The Challenges and Opportunities of China FPD Industry. Dr. Tieer Gu Tianma Micro-electronics. -Slide 1-

Transcription

1 The Challenges and Opportunities of China FPD Industry Dr. Tieer Gu Tianma Micro-electronics 1 -Slide 1-

2 天时 Text 地利 人和 Concept = Market Demand + Government Support + Integrated Value Chain 2 -Slide 2-

3 Contents Opportunities China macro-economy China development trends Increasing market demand Chinese government policy support Challenges Semiconductor / PV industry / TFT-LCD Integrated value chain (over capacity, technology, talent, financing) Thoughts and suggestions 3 -Slide 3-

4 China macro economy 2009 GDP growth Stimulated by moderately loose monetary policy and proactive fiscal policy, China s GDP showed V-type rebound. China s GDP reached 33.5 trillion yuan, up 8.7% from a year earlier. China s economy is transforming from recovery to expansion cycle % GDP 增速 growth : 同比 7% 的增长底线 7% bottom line growth source:wind Slide 4-

5 China macro economy Fixed assets investment is the key driver for 2009 GDP growth Consumer Spending Investment Export Contribution (%) Pull-up(%) Contribution (%) Pull-up(%) Contribution (%) 资料来源 :wind, 国家统计局, 江南金融研究所 Pull-up(%) 5 -Slide 5-

6 China macro economy Import & Export Imports and exports totaled US$2.2 trillion in 2009 External demand shrinked, domestic demand strengthened, trade surplus decreased Trade Surplus Export Import source:wind 6 -Slide 6-

7 China macro economy Domestic consumption Consumer confidence index recovered steadily, domestic consumption increased rapidly In spite of 8% decline in the global luxury goods consumption, the domestic luxury goods consumption had grown by 12% Throughout the year million automobiles were sold, an increase of 46.2% Commodity housing sales amounted to 937 million square meters, 42.1% increase 120 Consumer Confidence Index 消费者信心指数 : 月消费者满意指数 : 月消费者预期指数 : 月 China has become the world's largest auto market J-10 N-09 S-09 J-09 M-09 M-09 J-09 N-08 S-08 J-08 M-08 M-08 J-08 N-07 S-07 J-07 M-07 M-07 J-07 source:wind 7 -Slide 7-

8 China macro economy 2010 GDP growth Central government target 8% GDP is expected to grow by 9%-11% in 2010 GDP(%) CPI(%) 原预测 最新调整 原预测 最新调整 世界银行 IMF 摩根士丹利 汇丰银行 UBS 中国社科院 中国科学院 建设银行 江南证券 平均值 Slide 8-

9 China macro economy 2010 China economy still face a very complex situation Transforming the pattern of economic development and optimizing economic structure Monetary stimulation policy exiting strategy and timing Bubble asset risk Inflation risk Risk for second bottom The foundation for global economic recovery remains weak Trade protectionism is clearly reasserting itself RMB appreciation? 9 -Slide 9-

10 China macro economy A few predictions in 2010 Central government will keep a proactive fiscal policy Controlling the quantity of money supply becomes a norm RMB exchange rate reform will happen ahead of interests rate raise Gov visible hands Market invisible hands 10 - Slide 10 -

11 China development trend- Regional economic development Regional economic development strategy Eliminate unbalance of regional development, formulate regional economic development strategy West China Development Strategy Central China Rising Strategy Northeast Revitalization Strategy 中部崛起战略 振兴东北战略 西部大开发战略 环渤海经济圈 长三角经济圈 11 - Slide 11 - 珠三角经济圈

12 China development trend - High-speed railway High-speed railway drive overall economic development in China Direct investment increase Drive growth of related industry Change people's way of life, bolster consumption High-speed railway construction in China will have more than 18,000 km, account for more than half of the total mileage of the world s highspeed China long-term development plan of high-speed railway 1 hrs 3 hrs 5 hrs 12 - Slide 12 -

13 China development trend -Urbanization development Urbanization development 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% China s urbanization rate is about 45%, there is still much room for source:wind improvement comparing with 70% of urbanization of developed countries 人均 GNI 按购买力平价 (PPP) 计算 GNI 城市化率 (%) China s Urbanization 全世界 7,448 9, 低收入国家 649 1, 中等收入国家 3,053 6, 下中等收入国家 2,038 4, 上中等收入国家 5,913 10, 低收入和中等收入国家 1,997 4, 东亚和太平洋地区 1,856 4, 欧洲和中亚 4,815 9, 拉丁美洲和加勒比地区 4,785 8, 中东和北非 2,507 6, 南亚 768 2, 撒哈拉以南非洲 829 1, 高收入国家 36,608 34, 欧洲经济与货币联盟 34,307 31, 中国 2,000 4, Slide 13 -

14 China development trend-new rural area construction New rural area construction Increase farmers' income thru diverse channels Change rural village and consumer habits Home appliance going to countryside, expand rural consumption and improve the quality of rural life raise the maximum price limits to 7000RMB for home appliances sold, in the countryside 2009 Color TV sold in countryside The proportion of flat TV units:10k 6500K 70% 14 - Slide 14 -

15 China development trend- Income distribution reform Income distribution reform Gradually increase the portion of middle-income families Proportion of middle-income by 2009 Proportion of middle-income by 2020 High-income High-income 22% Middle-income 37%~38% Middle-income Low-income Low-income 15 - Slide 15 -

16 China LCD demand (2009Y) WW market :70M units China Domestic market :13.6M units Mobile phone WW market :1250M units China production volume:600m China Domestic market :160M WW market :160M units China Domestic market : 44 M units Automotive Monitor Notebook PC WW market :141M units China Domestic market :28M units LCD TV WW market :170M units China Domestic market :24M units 16 - Slide 16 -

17 China LCD TV market demand Lead the growth of LCD TV market LCD TV (M) '07 '08 '09F 50 China TV market Worldwide % Growth 77% 32% 35% M units LCD PDP China CRT % Growth 87% 53% 109% E 2010F 17 - Slide 17 -

18 China NB market demand Phenomenal year over year growth Notebook (M) '07 '08 '09F 50 China notebook market Worldwide % Growth 37% 34% 16% M units " " China % Growth 350% 56% 71% " E 2010F 18 - Slide 18 -

19 China monitor market demand Good penetration Monitor (M) '07 '08 '09F 75 China LCD monitor market Worldwide % Growth 23% 3% -3% China M units "+ 20"-22" 15"-19" % Growth 47% 14% 38% E 2010F 19 - Slide 19 -

20 China cell phone market demand Driving force change from new subscription to replacement Cell phone (M) '07 '08 '09F Worldwide % Growth 10% 16% -8% China % Growth 47% 49% 21% Source:isupply Slide 20 -

21 China auto market demand Big boom in auto sales leads huge demand for auto displays (PND, after market, and before market) Unit : K sets ' PND(GPS) 6,000 7,000 8,000 After Market 3,000 5,000 7,500 Total 9,000 12,000 15,500 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 After Market PND(GPS) ' Slide 21 -

22 Chinese government support Restructuring plan of ten key industries Feb 25, 2009,The State Council formulated a plan for restructuring ten key industries including steel, automobiles,, equipment manufacturing, and electronic& information technology The proportion of ten key industry by industrial added value The proportion of ten key industry by GDP Ten key industries 80% Ten key industries 1/3 Others 20% Others 2/ Slide 22 -

23 Chinese government support Electronic & IT industry revitalization plan February 18th, 2009, the State Council adopted the Electronic Information Industry Revitalization Plan IC technology advancement & capacity improvement Display industry upgrade TV industry transformation Next-generation telecommunication (TD-SCDMA) Digital TV promotion and supply chain construction Next-generation computation & internet application Software and information service, etc Slide 23 -

24 Chinese government support Revitalization of TV industry Improve supply chain of FPD industry Guide the construction of approved TFT-LCD, PDP production lines Support key set makers on system technology, module integration technology development Encourage the key panel makers to lead the construction of key materials and components supply chain 24 - Slide 24 -

25 Chinese government support Local government policy More than 50 state-level Economic and Technological Development Zone enjoy preferential tax policies During period of the industry transformation, 16 development zones focus on FPD industry Existing FPD industry parks: Kunshan, Nanjing, Shanghai, Wuhan, Chengdu, Beijing, Suzhou, etc Slide 25 -

26 Contents Opportunities China macro-economy China development trends Increasing market demand Chinese government policy support Challenges Semiconductor / PV industry / TFT-LCD Integrated value chain (over capacity, technology, talent, financing) Thoughts and suggestions 26 - Slide 26 -

27 Semiconductor, TFT, PV, and LED market Unit:USD100million LED 光伏 PV TFT-LCD 集成电路 IC IC 集成电路 TFT-LCD 光伏 PV LED Source:WSTS, Displaybank, DisplaySearch, BOEMRT 27 - Slide 27-27

28 China share Share 39% Solar Energy Share 5% TFT LCD Share below 10% Semiconductor Slide 28 -

29 What can we learn? Semiconductor PV TFT LCD Start Time Investment (USD$) Late 90 ~ M(12 ) 400M(1GW) 3500M (8.5G) Business model IDM Foundry/DH Manufacture IDM+VA Product character Customized+ Commodity Commodity Customized+ Commodity Value chain (Raw material to end product) Narrow Narrow Wide range of components Process difficulty Equipment evolution High low medium Medium Low Fast 29 - Slide 29 -

30 Fragmented value chain supply side Korea Japan Taiwan China Equipment Partial Complete Partial Lack Glass CF Complete Complete Complete Complete Complete Complete Lack Under construction LC Partial Complete Partial Partial Polarizer Complete Complete Complete Lack Backlight Complete High End Complete Middle-Low end LED Complete High End Complete Low end Optical film Complete Complete Complete Low end FPC IC Complete Complete High End High End Complete Complete Middle-Low end Partial 30 - Slide 30 -

31 The revolution of FPD investment in China Mobile phone market driving TV market driving 8.5/7.5G 10G?? 4.5G OLED /E-PAPER G5 /G Slide 31 -

32 China LCD fabs Chengdu: BOE-B2 G4.5, Chengdu Tianma G4.5, Foxconn G8.5 Wuhan: Wuhan Tianma G4.5 Beijing: BOE-B1 G5, BOE-B4 G8 Hefei: BOE-B3 G6, BOE-B5 G8 Suzhou: Samsung G7.5 Kunshan: IVO G5, AUO G7.5 Nanjing: CEC-Panda G6, CEC-Sharp G8 Shanghai: Shanghai Tianma G5, G4.5 Guangzhou: LGD G8.5 Shenzhen: Century G5, Huaxing (TCL) G Slide 32 -

33 China LCD fabs BOE-B1 BOE-B4 BOE-B3 BOE-B2 BOE-B5 InfoVision (IVO) Tianma CEC Panda Tianma Tianma Tianma Century CEC-Sharp LG Display Samsung Hua Xing (TCL) AUO Location Investment Gen. Capacity Status Exp. Date Bei Jing 1.34 B USD G 5 100k sheet/m Mass Production Q1, 2005 Bei Jing 28 B RMB G 8 90k Construction Q4, 2011 He Fei 17.5 B RMB G 6 90k Construction Q4, 2010 Cheng Du 3.1 B RMB G k Mass Production Q4, 2009 He Fei 28 B RMB G 8 90k Planning? Kun Shan Shang Hai B USD 5+3 B RMB G 5 G 5 110k 90k Mass Production Mass Production Q3, 2006 Q3, 2004 Nan Jing Shang Hai Wu Han Cheng Du Shen Zhen 13.8 B RMB 3.3 B RMB 4 B RMB 3 B RMB 1.5 B USD G 6 G 4.5 G 4.5 G 4.5 G k 30k 30k 30k 60+30k Construction Mass Production Construction Construction Mass Production Q1, 2011 Q1, 2008 Q?, 2010 Q1, 2010 Q2, 2009 Nan Jing 30 B RMB G 8 90k Planning Q4, 2012 Guang Zhou 4 B USD G k Planning Q2, 2012 Su Zhou 2.3 B USD G k Planning Q3, 2012 Shen Zhen 24.5 B RMB G k Construction Q1, 2012 Kun Shan 3 B USD G k Planning Q4, Slide 33 -

34 Over capacity Not now! Government visible hand!!! Birth control Who will be born? 34 - Slide 34 -

35 Technology & IP risk Exchange market for technology Import digest absorb renovation Self-innovation Self innovation Cross license Patent License Tech transfer Acquisition Self innovation Tech transfer Future Now 35 - Slide 35 -

36 Technology & IP risk Large display IPS/MVA/3D Small/medium display IPS/MVA/LTPS/Transflective/AMOLED/E-paper 36 - Slide 36 -

37 Talent shortage 2009 college graduates 6 million students FPD panel makers needs > 10,000 engineers Currently staffing < 4,000 engineers <3~5yrs related working experience (not many turn over from IC) Retention is a big issue High cost of introducing oversea talents, C&B for local talent in 1st tier city increase significantly Huge gap in leadership Company culture needs more time to develop 37 - Slide 37 -

38 Financing channel Major financing channels Profit reinvestment Stock market Bond market Bank Loan Government investment arms Financial support (by central and local government) Registered capital 40% Project reinvestment 0% Bond market 0% Stock market 20%~30% Gov. investment arms 10%-20% Bank loan 60% Total 100% 38 - Slide 38 -

39 Contents Opportunities China macro-economy situation China development trends Increasing market demand Chinese government policy support Challenges Semiconductor vs. TFT-LCD vs. PV industry Integrated value chain (over capacity, technology, talent, financing) Thoughts and suggestions 39 - Slide 39 -

40 Industry Balance growth and profitability Build an integrated supply chain and establish economic scales through partnership and integration Align market strategy with technology strategy & fab investment strategy Invest in technology and people 40 - Slide 40 -

41 Government Macro control on over-investment ( birth control policy) Financial support on Taxation R&D Promote cooperation among industry, academy & university Facilitate new financing channels 41 - Slide 41 -

42 Thank you! 42 - Slide 42 -