has set its sights on MiniLED integrated structure technology. This technology can equalize the high brightness, ultra-low latency, and large viewing angle of OLEDs, while also having the advantage of long life.
In 2017, Nanjiguang invested more than 2.64 million yuan in the research and development of new MiniLED integrated structure technology projects. With the emergence of the curved screen trend, Antarctic has invested about 2.29 million yuan in the curved backlight module project of the new MiniLED structure in 2019 to replace the OLED flexible screen technology.
At present, OLED technology is mainly applied to small and medium-sized screens, among which smart phones account for up to 71%; followed by wearable devices, accounting for 10%. In professional display fields such as automotive displays, medical displays, industrial control equipment displays, and home appliance displays, LCD technology is still the dominant technology, and it is difficult to penetrate OLED panels.
Therefore, Nanjiguang began to develop professional display backlight products, and continued to increase its efforts to develop customers in the professional display field. Antarctic has in-depth cooperation with midstream LCD manufacturers such as Juncheng Electronics, Tianshan Electronics, and Akita Microelectronics, and its products are ultimately applied to the downstream products of Haier, Midea, Honeywell, Panasonic and other well-known brands. The revenue from professional display backlight products to Antarctic has also kept rising for three consecutive years.
Relying on these measures, Nanjiguang has maintained sustained and rapid growth in performance under the potential impact of new OLED technology. From 2017 to 2019, Antarctic’s main business revenue increased from 562 million yuan to 994 million yuan, an increase of
76.83%. In 2019, Antarctic's comprehensive gross profit margin was 20.46%, which also exceeded the average 18.51% of comparable companies in the industry.
Seize the new opportunity of "5G replacement wave"
In addition to maintaining the dominant position of existing LCD backlight products, in the face of the coming wave of 5G mobile phone replacement, Nanjiguang has not "only defended but not attacked". It will also seize the opportunity to proactively attack and build through 5G mobile phone back cover products. New growth point.
Although the current penetration rate of OLED screens in the entire smart phone market is not high, the utilization rate of OLED display panels in 5G phones has greatly increased. During 2019-2020, all major 5G mobile phone manufacturers have chosen OLED displays for their new models. Once the 5G mobile phone production period comes, the original market share of Antarctic may be greatly affected.
At the same time, in the process of popularization of 5G mobile phones, the demand for new supporting products is emerging.
In the 5G era, smart phone antennas have increased in number, enhanced functions, and weakened electromagnetic wave penetration. The metal body with electromagnetic wave shielding characteristics is no longer suitable, but has excellent strength, good impact resistance, heat resistance, and high Plastic back cover with hardness and aging resistance will become one of the ideal materials for 5G smartphone back cover. This provides an excellent entry point for new products of Antarctic.
Technically, the back cover of the 5G mobile phone and the light guide plate in the backlight are all injection molded parts, and their production processes are similar, with the same core technology and main production equipment. Therefore, Nanjiguang's strengths in manufacturing technology-mold manufacturing technology and compression molding technology are all suitable for 5G mobile phone back covers, which can provide a strong guarantee for the development and production of new products.
In order to achieve the landing of new products as soon as possible, Nanjiguang has cooperated with China Vision Optoelectronics with strong financial strength to conduct research and development. At present, it has begun small batch production of 5G mobile phone back cover products.
In addition, Antarctic will also use the raised funds to invest in the construction of a 5G mobile phone back cover production base of RMB 72.7265 million. After completion, the annual output can reach 40 KK, which is expected to bring a net present value of RMB 78,824,600 to Antarctic. A substantial increase in production capacity will help Antarctic quickly seize market opportunities.
For these new capacity, Antarctic also has a good digestion channel. Antarctic’s existing in-depth cooperation with downstream manufacturers has applied products to major mobile phone brands such as Huawei, OPPO, VIVO, Xiaomi, and Samsung. Its 5G mobile phone back cover promotion has a good customer base. Nanjiguang can use the resources and marketing system of the existing end customers in the backlight field to track market trends in time and produce mobile phone back covers that meet customer needs.
From the perspective of the three dimensions of technology, capital and consumption of new production capacity, in the upgrading of 4G to 5G mobile phones, Antarctic uses the back cover of 5G mobile phones as a new business growth point, and the conditions are ripe.
The display panel industry is still coexisting with LCD screens and OLED screens for a long time. Antarctic actively researches and develops MiniLED integrated structure technology with price advantage, replaces OLED, and makes efforts in the special display field where OLED is difficult to penetrate, achieving three consecutive years of rapid growth in revenue and net profit.
In the future, under the opportunity of the tide of 5G mobile phone replacement, in order to cope with the potential market impact brought by OLED screens, Antarctic will use 5G mobile phone back cover as a new business growth point. With years of technology and customer accumulation, it will continue to grow. Solid foundation.
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