The foundry empire Foxconn has invested heavily in the panel industry.
On November 7, Foxconn President Guo Taiming appeared at the signing ceremony of the 6th generation line of low temperature polysilicon (hereinafter referred to as LTPS) held by Zhengzhou Economic and Technological Development Zone Management Committee and Yinghui Co., Ltd. The investment amount of 28 billion yuan means that this is Foxconn's largest investment in the layout of the mainland panel.
This is not the first time Foxconn has been involved in the panel industry on the mainland. In fact, Foxconn, which hopes to increase its gross margin, has been in the panel field for a long time. However, the boom in the construction of the LTPS6 generation line in China has made the “blowout†crisis looming.
28 billion investment in panel lines
Meeting the needs of the local mobile phone supply chain is one of the important reasons for the LTPS6 generation line to fall into Zhengzhou. The Foxconn Zhengzhou factory, which has hundreds of thousands of workers, is the main force in the production of Apple mobile phones.
According to the "China Times" reporter, Zhengzhou LTPS6 generation line is mainly for Apple mobile phone manufacturing screen. The production line is expected to start this month, with a planned trial production in November 2017 and mass production in 2018. After mass production, it is expected to produce 20,000 LCD panels per month.
The LTPS6 generation line features high resolution and low power consumption, and is widely used in high-end mobile phones.
It is reported that the company has signed a product purchase agreement with Apple Inc., and 70% of future products will give priority to Apple products.
The news that Foxconn will build LCD panel factory in Zhengzhou can be traced back to last October.
According to the news at the time, Foxconn was negotiating with the Zhengzhou Municipal Government to discuss the construction of a display manufacturing factory in the local area. At that time, the valuation of this investment was about 35 billion yuan.
In September of this year, Guo Taiming also denied that he had established a joint venture with Huawei in the LTPS6 generation line in Guizhou, and has already begun to carry out related promotion of the LTPS6 generation line.
At that time, he said that Hon Hai and Innolux would set up factories in various parts of the world including China to meet the needs of the market and customers to meet the local supply chain. In addition, he stressed that Hon Hai and Innolux are not short of money and there will be no joint ventures.
But it is worth noting that Foxconn's parent company, Hon Hai Precision, denied that the investment was related to it.
Honghai Precision announced on November 9 that Yinghui Co., Ltd. is a strategic partner of Hon Hai. The announcement also stated that if Hon Hai has relevant investment plans, it will be handled according to regulations after approval by the board of directors or relevant legal procedures.
It is reported that Yinghui is an investment company established overseas by Foxconn to circumvent certain investment policies. But this statement has not been confirmed by Foxconn.
However, Yinghui is clearly close to Foxconn.
On November 9th, the article “The 6th Generation LTPS LCD Panel Project Settled in Zhengzhou†was published on the official website of the Henan Provincial Government. The other identity of Zhang Dengkai, the general manager of Yinghui Co., Ltd., was the deputy general manager of Foxconn Group.
In fact, with the suggestion of Guo Taiming's eyeball program, Foxconn has already carried out panel layout in the mainland.
Previously, Foxconn and Shenchao Technology Investment Co., Ltd., a subsidiary of Shenzhen State-owned Assets Supervision and Administration Commission, established Shenchao Optoelectronics with a joint venture of US$1.5 billion. The panel factory has a LTPS5 generation line and a TFT-LCD (Thin Film Transistor Technology) 5th generation line.
In 2012, Foxconn plans to build a LTPS 6 generation line in Chengdu. At that time, Foxconn adopted a model in which Shenchao Optoelectronics and the Chengdu Municipal Government jointly invested to establish Tianyi Display Technology. But the project ultimately failed to advance.
In addition, Foxconn has been in the overseas panel market for a long time. In September this year, the Japanese media said that Hon Hai plans to hold more than half of the shares of LCD companies that were spun off from Sharp through the acquisition. In addition, Foxconn also holds Chi Mei, one of the two tigers in Taiwan.
Guo Jian, a senior analyst at CCID Semiconductor Industry Research Center, told the China Times that Foxconn is doing a panel to integrate with Apple's supply chain. In addition to the low-margin assembly business, Foxconn is seeking the possibility of diversification.
6th generation line pressure
For the Zhengzhou LTPS6 generation line, this is a good time.
At present, China is in a situation of extremely tight LTPS production capacity, and no LTPS6 generation line has been completed and put into production.
In addition to deep super photoelectric, only the domestic panel makers, Shen Tianma and BOE can mass-produce LTPS LCD panels.
According to the reporter, Shen Tianma has a LTPS5.5 generation line in Xiamen, and BOE has built a mixed 5.5 generation line of LTPS and AMOLED in Ordos.
Guo Jian told reporters that the technical difficulty of low-temperature polysilicon is relatively large, and the yield and output of several large domestic factories are not very good. At present, about 95% of LTPS panels required for production in China need to be imported to Japan and South Korea.
Foxconn's self-built panel production line obviously helps to change the situation that high-end mobile phone screens are too dependent on imports.
According to the reporter, JDI, LGD, Sharp and other Japanese and Korean companies are relatively mature in LTPS technology, and are currently the main screen suppliers for Apple's iPhone6S and iPhone6S plus.
Zhang Bing, director of IHS DisplaySearch China market research, told reporters that Foxconn is mainly to meet the needs of its own mobile phone production, and will certainly put pressure on the existing panel production pattern.
But for the Zhengzhou LTPS6 generation line, this is also an era of fierce competition.
The huge demand for mobile phone screens has brought a lot of LTPS6 generation lines to the horse. It seems that the production capacity of LTPS LCD panels will be concentrated in 2016-2017.
In September 2014, Huaxing Optoelectronics invested 16 billion yuan to build the LTPS 6 generation line in Wuhan Optics Valley, which is expected to be mass-produced by the end of 2016. In March of this year, also in Wuhan, Shenzhen Tianma also announced an investment of 12 billion yuan to build a new LTPS 6 generation line.
Another domestic main panel maker, BOE, announced in October last year that it plans to invest 22 billion yuan to build a 6-generation line of mixed production of LTPS and AMOLED in Chengdu. It is expected to start production in the first half of 2017.
AUO turned around earlier. In January 2014, AUO, which was originally expected to build an 8.5-generation line in Kunshan, announced that it would change the project to the LTPS 6-generation line. AUO is expected to invest NT$50 billion in two to three years, with a monthly output of 20,000-30,000 glass substrates, and is expected to be mass-produced in 2016.
In addition, LTPS technology is also facing competition from technologies such as OLED and AMOLED. According to the reporter, the current mobile phone LCD panel has LTPS, AMOLED, IGZO and other technologies.
However, the bursting of production capacity has not cooled down the enthusiasm for domestic enterprises to develop LTPS. Zhang Bing told reporters that the current LTPS technology is the most mature and widely used, and domestic manufacturers “have no choiceâ€.
Guo Jian also told reporters that the same size and the same resolution, the price of LTPS panel is 1/3-1/2 of AMOLED.
Zhang Bing told reporters that for panel companies, technology and so on are not important. What matters is that products must have a estuary. One is the brand's own estuary, and the other is the estuary of the foundry company.
Under the worries of "blowout", Foxconn's ability to digest is crucial.
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