On the evening of March 22, BOE A announced that its holding subsidiary Wuhan BOE intends to take advantage of the 25,000 glass substrates/monthly plant space reserved at the initial stage of construction, and intends to raise 3.775 billion yuan to expand the existing plant in Wuhan, China. Capacity.
Monthly production capacity expanded to 180,000 sheets
According to the announcement, the specific construction content of this expansion of Wuhan BOE in China is to expand the production line of the existing 10.5th generation thin film transistor liquid crystal display panel (TFT-LCD), including production and auxiliary production facilities, power facilities, environmental protection facilities, Safety facilities, fire-fighting facilities. After the construction is completed, the monthly production capacity will be expanded from 155,000 substrates to 180,000 substrates, and the labor force will be increased by 945 people. It is expected that in 2022, the process equipment will be moved in and full production will be achieved.
According to the announcement, at the beginning of the construction of the factory, 25,000 substrates/month are reserved for plant space. Through capacity expansion, the existing plant space can be fully utilized to avoid idle space. At the same time, in addition to the purchase of new equipment, the expansion project also fully considered the capacity of existing equipment to tap the potential, and formulated a series of plans to maximize equipment capacity to improve the operating efficiency of existing equipment. Based on the utilization of the existing plant and the potential of the production capacity of the equipment, the investment amount required for the new production capacity of this expansion unit is much lower than that of the new factory. The completion of the project will significantly improve the profitability and competitive advantage of Wuhan BOE.
In January 2021, BOE A released a fixed increase plan of 20 billion yuan. One of the proposed investment directions is to increase its holdings in Wuhan BOE. BOE A intends to purchase 14.44 percent and 9.62 percent of the equity of Wuhan BOE, China held by Wuhan Lingkong Port Industrial Development Investment and Changbai Fund, respectively, for a total price of 6.5 billion yuan. After the completion of the acquisition, the company will hold 47.14 percent of Wuhan BOE.
The revenue of BOE Wuhan, China is mainly derived from the 10.5th generation TFT-LCD production line. The product will be lighted up in September 2019 and mass production will be achieved at the end of December 2019. In 2020, Wuhan BOE realized operating income of 1.775 billion yuan and a net profit loss of 156 million yuan.
The demand for large-size panels continues to grow
The background of the increase in holdings and production expansion is the high prosperity of the large-size LCD panel industry. According to the forecast of the research institute Qunzhi Consulting, due to the continued strong stocking demand of downstream brands and the limited actual supply of panels due to the shortage of upstream, especially chip supply, the supply and demand of the global LCD TV panel market remained tight in March, and it is expected that the supply and demand relationship in the second quarter will not be obvious. Improved, panel prices maintain an upward trend, and large-size panels may expand.
BOE A said that with the development of new technologies such as 5G, Internet of Things, and big data, the next five years will be the golden period for the development of 4K/8K ultra-high-definition display technology. Technology upgrades will promote the continuous shift of display consumer products to high-end medium and large sizes. .
BOE A predicts that the demand for medium and large-size panels will continue to grow in the next five years, and the demand for 65-inch and 75-inch products that are economically cut sizes for the 10.5-generation production line will usher in substantial growth. In order to meet the incremental demand of customers and further seize the incremental market for medium and large-size panels, Wuhan BOE must implement a production line expansion project to expand the production capacity of corresponding medium and large-size panels to ensure a competitive advantage.
