Capacity integration accelerates the progress of TCL's acquisition of Samsung LCD assets under the trend of panel price rise. The industry has entered a new era of competition.

Samsung said on Friday that South Korea's Ministry of Industry, Trade and Resources had formally approved the sale of its LCD production line in Suzhou, China, to Huaxing Optoelectronics, a subsidiary of Chinese panel company TCL Technology, according to South Korean media reports.

Under the agreement signed last August, TCL Huaxing will acquire a 60 per cent stake in Suzhou Samsung Electronics LCD Technology Co., Ltd. and a 100 per cent stake in Suzhou Samsung display Co., Ltd., for a consideration of US $1.08 billion (about 7.622 billion yuan). The whole process is expected to be completed in March.

Open source securities Liu Shuangfeng team reported on the 7th that the sale of the production line shows Samsung's determination to divest the LCD business and focus on the quantum dot display business. After the completion of this acquisition, TCL Huaxing will have three full-production 8.5G lines in the large-size field, with a total monthly production capacity of 440K; one full-production line with a current monthly production capacity of 90K, and another 11-generation line under construction.

From the perspective of the industry as a whole, this also means that the clearance of LCD production capacity of South Korean enterprises has gone a step further.

Previously, some South Korean enterprises, including LG display, have delayed closing the LCD production line for profit demand, but some institutions believe that with the further release of domestic production capacity of the 10.5G and 11th generation lines and the steady increase in market demand for large-size TV, the cutting efficiency disadvantages of the 7th and 8.5G lines of South Korean enterprises will be gradually magnified, and it is a general trend for South Korean enterprises to withdraw from the LCD industry.

Liu Shunfeng team of Ping an Securities reported that the production capacity of Samsung LCD factory in Suzhou accounted for 2.8% of the world's large panel production capacity in 2019. Now Samsung's 8.5G line is included in TCL Huaxing, marking the beginning of the integration of the LCD industry. The supply power of BOE and Huaxing Optoelectronics has expanded, so it has more say on the attitude and extent of price increases.

While the supply side is further concentrated to domestic production capacity, there is also a growing trend in panel price increases that began at the end of last year.

According to the panel quotation in early February counted by the market survey agency WitsView on the 5th, compared with late January, the average price of 65 inches increased by 1.7%, 55 inches, 2.2%, 43 inches, 43 inches, 32 inches, and 3.0%, and the panel price rose for eight months in a row, and the rising trend in February 2021 remained unchanged. It is believed that the cycle upward + pattern has improved, and the panel leader's profits in 2021 are very flexible.

The team of open source securities Liu Shuangfeng reports that the price increase of small and medium-sized sizes will narrow from February, while large sizes will maintain a large increase: 32 "up $2. 39.5"-43 "narrowed down to $2. 55" rose by $4. The 65 "increase narrowed to $4. Small and medium-sized sizes continued to rise, with an increase of 17.3"-27 "around $0.5-1. Panel prices continued to rise and investment opportunities were clear.

The latest report of Jibang Consulting pointed out that in the case of shortage of glass and other materials in the upstream and shortage of, Driver IC, the actual supply of panel factories will continue to be tight, the downstream stock will also be more active, and the industry supply will continue to fall short of demand.

However, Ping an Securities Liu Shun Feng the above report also pointed out that in the long run, after the completion of LCD industry integration, panel prices will return to stability, LCD panel industry will enter the era of yield first, management priority.