Japan and South Korea's backward LCD production capacity flooded into China. Should the local government take over?

China manufacturers dominate the global LCD panel market. In recent years, Japanese and Korean manufacturers who have lost competitiveness have announced plans to close LCD panel production lines and sell some old equipment to domestic enterprises, prompting a wave of investment in second-hand production lines across the country.

But these second-hand production lines are old and inefficient. Are they still competitive in the current industrial ecology? What impact will it bring to China's LCD panel industry? Should domestic enterprises and local governments take over?

CLP Panda 6th Generation Line has lost money.

The earliest second-hand LCD panel production line in Chinese mainland came from Sharp.

Sharp was hit by the financial crisis in 2008 and suffered its first loss since its listing, with a loss of about $654.38+03 billion. In order to make up for the deficit, Sharp decided to sell the 6th generation TFT-LCD panel production line of Kameyama to China Electronics in 2009, and the 6th generation TFT-LCD panel production line of CLP Panda was born.

China Electronics and Sharp formally signed a transfer agreement.

CLP Panda 6th Generation Line, as the second 6th generation LCD panel production line in Chinese mainland, has many advantages: on the one hand, it introduced technologies such as UV2A used in Sharp 10 Generation Line, and the product performance index was at the leading level in the world at that time; On the other hand, relying on China Electronics, TPV Technology, Panda Electronics, Sharp and other enterprises, it has realized the vertical integration of the industrial chain and ensured the access to the sea.

However, the sixth generation line of CLP Panda has been losing money for many years, and there have been rumors that it will be sold or rented. Insiders of CLP Panda believe that the management team of CLP Panda's 6th generation line has fallen behind the times, and it is difficult to operate a highly market-oriented LCD panel business with the mentality of "rather not working than making progress" and no innovative spirit.

Sony's three second-hand lines are not profitable.

The second-hand production line seems to be hard to get rid of the fate of loss. Sony, which has been pursuing low investment, has purchased equipment from three old production lines from Samsung Display and invested in factories in China, but so far, it has not achieved profitability. In 20 13, when Sony and Samsung Display negotiated to buy 4.5 generation line equipment, the LCD panel market maintained a good momentum. And the staff of Xinli Huizhou 4.5 generation line is more professional. Sony's former employees pointed out that they followed the whole process of equipment disassembly and installation, making the production line go smoothly. It is understood that the 4th and 5th generation line of Xinli Huizhou began to be dismantled in 20 14, installed in 20 15, and entered mass production at the end of 20 16. However, due to the old business, it has been at a loss.

Xinli Shanwei 5 generations

Xinlimeishan 5 generation system

Manufacturers are still keen to launch second-hand lines.

Even if the 6th generation line of CLP Panda, 4th generation line of Xinli Huizhou and 5th generation line of Xinli Shanwei suffer losses, there are still a large number of enterprises keen to introduce Japanese and Korean old production line equipment. The latecomers in the panel industry hope to build the line quickly at a lower cost, and local governments also hope to introduce high-tech projects with less investment to promote local economic development and industrial upgrading. The coincidence of the two parties gave birth to the second-hand production line projects such as Hefengtai Nanxun 8.5 generation line, Jiatai Qinzhou 7.5 generation line and Huarui Optoelectronics Zhengzhou 5 generation line.

Huarui photoelectricity Zhengzhou wudai line

Huarui Optoelectronics Zhengzhou Fifth Generation Line Project is a typical case. Relying on the geographical location of the Central Plains and the advantages of transportation hub, Zhengzhou has achieved remarkable results in developing the logistics industry. In 20 19, the cargo and mail throughput of Zhengzhou Airport ranked first among the six central provinces.

Huarui Optoelectronics Zhengzhou 5th generation line equipment comes from the old production line of LG Display, with a total investment of about 5.5 billion yuan, which fills the gap in the field of new display industry in Henan Province. It is understood that the first exposure machine for process equipment has been successfully moved in, and the 5th generation line of Huarui Optoelectronics Zhengzhou has entered the stage of equipment installation and commissioning, and it is planned to be put into production at the end of this year.

Although Hefengtai has been deeply involved in LCD modules for many years, he is a latecomer in the field of LCD battery production line. If he wants to catch up quickly, he needs to invest in several production lines in a short time, so Hefengtai is very radical in investment strategy. After Jiatai, a subsidiary of Hefengtai, invested in the 7.5-generation line in Qinzhou, Hefengtai invested in the 8.5-generation line in Nanxun.

Jiatai Qinzhou 7.5 generation line

Hefengtai Nanxun 8.5 Generation Line

According to Wang Jiwei, in addition to Hefengtai Nanxun 8.5 generation line, Jiatai Qinzhou 7.5 generation line and Huarui Optoelectronics Zhengzhou 5 generation line, other manufacturers plan to introduce Panasonic 8 generation line, Samsung Display L8- 1-2, L8-2-2 and L7-2 production lines. Chinese mainland is becoming a hot spot for the transfer of old production lines in Japan and South Korea.

After combing the development status of second-hand production lines imported from Japan and South Korea, it is found that none of them are really profitable, but there are still a large number of local governments considering introducing second-hand production lines, hoping to promote the development of local panel industry and its supporting facilities through second-hand production lines. Is this reliable?

Those pits on the second-hand production line

In the short term, the initial cost of introducing old Japanese and Korean production lines is lower than that of new production lines, but the old equipment has software and hardware problems, and the operating cost is higher, which may be higher in the long term.

The hardware part of old equipment usually encounters three major problems. First, the old equipment will be worn to varying degrees due to the perennial operation, especially some core equipment may be seriously worn and need a lot of maintenance costs. Second, equipment, like cars, may need to replace some damaged parts according to actual needs, while the old equipment model may have been discontinued, and there is no special parts supplier, which requires manufacturers to spend a lot of time looking for other suppliers or pay high fees for customized development. According to an industry insider, a manufacturer once introduced a second-hand production line. Although some parts were missing, it still hoped to put into production as planned and had to manually replace the same type parts of adjacent equipment. Third, the old equipment may lack some key components, the supporting manufacturers may have closed down or been acquired, and the old equipment may not be restored.

Compared with hardware, old equipment software has more hidden dangers. Because the hardware part can be replaced or customized, for example, the manufacturer can disassemble some irreparable control boards or circuit boards, and then reverse engineer and re-carve them, but if there are problems or defects in the software or control system, it will be difficult to recover unless the engineer who developed the software or system at that time is found. The former engineer of Jiatai Electronics pointed out that the software engineer who developed the old equipment may have left his job and it is difficult to find it. Or even if the original engineer of the old equipment is found, the original business may no longer exist.

In fact, the hardware and software problems of old equipment are just the tip of the iceberg. The iterative speed of equipment renewal is very fast, and the accuracy, yield and material utilization rate of old equipment may not be high, so it is difficult to compare with new equipment, so old equipment is generally at a disadvantage in the current market competition. An insider pointed out that in order to enhance the market competitiveness of second-hand production lines, it is necessary to transform old production lines or upgrade old equipment. For example, Sony tried to purchase the latest exposure machine for Meishan 5th generation line this year.

In addition, there may be various unpredictable uncertainties in the production and operation of old equipment, so second-hand production lines are generally not the choice of mature panel manufacturers such as BOE and TCL Huaxing. At present, second-hand production lines are mainly purchased by new manufacturers. The platforms of these manufacturers are relatively small, so it is difficult to recruit a team of senior engineers who can handle these old equipment. Even if they are lucky enough to recruit some talents, they may not be able to stay. For example, Jiatai Electronics lost many senior engineers during the epidemic. An insider pointed out that the transformation of the old production line, the optimization of the production line and the good operation of the second-hand production line all need a large number of experienced talents. If there is a shortage of talents, the low-cost advantage of the old production line will be difficult to play, which is one of the important reasons why the second-hand production line of Xinli is difficult to make a profit. Zhang Rujing, the chairman of Xinen, is one of the keys to find suitable talents in the global market and give full play to the cost competitiveness of old equipment.

If new manufacturers take the risk of introducing old equipment, they should first introduce a professional equipment team to make professional adjustments to the second-hand production line. Members of Jiatai Electronics team suggested that, firstly, manufacturers who purchase second-hand equipment should select talents with rich equipment experience in the recruitment process, which is conducive to ensuring the subsequent transformation, upgrading and operation of the old line. Second, manufacturers who buy second-hand equipment need to set up a team familiar with equipment, technology and market before buying equipment, make a professional evaluation of the production cost and product specifications of the old production line, and even consider the future market trend and production line planning. Otherwise, it is easy to buy a bunch of useless or incomplete old equipment, the production cost is higher, and the products are not competitive in the market.

Should the old production line be introduced?

At present, many LCD panel production lines in China and South Korea are closing or planning to close. Japanese manufacturers will have plenty of opportunities to introduce old production lines next. Should they introduce them?

Engineer Xinli said that the global LCD panel industry pattern has been set, and there will be no new LCD panel production line investment in the next few years. The supply of new equipment is not tight, the cost is lower than in the past, and the construction period of new production lines is greatly shortened. It is better to introduce old production lines from Japan and South Korea.

Hu Chunming, Deputy Secretary-General of China Optical Photoelectric Liquid Crystal Branch, also does not advocate introducing backward foreign production capacity. Hu Chunming pointed out that, first, many old production lines have been introduced in China, and there are no successful cases; Second, the display technology has made rapid progress, and the market has new requirements for products. The products produced by the old production line may not meet the current market demand; Third, the old production line mainly produces low-end products, which may bring unnecessary price shocks to the existing market.

Liang Xinqing, executive vice chairman and secretary general of China Optical Photoelectric Liquid Crystal Branch, believes that Chinese mainland has a huge LCD panel production capacity at present, and the existing applications may be difficult to fully digest. If we increase the backward production capacity of Japan and South Korea, it will undoubtedly make matters worse. If domestic manufacturers introduce the old production lines of Korean leading panel manufacturers, it will boost Korean manufacturers to invest more in advanced display technology to a certain extent, making Korean manufacturers more advanced in technology, while China manufacturers receiving backward production capacity will be relatively backward, which is not conducive to the upgrading of LCD panel industry in China.

China Optical Photoelectric Liquid Crystal Branch calls on local governments and enterprises to pay attention to market and technical risks, treat backward production capacity of Japanese and Korean manufacturers cautiously, follow the national window guidance system in the investment and construction of panel production lines, introduce advanced technology, make centralized investment, and strictly control the transfer of backward production capacity to China.