BOE or­gan­i­cally screens out the com­pe­ti­tion in pan­els

China Daily (Hong Kong) - - BUSINESS - By ZHAO YINAN zhaoy­i­nan@chi­nadaily.com.cn

“Once the assem­bly line starts op­er­a­tion, it’s like turn­ing on a bank note print­ing ma­chine.”

That was how the vice-pres­i­dent of Bei­jing- based BOE Tech­nol­ogy Group Co, Zhang Yu, de­scribed the op­ti­mistic out­look of his com­pany. And he has a rea­son for say­ing so.

China’s largest flat panel man­u­fac­turer, BOE is ex­pected to make prof­its of 2 bil­lion yuan ($328.4 mil­lion) this year, a huge jump from last year’s 258 mil­lion yuan, af­ter it re­cov­ered from a decade long re­ces­sion that killed off or dam­aged other com­pa­nies in the panel in­dus­try.

To main­tain the mo­men­tum, Zhang said the com­pany is plan­ning to roll out its most ad­vanced assem­bly line pro­duc­ing or­ganic light-emit­ting diodes (OLED) in Or­dos, in the In­ner Mon­go­lia au­tonomous re­gion.

“With this OLED assem­bly line, we would be able to top other com­pa­nies in terms of tech­nol­ogy in the in­dus­try in China,” Zhang said. “And if ev­ery­thing goes well, we will be among the world’s top three dis­play gi­ants by 2015.”

Pre­vi­ously, South Korea’s LG Dis­play an­nounced it had be­come the world’s first dis­play man­u­fac­turer to be­gin mass pro­duc­tion of OLED pan­els.

Or­dos’ assem­bly line will be­come China’s first plant and the world’s sec­ond to de­liver mass pro­duc­tion of flex­i­ble OLED prod­ucts for smart­phones.

Zhang ex­plained the new tech­nol­ogy puts the OLED pan­els on plas­tic sub­stratas, in­stead of glass ones, which gives them flex­i­bil­ity and makes the dis­plays more durable un­der im­pact than tra­di­tional glass screens.

In ad­di­tion, its cost of raw ma­te­ri­als is 70 per­cent lower than the tra­di­tional thin film tran­sis­tor- liq­uid crys­tal dis­plays.

“The mar­ket for OLED is ex­pected to grow very quickly be­cause it will ful­fill the re­quire­ments of au­to­mo­tive dis­plays, tablets and wear­able de­vices.”

In ad­di­tion to the up­com­ing plant in Or­dos, BOE also boasts an­other seven pro­duc­tion lines of TFT-LCD prod­ucts, rang­ing from gen­er­a­tion 4.5 to gen­er­a­tion 8.5.

Higher gen­er­a­tion of assem­bly lines is ex­pected to pro­duce larger pan­els and gen­er­ate more prof­its.

“The panel in­dus­try is an in­dus­try for the wealthy,” said Zhang, look­ing back to the past when the com­pany was en­dur­ing a re­ces­sion in re­cent years.

BOE only started to make a profit in 2011, when other com­pa­nies mak­ing panel dis­plays were also suf­fer­ing from the global eco­nomic down­turn.

“Some­times you sur­vived only be­cause you kept at it. In terms of panel manufacturing, you can only live best when you live the long­est,” Zhang said.

A lat­est line of gen­er­a­tion 8.5 in Bei­jing has cost the com­pany 28 bil­lion yuan. BOE’s to­tal in­vest­ment will cost a fur­ther 100 bil­lion yuan, if the assem­bly line at Or­dos and an­other in Bei­jing are com­pleted.

It is no wonder why BOE pur­chased shares in the Bank of Chongqing in late Oc­to­ber, worth nearly $20 mil­lion. It was a bid to strengthen co­op­er­a­tion with Chongqing’s govern­ment and lo­cal fi­nan­cial in­sti­tu­tions.

To ce­ment its sup­ply of ad­vanced dis­play pro­duc­tion equip­ment and to cut costs, BOE also teamed up with Cal­i­for­nia-based Ap­plied Ma­te­ri­als Inc, a lead­ing semi­con­duc­tor equip­ment man­u­fac­turer, in Au­gust.

“The in­dus­try will con­tinue to ex­pand un­til 2017 at least, when it will see a bal­ance in sup­ply and de­mand,” Zhang pre­dicted.

Li Yaqin, head of re­search at Sig­main­tell Con­sult­ing Co, a com­pany pro­vid­ing panel in­dus­try con­sul­tancy, agreed that the panel pro­duc­tion in­dus­try is fac­ing a golden op­por­tu­nity at the mo­ment.

“Tablets mea­sur­ing 5 inches ( 12 cen­time­ters) are re­plac­ing tablets of 3 inches, which used to be stan­dard for smart­phones. In ad­di­tion, it will take time to turn any in­vest­ment into prof­its,” she said.

Dong Yikai, a re­searcher at the Na­tional En­gi­neer­ing Laboratory of TFT-LCD Ma­te­ri­als and Tech­nolo­gies, said the re­cov­ery of the whole in­dus­try may still face un­cer­tainty be­cause it is heav­ily af­fected by an in­crease in im­port tar­iffs.

China raised the im­port tar­iff on LCD pan­els to 5 per­cent start­ing in April 2012, at a time when sev­eral do­mes­tic LCD pro­duc­tion lines had gone into op­er­a­tion, chang­ing the mar­ket’s dy­nam­ics.

PRO­VIDED TO CHINA DAILY

An assem­bly line of the 8.5 gen­er­a­tion TFT-LCD prod­ucts of BOE Tech­nol­ogy Group Co in the Cloud Val­ley in south­east­ern Bei­jing.

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