How can LCD panels avoid overcapacity?

- Mar 26, 2018-

                  

                   The forward-looking investment adviser of the IPO consulting firm believes that the overcapacity existing in the domestic market is mainly a derivative of the government-driven investment model. Take iron and steel, electrolytic aluminum, photovoltaic and other industries as examples. The problem of overcapacity is based on the formation of excessive government involvement in microeconomic activities, which distort the price signal and distorts the supply curve and cost structure of the company. . On the one hand, the local government's industrial environment created by various subsidy policies in terms of funds, venues, and taxes can easily create a big impulse for the company to become bigger and stronger; on the other hand, the strong involvement of the government makes the company's investment. The creditors and creditors over-convinced the blindness of the government after the blind expansion.

                  In order to withstand the survival crisis brought about by price fluctuations, LCD panel makers have continuously increased the production efficiency of existing production lines. On the other hand, they have continuously invested heavily in the construction of higher generation production lines in order to obtain excess profits in emerging high-end markets. As investing in high-generation LCD panel production lines will greatly stimulate the development of the local economy, supporting the development of LCD panel makers will not only stimulate the rapid development of the local economy and industry, but also quickly improve the performance of the government. However, once the local government-led investment projects are out of the market, they cannot follow the rhythm of the industrial cycle, and may cause domestic manufacturers to repeat the overcapacity and fall into the expansion trap.

                 In addition, from the perspective of the global flat panel display industry, the emergence of new OLED display technology has provided a rare opportunity for development in China's display industry. Since the technology relevance and resource sharing between TFT-LCD and AMOLED is as high as 70%, as foreign companies further open up in the field of flat panel display and relax restrictions on China's output lines and technologies, domestic LCD panels should seize the industry. Opportunity to transfer, optimize its own industrial structure, vigorously introduce high-generation production lines, meet future development and production needs of AMOLED products through the versatility of backward production lines, rationally adjust the relationship between production capacity and supply and demand, and improve profitability so that it enters a virtuous circle. Promote the healthy development of the industry.