News reports that panel manufacturer Qunchuang Optoelectronics will shut down its Nanjing factory

On April 9th, according to 21st Century Business Herald, following the factory shutdown at the end of last year, the leader of the panel industry, Qunchuang Optoelectronics, once again revealed its employee adjustment plan. According to market news, the Nanjing module park of Qunchuang Optoelectronics plans to shut down, and the equipment will be transferred to the Ningbo factory. Currently, employees are being disbanded in batches, with a severance pay of N+1. According to the data, there are currently 2395 insured persons in the Nanjing factory area of Qunchuang Optoelectronics. The person in charge of recruitment at the Ningbo factory of Qunchuang Optoelectronics revealed that he has received the above information internally, but has not yet received any news that employees from the Nanjing factory will be transferred to Ningbo, “even in the situation where our Ningbo factory is very short of employees,” the person said. At the same time, another display panel giant Sharp is also considering reducing its LCD panel business, and its 10th generation panel factory SDP located in Sakai City, Japan may be included in the shutdown list. In fact, against the backdrop of sluggish demand for consumer electronics, the current panel industry is facing dual pressures of orders and profits. “The display panel industry has bid farewell to the era of rapid expansion in the past, and enterprises will pay more attention to healthy operation, stable operation, and profit, so investment is relatively cautious.” Li Yaqin, General Manager of Qunzhi Consulting, said in an interview recently that the display panel industry is in a bottoming out state in 2023, and will continue to grow in 2024 and 2025. Without additional production capacity, it has laid the foundation for a more benign competition in the future industry. Last year, Qunzhi Optoelectronics Nanjing Factory (Nanjing Qunzhi Optoelectronics Co., Ltd.) suffered a loss of NT $18.7 billion and was established on May 23, 2001. Currently, Qunzhuang has panel rear module factories in Ningbo, Foshan, Shanghai, and Nanjing. Since last year, the utilization rate of rear panel module production capacity has always been at a low level. At the end of last year, there were rumors in the industry that Qunzhuang would close factories in Shanghai and Nanjing, and the two factories were planned to be sold. Orders would be concentrated in the Ningbo and Foshan factories, and the production equipment of the two factories was planned to be temporarily relocated to the Tainan factory area. At that time, the official statement of Qunchuang stated that based on a flexible strategy, the company’s business layout was comprehensively and prudently evaluated and planned, including plans for factory buildings, equipment demand, and the introduction of new technologies. It will transform according to future market trends and new technology development plans, and strive to achieve overall positive operational benefits. In fact, in response to the losses in 2022, Qunchuang has processed a cash capital reduction of nearly NT $4.778 billion in 2023, sold 477822808 shares, and returned approximately NT $0.5 per share in cash to shareholders. In response to losses in 2023, it is not ruled out that further capital reduction will be processed. According to the statistics of mass entrepreneurship, the consolidated revenue for the whole year of 2023 was NT $211.7 billion, with a net operating loss of NT $18.7 billion and a net loss after tax of NT $18.6 billion, resulting in a basic loss of NT $2.01 per share. Yang Zhuxiang, General Manager of Group Innovation, pointed out that advanced semiconductor packaging (fanout packaging) can provide customers in the second half of this year, with a monthly production capacity of nearly 1000 pieces. In the next 12 to 18 months, it will be increased to 3000 to 4500 pieces according to customer demand. Other leading panel companies in China also mentioned in their annual reports the losses caused by the pressure on consumer electronics terminal demand. Weixinnuo expects a net profit loss of 3.58 billion to 3.98 billion yuan in 2023, a year-on-year increase in losses. The company stated that AMOLED production capacity has been further released, resulting in significant fluctuations in product prices and low industry profits. In the fourth quarter of 2023, with the gradual improvement of the consumer electronics industry, the hot sales of mainstream brand new generation flagship models and the driving force of the year-end promotion season, OLED product prices have increased. Shentianma expects a net profit loss of 2.07 billion to 213 billion yuan in 2023, a year-on-year shift from profit to loss. Shenzhen Tianma stated that during the reporting period, the company’s profits declined due to industry influence. However, the company continued to actively seize market opportunities, strengthen core capability construction, and achieved steady year-on-year growth in operating revenue. Under the pressure of increased depreciation on the Wuhan AMOLED production line, the company’s net profit situation after deducting non recurring gains and losses in the third and fourth quarters still improved compared to the first and second quarters. While the industry is facing collective difficulties in finding new growth points, some weak positive signals are also emerging. The upgrade and replacement requirements of large screen televisions are one of them. Youda Chairman Peng Shuanglang previously stated that “this year we can see opportunities for recovery, including AI PC and Windows upgrades that may stimulate the wave of device replacements. In addition, there will be international large-scale sports events driving demand for large-sized televisions this year. Looking ahead to 2024, although there are challenges, we hold a cautious and optimistic attitude.” In terms of TV panel pricing, Q1 2024 coincided with the impact of the Spring Festival. In order to reduce production costs and add to the traditional off-season, panel factories conducted large-scale production cuts in February, resulting in panel supply being relatively concentrated in January and March, further driving the rebound of small and medium-sized TV panel prices in January. According to Witsview data, as of March 2024, the average price of 32/43/55/65 inch TV panels was 36/64/127/171 US dollars per piece, an increase of 1/2/3/5 US dollars per piece compared to February, and the increase was even higher for larger size panels. The average price has also exceeded the short-term high in September 2023, rebounding 24%/28%/53%/55% from the lowest point in February 2023. In addition, entering Q2 2024, major brand customers have strong sales momentum, which is conducive to continuing the price increase trend of TV panels in Q2 to prepare for major sports events such as the Olympics and the peak 618 promotion season. According to a research report released by Everbright Securities, in the short term, due to the impact of promotional festivals and sports events, brand factories in H1 2024 have sufficient momentum to attract goods, and the trend of panel price increases may continue; In the long run, the trend of large-sized panels will drive the growth of TV panels, further increase industry concentration, and tighten the supply and demand pattern. It is expected that the fundamentals of companies in the panel industry will be significantly improved this year, and the current valuation level is still relatively low. There are very cost-effective investment opportunities in the recovery chain of consumer electronics. In addition to hoping for the recovery of the traditional consumer electronics industry chain, panel manufacturers are also focusing on high-end business growth points such as OLED car displays. Hong Jinyang, Chairman of Qunchuang Optoelectronics, recently stated that in order to avoid being dragged down by the panel business cycle, non-traditional display businesses such as automotive, medical applications, and fanout semiconductor packaging will be expanded. In the fourth quarter of 2023, non-traditional display products showed an upward trend in revenue contribution, mainly due to strong automotive orders; The revenue of advanced semiconductor packaging products (fanout packaging) is expected to show in the second half of this year. In addition, Shenzhen Tianma stated that in 2024, it will increase the coverage of OLED mobile phone screens in flagship projects of top customers, improve profitability, and it is expected that the shipment volume of flexible OLED mobile phone panels will maintain rapid growth this year; In the field of in car displays, we are accelerating the development of LTPS (low-temperature polycrystalline silicon) LCD panels and OLED in car display technology. However, at the same time, some industry insiders have admitted to reporters that due to factors such as long iteration cycles and high costs, OLED’s penetration speed in the in car field is relatively slow. Among them, new power car manufacturers such as Ideal and NIO, especially models priced at 300000 yuan and over 500000 yuan, are more willing to equip OLED screens. However, for car manufacturers that emphasize cost-effectiveness, they prefer price friendly mid to low end screens, which are still the mainstream at present.