LCD panel business investment, in quite a long time, almost impossible to rely on product profitability to get out, but as the expansion of production lines, and constantly settling for the production line of “expected return.” This is the LCD panel investment called “no highway exit” reasons.

“In the LCD display industry, saying the classic, saying TFT investment is ‘no exit the highway’.” Display Search Zhang Bing, director of China research, told reporters the phrase in describing large-size TFT-LCD investment, particularly accurate. Display Search, a renowned international display industry research.

Konka Group has worked for many years in the Zhang Bing personally experienced China’s color TV industry from the CRT era to the TFT (LCD) the transformation of the times. In his view, the liquid crystal display industry, compared with the previous CRT TV, the biggest difference is that the former has a very large and complex industrial chain.

CRT TV only a few simple Di parts, Zaiguoneijiu Keyixingcheng complete industrial chain; and LCD Jishu Zeshe Ji physical, chemical, optical Deng complex field, it involves a number of Nei Ye Jing panel 10 components and several hundred kind of material, no company can independently accomplish the integration of the whole industrial chain, and therefore formed a large cluster.

Until 2007, LCD technology was not in the field of large-size competition from other display technologies, focusing on small-size applications such as computer monitors. But with the rapid expansion and scale of the industry to compete in the rapid production declines in the cost of LCD TV to become the new darling of the market, all manufacturers then joined the high-generation production line (6 Line and over) among the competition.

In the fierce market competition, from the IT industry emerged from the womb out of the liquid crystal display industry competition reflects a similar pattern: the first line into the development of high-generation factory has been over the huge profits and thus lead to construction of similar large-scale production line.

With the rapid growth of panel production capacity, steadily increasing end consumer market soon trapped in a “glut” of the situation and lead panel prices fell sharply and panel manufacturers in the loss.

When the growing consumer market was finally able to “digest” the existing capacity, the larger size of the production line put into operation once again set off new business cycle, this is the LCD industry calls “LCD cycle.”

According to Zhang Bing’s observations, liquid crystal display industry in every year into a profit and loss will be reversed, such as 2004,2006 and 2008 are losing money the whole industry chain, while the 2003,2005 and 2007, most manufacturers are able to money. Wang Dongsheng, chairman and CEO while the BOE is a related, proposed an alternative “survival law”, that is, approximately every three years, liquid crystal display panel prices dropped 50%.

In this brutal cycle of pressure, the liquid crystal panel of the profits from earnings 30% to 40% loss of sharp fluctuations in price volatility can not resist the enterprise can only frustration out.

In order to withstand price fluctuations brought about by the crisis, panel enterprises, rising productivity has been the efficiency of production lines, on the other hand continue to invest heavily in the construction of higher generation production lines, with a view to the emerging market for high-end excess profits .

The investment characteristics of the roll, but also makes the LCD panel business to invest in quite a long time, almost impossible to rely on product profits inflow is out, but with the expansion of the production line and constantly settling for the production line, “expected returns.” This is the LCD panel investment called “no highway exit” reasons.

In this investment mode, exit the LCD panel industry Touzi Zhe For the investment projects, mostly by way of mergers and acquisitions, production and related facilities for Zhengti Xian transfer. BOE acquired South Korea’s current LCD panel production line, that is the way to complete the acquisition subsidiary.

In this industry, the investment process, the pure of industry funds or Touzi Zhe Bixu carefully calculated, Yi Baozhengshougou line Nenggou after the Shengchan profits in the short term period so as to maintain the Houxushengcun; Er for Gengjiazhuzhong industry Ladong effect of Difangzhengfu Eryan , but can tolerate losses for longer panels business and through various preferential policies to support enterprise development.

According to Zhang Bing, the global liquid crystal display industry’s annual output of about 500 billion dollars, “In addition to LCD, the only IT, automotive and communications industries have such a big production value, it will cause great concern in the government.”

His concern is that while large-size LCD panel market in the country has enough space and demand, but if the local government-led investment cycle, the rhythm can not Tazhun industry, may repeat the same line of investment on behalf of BOE 5 “peak investment output trough “cycle, so that panel company expanding into a new trap.

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