BOE's Chen Yanshun: The LCD industry will maintain growth in the next three years

BOE Chairman Chen Yanshun stated that the liquid crystal display (LCD) industry will maintain growth over the next three years.

According to industry insiders on September 18, BOE Chairman Chen Yanshun predicted at its first-half earnings conference on September 11 that "there are some positive factors, such as the gradual closure of old LCD production lines and the expansion of average TV screen sizes," and predicted that "LCD will show a steady upward trend over the next three years." The earnings conference was held at IPC from September 11 to 14.

The closure of old production lines means a reduction in the existing LCD supply. This supply shortage could lead to higher LCD prices. BOE is converting its B6 LCD and organic light-emitting diode (OLED) fab to micro/micro light-emitting diode (MLED) production. B6 is a 5.5-generation (1300x1500 mm) fab that began production in 2013.

The expansion of TV screen sizes is also a factor in improving panel profitability. Currently, large-size TV panels are primarily produced on Gen 8 and Gen 10 lines. A Gen 10.5 line (2940x3370 mm) can produce eight 65-inch TV panels, while a Gen 8 line (2200x2500 mm) can produce three. The larger the glass substrate, the more panels can be produced. The ratio of glass substrate area to actual panels also increases. BOE Chairman Chen Yanshun emphasized, "The economic volatility of the LCD industry has subsided, and it has entered a phase of stable growth. LCD will remain the mainstream of the display industry for the next 10 years." He added, "LCD will continue to provide BOE with stable cash flow and serve as a counterweight to the company's growth."

BOE's sales reached RMB 101.278 billion in the first half of this year, an 8.45% year-on-year increase. BOE's annual operating cash flow remains between RMB 50 billion and RMB 60 billion. Chen Yanshun stated, "We are transitioning from a phase of large-scale capacity construction to a phase of high-quality operational development," adding, "Depreciation and capital expenditures are expected to peak this year." Depreciation of BOE's large-scale LCD factories and equipment, combined with investments in new production lines, is expected to be the largest expense this year. BOE will invest 63 billion yuan in Chengdu to build its 8.6-generation OLED production line, B16. B16 is planned to have a monthly production capacity of 32,000 (32K) panels. South Korean companies Sunic System and Avaco also provided the equipment.

Looking ahead, BOE plans to adjust its capital strategy to accommodate the reduction in production line investment. BOE will maintain and manage existing production capacity and increase net profit attributable to controlling shareholders by increasing its stake in subsidiaries. BOE will also strengthen its shareholder return policy, including increasing cash dividends and repurchasing treasury stock.