By Liu Cheng
Domestic color TV enterprises have dabbled in the upstream of their industrial chain one after another, invested and initiate liquid crystal module (LCM) project. Dr. Liu Weidong reminded that; "When enterprises launch into the module field, they shall avoid the dependence on foreign technologies and initiating hurriedly, but strive for processing independent technologies, only by which, the technology risk can be evaded fundamentally."
In June, there were two enterprises in the color TV industry whose actions are eye-catching: on June 16, Hisense Electric Co. Ltd released a bulletin that it was scheduled to collect RMB 1.531 billion yuan on the manufacture of LCM TV module and complete appliance integration and the investment in matched construction project and matched project of flat panel TV production; on June 22, Sichuan Changhong Group released a bulletin that it would make a financial contribution with BriView Electronics (L) Corp. , a subsidiary company of AU Optronics Corp. (AUO), to establish a joint venture company in Mianyang city, Sichuan province, which is aimed to manufacture liquid crystal TV modules.
The two companies happened to coincide with each other to invest in liquid crystal TV module project, which reflected a main trend that domestic color TV enterprises are taking active actions to expand to the upstream of Flat Panel TV industrial chain. As understood, Hisense dabbles in the field firstly. In September, 2007, the first domestic liquid crystal TV module production line was put into production in Hisense. In April, 2008, Skyworth Group announced that it would invest a share-holding LGD Guangzhou LCM module plant. At the same month, the liquid crystal TV module project jointly established by TCL Group and Samsung Electronics Co. Ltd was initiated in Huizhou city, Guangdong province and Phase I project was estimated to have an annual output of 2.33 million units. In this February, Konka Group Co., Ltd set up LCM production lines in Kunshan city, Jiangsu province.
Color TV enterprises that take efforts to expand towards the upstream mainly aimed to obtain competitive advantage. For a liquid crystal TV, the module takes bigger proportion of the cost of the complete appliance. If domestic enterprises master module technologies plus other technical advantages on, for example, the complete appliance circuit, taking a view of controllable cost proportion, Chinese color TV enterprises will be provided with around 60 percent of independent right in the cost of liquid crystal TV complete appliances. As introduced by Liu Hongxin, General Manager of Hisense Electric Co. Ltd, Hisense's LCMs contribute to net profit by more than 1 percentage, which is a considerable profit support under the background of low average profit in color TV industry.
The plan on adjustment and revitalization in electronic information industry stipulates definitely that "Key technology breakthrough shall be realized in such fields as innovative display panel production, module integration design of complete appliance and glass block manufacture." As understood, the government has earmarked special fund to support enterprises launching the module industry field by means of "the combination of earmarking guidance fund and collecting fund in the capital market by enterprises". Undoubtedly, that the government's definite policy orientation has provided a policy guarantee to the enterprises striving for expanding to the upstream.
Rapid development in domestic liquid crystal TV market has also provided the color TV enterprises with an opportunity to establish LCM module production lines. In 2008, the flat panel color TV volume in Chinese market took up around one third in the total color TV sales volume, and it is still growing rapidly this year. Viewing from the industrial development trend, in the time of CRT TVs, all of such enterprises as Hisense, Konka, Skyworth and TCL were provided with the CRT TV output of more than 8 million sets. Compared with such a figure, the liquid crystal TV output of these enterprises will also reach 8 million in the future. Presently, most of domestic color TV enterprises have just begun to realize the mass production of LCM, so the gap of LCM output is still large. Therefore, such enterprises as Hisense have been adding investment increasingly to expand the LCM output. In July, 2008, Hisense's Phase II project on LCM was accomplished with the annual output of 1.5 million modules. In the future two years, Hisense will further increase its module output by 5 million units, achieving an aggregated annual output of 6.5 million units.
For those color TV enterprises intending to launch into the upstream of the industrial chain, to form a differentiation advantage in products is one of their important targets. Dr. Liu Weidong, a technical expert with Hisense, introduced that the product differentiation is sourced from two aspects. On the one hand, the differentiation is sourced from front-end units, for example, modules; on the other hand, the differentiation is sourced from the possibility of providing differentiated solutions on complete appliances, which, in turn, requires mastering certain key and core technologies in chips and modules of liquid crystal TVs. Without these core technologies, even though LCM projects are initiated, it is even very difficult to realize the product differentiation.
Liu Weidong believes that it is the mastery of core technologies that makes Hisense take the lead in initiating LED LCM project and launching LED liquid crystal TV, such a differentiated product. As introduced, the global sales volume of LED liquid crystal TVs was close to 200,000 sets last year, and it will jump to 3.674 million sets this year and 15.137 million sets next year. By 2012, LED TVs are expected to take up around 30 percent of the liquid crystal TV market shares. LED modules belong to the cutting-edge color-TV technologies in the world, so foreign color TV enterprises would not contribute these technologies at the first time to cooperate with domestic enterprises on module production line establishment, which will increase the difficulty for Chinese color TV enterprises to seize the initiative in LED TV market. Hisense has not only mastered the core technologies on modules, but also successfully developed the LED liquid crystal TV technologies; therefore, it naturally keeps pace with foreign color-TV enterprises in the course of LED LCM industrialization.
