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Depth of the panel shows the development of the industry in the end you understand how much
Jul 17, 2017

As a consumer, the LCD screen is now everywhere, electronic watches, calculators, cell phone screens, high-definition televisions and computer displays and so on. But you think about the outbreak of the LCD screen, that is, these decades of things. The rapid changes in the industry behind, there must be a lot of big gambling big win, big lost, thrilling business story.

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In the late 19th century, scientists discovered something like liquid crystal. Liquid crystal is characterized by the ability to change with the temperature, between the turbidity and transparency, but for many years we do not know what the actual use of this thing. Until the 1960s, a US company began to use liquid crystal display technology.

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The US company has now disappeared, the original but famous, called the United States Radio Corporation (RadioCorporation of America, referred to as RCA), is the inventor of color TV, after World War II is the United States and the world's television industry leader. As the inventor of color TV, RCA company early thought that the kind of "hanging on the wall of the flat-panel TV."


In 1961, the United States RCA company Princeton laboratory, a young electronics scholar is preparing a doctoral thesis defense. He found that the two transparent conductive glass between the folder between the LCD, and then add the voltage to the LCD, you can precisely control the LCD transparent or turbid - this is not the color flat-panel TV?


RCA company has just begun to pay great attention to his research, has been listed as a major corporate confidential projects. Until 1968, RCA made the world's first liquid crystal display model, held a conference in New York, public display of this new invention. Japanese companies participated in the conference, which knows the new technology developed by the Americans.


However, RCA company invented the liquid crystal display technology, but they disappointed to find that this thing can not be used to produce "hanging on the wall of flat-panel TV." Because the LCD display speed is too slow, the color is too monotonous, distance can see the color TV is still very far. Over time, RCA company a bit desperate.


Moreover, this time RCA company, to turn to the then more and more thriving computer industry. They intend to compete with IBM and some, so cut the investment in consumer electronics, LCD to stop the continued research and development. Unfortunately, RCA and IBM in the battle of the company completely defeated, but also from the market disappeared. By the 1970s, other US companies have given up the development of liquid crystal display technology for similar reasons.


Japan into the LCD market, R & D breakthrough to become a pioneer


But in the RCA company conference to see the new technology of the Japanese, can have a strong interest in the LCD. The first shot, the Japanese watch business, Seiko. At that time, the Japanese are ambitious to develop quartz watch, intended to challenge the market for many years in Switzerland and other watch power. The Japanese have developed an integrated circuit for quartz watches, but there is no breakthrough in the display. See LCD technology, Seiko overjoyed, and quickly buy technology permits, creating a liquid crystal display of the electronic form.


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Japanese invented the electronic watch in the market has achieved great success, almost to the Swiss mechanical watch into desperate. The traditional mechanical watch was later turned to the luxury market, only to win back the local market. However, this is another topic.


In addition to electronic watches, Sharp and other Japanese companies, but also LCD technology used in the calculator, instrument display and other fields, have achieved great success. Japanese companies rely on liquid crystal display technology, making a lot of money. In addition to making money, the success of this market there is a role, is to ensure that the Japanese enterprises in the LCD follow-up investment, and promote the continuous progress of LCD technology. If there is no rolling profits, Japanese companies can not invest long-term research and development of LCD.

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So why do not US companies produce electronic watches and calculators for these markets?


This is the main reason why Americans get back early in the morning. R & D LCD technology RCA and other companies, bent on the LCD technology is used for "hanging on the wall of the flat-panel TV." TV this market is too big, if you really create a flat-panel TV, instead of CRT TV, is simply dug gold mine ah. Later facts also show that the worldwide flat-panel TV on the CRT TV replacement, is indeed a huge market.


 

Americans have made the right judgment, but they are too "low"

 

In the LCD technology is still very immature, completely unable to use the TV, the Americans chose to give up. They simply can not see the electronic form, calculator these gadgets, earn money Well, let the Japanese to do these small products it. We Americans do is big business, make big money. But it is by virtue of the Americans do not see the gadgets bring profits, Japanese companies continue to invest, and strive to develop LCD technology.

In 1983, Seiko developed a 2-inch color LCD display. LCD technology has finally broken through the previous slow, monochrome state. At this time, due to the large number of Japanese companies involved in the continuous research and development, LCD technology related to the various enterprises have gathered in Japan.


The gathering of enterprises has accelerated the spread of knowledge, greatly stimulating the progress of technology. Because this size is too small, not only can not be used for televisions, other uses are not large. LCD to large-scale application, the need for larger size, so the Japanese companies to build the first generation of LCD panel production line, the size of 8,9 inches or so, that is, iPad so big.


In 1988, Sharp, Toshiba, NEC and other companies, have the production of large-size LCD screen technology. In 1991, Sharp took the lead in the first large-size LCD screen production line. Products, technology, production equipment, and other parts of the entire LCD production supply chain, are located in Japan, which not only to Japan in the LCD R & D, production ahead, but also formed a pioneer barriers. Including the United States, including other countries, this time in the LCD technology to catch up with Japan, may not be so easy.


In 1990, 90% of the world's LCD screen production in Japan; to the mid-1990s, this ratio rose to 95%, the Japanese almost exclusive LCD market. Philips in the Netherlands, in 1991, tried to build a liquid crystal production line, but they found that, because away from the Japanese industrial clusters, they simply can not keep up with the mainstream LCD technology progress.


After several hard work, Philips showed that the president of the business had to admit that we had paid the price in solitude. Americans this time even more embarrassing, and played a big early, but caught a late set, which shows what?


 

A new technology, from the initial to the industrial production, often have to go through a long process of research and development. In this process, companies can continue to invest in technology research and development, is critical

 

Electronic watch, calculator these gadgets, although the Americans do not look, but the Japanese rely on these products to ensure that the enterprise's profits, which can continue to invest in LCD technology, made a technological breakthrough, and ultimately occupy the market advantage status.


However, the Japanese did not laugh for how long. In the evolution of the LCD industry in the process of rapid changes in the world, not many years, the Japanese scenery is no longer. To today, only a thousand miles to describe the Japanese LCD industry.


In 2016, Gou's Hon Hai Group acquired Japan's Sharp, which is a landmark event. Now, Japan continues to produce LCD panels, leaving only two companies. The current world of liquid crystal industry, China and South Korea is the match, the basic calculations out of Japan.


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In 1992, IBM introduced the later ThinkPad notebook series, its first product 700C, with 10.4-inch color LCD display. Notebook computer display is the first LCD "killer application", the market suddenly detonated. Sharp, NEC, Fujitsu and so on Japanese companies have responded to market demand, opened the second generation of LCD production line, production notebook display.

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Liquid crystal cycle


We have to talk about, LCD screen intergenerational division, the main is cut out of the LCD panel size. LCD industry competition between the various enterprises, a simple understanding is to build a higher generation, can produce larger size of the panel production line. LCD industry by intergenerational division of the characteristics, resulting in a unique "LCD cycle."

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When a certain size of the LCD panel into the market, to meet a certain aspect - such as notebook computer display - the need. Corporate profits will surge, other companies see this scene, have invested in the production of this size LCD panel. So the product soon oversupply, the price fell, the profits of various companies are plummeting, or even fall into a loss.


Although we all fall into a loss, but the panel prices fall, so that the rapid expansion of the application of liquid crystal display, more users began to use flat panel display. Which led to lack of capacity, prices, and then re-investment to expand production. And then oversupply, prices plummeted, and into a loss ... ...


It seems that this process and the general commodity supply and demand changes no difference, it is not true. The particularity of the LCD industry is that liquid crystal display has a more and more widely used in the community process. If the LCD panel is expensive, it can only meet those high-end applications, such as fighter cockpit or high-end notebook computers, most people will not consider. But if the LCD panel prices, many of the original demand does not exist from scratch, from small to the earth came out. For example, we ordinary individual users, but also the table on the monitor tube into a liquid crystal display, this thing actually happened in previous years.


 

The problem is that the greater the yield, the higher the profits of the business process, not the straight line, but the leap

 

Every jump is a liquid crystal cycle, companies must first leg - bear the loss of the cycle, and insist on investing in the construction of a new generation of production lines, and then to jump up - usher in greater production and profits.


Japan has almost monopolized the world market of liquid crystal production enterprises, because it did not fully understand this special law, there is no timely change in the way of competition, only to the Korean business opportunities.


From 1993 to 1994, LCD production entered the first cycle - prices fell, profits greatly reduced. Japanese companies because of losses, cut production, so a group of LCD industry, Japanese engineers were unemployed.


The rise of Korea


South Korea's Samsung Group to seize this opportunity to set up R & D institutions in Japan, to attract these unemployed engineers, began preparations for LCD production. By 1995, Samsung, LG two companies were built their own LCD production line.

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South Korean companies to enter the LCD industry, the "anti-cyclical investment" has become their big killer. After 1994, the LCD industry through the trough, but to 1995-1996, and into the cycle of the trough. In the face of huge losses, South Korean companies not only do not like Japanese companies to cut production to maintain prices, but insist on large-scale investment expansion capacity. You know, the investment in the LCD industry, but the astronomical figures, according to the yuan, it is necessary to dozens, tens of billions. South Korean companies is by virtue of this unprecedented, ferocious offensive investment strategy, defeated the Japanese companies.


South Korea's crazy investment strategy, the Japanese began to disagree. A large Japanese company executives have irony Korean companies, investment in the 5 generation production line is certainly a sea to sink the Titanic. The Japanese feel that their existing third generation, 4 generation production lines, have been oversupply, this time should not cut production to keep the price? Korean people instead invest in the production of larger size of the panel, simply unreasonable.


However, the Korean people through the large-scale production line 5 generation, completely defeated the Japanese companies. 5 generation production line before the LCD panel, to meet the needs of 14-inch notebook display. Production of larger size notebook display, it does not seem much necessary, the Japanese even think that the 5 generation production line is the physical limit of the LCD industry.


But the field of LCD "production to create demand" rule, then played a role. 5-generation production line can cut out the maximum 26-inch panel, really no one will use such a large screen laptop. But 5 generation production line of the panel, so that consumers to the original desktop CRT display, replaced by a liquid crystal display. At the same time, people looking forward to years of flat-panel TV also began production - although the size of flat-panel TV is not large, but did not exist before the market was excited.


In 2001, Samsung, LG two companies to invest in the 5th generation production line. After the production, the Korean companies to completely catch up with Sharp and other Japanese companies. Samsung, LG two companies are the market share of the world's first and second. Korean companies surpassed the Japanese in one fell swoop when the dream wake up, Sharp had to give up the original conservative attitude, through the 5 generation production line, directly into the larger size of the 6-generation production line.


But the Japanese one step can not catch up, step by step not catch up. After entering the 21st century, not only the emergence of Korean enterprises, China Taiwan's LCD production has begun to grow rapidly, both sides under the attack, the Japanese companies retreat.


At first, the Japanese come from behind, beat the Americans occupy the LCD market, relying on the small start, to maintain profitability, and then continue to invest in technology research and development, leading to the industry finally mature. But it is this too stable and stable "small pattern", so that Japanese companies did not like South Korean companies as "crazy" investment.


Therefore, the Korean people beat Japan, not by technology beyond, but a new investment strategy. Times have changed, playing law has changed, the Japanese did not keep up with the times, because they made a strategic mistake.


Liquid crystal V.S. plasma


In fact, the failure of the Japanese, there is another important reason. In the flat-panel TV just listed when the LCD is not only a technology, as well as plasma TV, these two technologies are difficult to distinguish.


At the beginning, plasma flat-panel TVs were more advantageous because the panels were larger and more colorful. At that time a lot of people think that plasma will win, such as the Changhong Group bet on the plasma technology.


 

Of course, now we know, winning must be LCD

 

The reason is that the liquid crystal display is actually a semiconductor technology; and plasma is a vacuum tube technology, the principle is closer to the original picture tube. Vacuum tube technology development, has reached the limit. Although the display is very good, but can not be further developed. The development of semiconductor technology, at least to the present, not only fast and no end, that is, the so-called Moore's Law, every 18-24 months performance doubled.

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So, even if the initial LCD display is not as good as plasma, but with the development of semiconductor technology, LCD resolution will be rapid progress, from 2K to 4K, now has to 8K, or even 10K. LCD panel size, the initial really small, but the size of the plasma panel, it is only a matter of time. Later development really so, and now the basic plasma TV has been out of the market, and LCD technology in the field of flat panel display dominate the world.


LCD and plasma two different technologies, meaning deep, which in fact represents the two industrial development model.


For the plasma and the earlier picture tube, the technology is varied. Excellent business will have unique skills, and therefore get excess profits. For example, in the field of CRT, Sony has a superb "single gun three" technology, that is, Trinitron picture tube, outstanding color performance, bright image. Sony TV so thriving, although the price is expensive, consumers still blitz. There are also Mitsubishi Corporation, also has a unique picture tube technology. They produce the diamond tube, the image quality is also great. This time the technology is that each has a variety of strokes, the village has the village of authentic.


But for the liquid crystal display, the technology is common, the production is highly standardized, the division of labor is global. Each enterprise production line upstream suppliers, equipment providers, accessories, are almost. Therefore, the LCD panel in the quality is not a big difference, the main difference is the size of the panel size.


It is said that Samsung LCD TV just listed when the Japanese companies look down on Samsung. A Japanese journalist to the mall, compared to Samsung LCD TV and Japanese companies LCD TV, it seems that do not see the difference. Reporters went to consult the Japanese LCD business executives, Japanese executives replied: you look for half an hour, you can see the Japanese products better than the Samsung products. The reporter later commented that no consumers will be staring at the two shopping malls in the mall for half an hour. If consumers feel almost the same quality, function, reliability is also similar, they will choose cheaper products.


In fact, not just LCD, into the digital age, the entire electronics industry is almost the case. Modular, standardized production, the global division of labor, general technology, each product in the technical, quality is not a big difference.


In the digital age, the main way of competition is not to rely on unique skills, technology, but by the development of new product speed, supply chain control, cost control, marketing and so on. At this time, in the era of the graphics tube with a unique stunt big earned special Japanese companies, behind.


In fact, in the computer age, the Japanese in this regard can be said to be a repeat offense. They are in the communications equipment, mobile phones, PC have made a similar mistake. Is in the era of general technology, but also wishful thinking about relying on unique skills, superb technology, exquisite design, etc., to create a different product, so as to obtain excess profits.


Of course, Japanese companies do so, not all because of cognitive errors, in fact, there is a more profound social reasons, they made a high profit in the era of CRT, corporate executives and staff income has gone up. The so-called by the thrifty luxury, by the extravagance difficult, Japanese companies need to maintain the era of high-profit graphics tube, or the whole organization system can not maintain. They can think of the way, is once again find unique skills.


Therefore, in the early stage of flat panel display technology, the Japanese companies want to make big difference with others, toward the unique skills. At that time, Panasonic and Hitachi main attack plasma technology; Canon and Toshiba developed a display technology called SED; Sony research "field light" technology (now few people know what that means); Sanyo is specializing in OLED technology.


Japanese companies, only Sharp focus on LCD technology. But even Sharp, still want to study unique skills. In a very long time, Sharp LCD panel production only for their own use of the TV, not external supply, Sharp want to make their own LCD TV thriving. Of course, this soon became a fantasy, Sharp and then how hard, can not be in the general LCD technology and others are significantly different. Later, after selling to Hon Hai Group, Sharp first changed, is to start external supply.


South Korea's Samsung and LG two companies, at first, is between the plasma and LCD technology hesitation. But when they see the semiconductor to the LCD to create out the prospects for development, the decisive to give up the plasma, began to LCD "crazy" huge investment. They no longer try to beat the Japanese with technology, they know that the way of competition has changed.


Of course, Japanese companies are also awake quickly, has joined the LCD camp. However, they did not give up on the unique skills of the pursuit of infatuation. Some analysts have analyzed the patent distribution of LCD technology and found that the number of Japanese companies has a significant advantage in the number of patents, and mainly focus on technology patents, rather than design and other patents.


We can see the Japanese still want to create a different product, they did not get rid of the previous way of thinking. Unfortunately, more technical patents did not give the Japanese LCD industry a competitive advantage. The failure of the Japanese in the field of liquid crystal, worthy of our careful analysis.


 

Competition is always in, but the way of competition will never be immutable

 

The Japanese have by virtue of the "artisan spirit", relying on carved, exquisite workmanship, excellent quality in the world market dominate. But after the advent of the digital age, this carved in many areas no longer useless.

In the modular production, extensive division of labor, giant production lines, huge investment, rapid changes in the market demand, the way the competition has undergone profound changes. Now if you still want to rely on unique skills, to create a different product, and finally only embarrassed to find the so-called unique skills, are basically self-deception.


The times have changed


We leave this field from the LCD first for a while, from a more basic, broader perspective, look at the Japanese electronics industry, a strategic mistake.

The father of the computer


We start with an American, and he is called von Neumann. He is a great mathematician, all contributions are a lot, but also involved in the development of the US atomic bomb. But von Neumann's most famous contribution is to present the "von Neumann structure", so he is called "the father of the computer".

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We use the computer today, no matter how advanced, the basic structure or then von Neumann put forward. On the "von Neumann structure", if you go to check the information, will see a lot of technical terms. It is a simple understanding of its groundbreaking in the end where it?

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You see, an electronic product, in order to work properly, nothing more than the input signal or data, and then deal with the signal or data. Such as a radio, through the antenna input radio station issued by the radio signal, in the radio after some treatment, into the human ear can hear the sound, play out. You open the radio a look, there are a variety of electronic components, transistors, resistors, capacitors, etc., the role is nothing more than dealing with the input signal. These components are combined together and become circuits; more complex combinations, that is, integrated circuits, although complex, but the principle is no different.


So far, we are talking about the computer before the electronic products. These electronic products are characterized by a single use. Radio is a radio, the TV is a TV, the phone is a telephone, the difference is great, can not mix. Because they are not the same internal hardware, the process of dealing with the signal is not the same.


The world's first computer, the same is composed of a large number of components, and by the combination of components to be calculated. Therefore, in the different calculations, it is necessary to change the combination of components and wiring, which of course very inconvenient. So, someone made a new idea, he is von Neumann.


He put forward the "von Neumann structure", is a computer is divided into about five parts:


Input data and program input device


Memory program and data memory


Complete the data processing of the operator


Control the controller that executes the program


Output the output device of the processing result


We now use the computer, mobile phones, are also the combination of these five parts out.


As a result, a major change took place. In the completion of different tasks, you do not have to change the hardware, do not have to create a different integrated circuit, just change the memory of the software on it, this is the so-called general-purpose computer. A general-purpose computing device that can be calculated, can handle documents, can play video audio.


Hardware software division


This is the original electronic equipment can not imagine, this is a major revolution. What is the result of it? Is the hardware and software division.


The software is responsible for "personalizing" generic hardware and thus raising the value of the task, so the software appears as a separate industry. It seems that this is only a technical change, but in fact, this change profoundly changed the enterprise form.


If the hardware and software are not separated, an electronics company must be both dry and dry, that is, vertical integration. Production of radio business, not only to design their own radio inside the circuit, but also to create it out.


When the hardware and software after the separation, not only the emergence of such software companies in Microsoft, manufacturing also appeared within the differentiation. For example, there is only the design of Apple does not produce the enterprise, and Hon Hai companies only do not design the production of enterprises. This is two different companies, they will start division of labor between.


This is a major innovation


Some people may say that this is also innovation? Most people always understand innovation as a new invention of technology, new breakthroughs. But in accordance with the economist Schumpeter's definition, the original elements of production, re-arranged for the new mode of production, which is innovation, and may be more important innovation.


Japan's electronics industry, it is because of the rejection of this innovation, and from far ahead to all the way behind. The Japanese have always been proud of their "manufacturing", that the manufacture of quality products is the specialty of Japan. But after the advent of the computer age, in the context of hardware and software separation, Japanese companies are reluctant to give up the original vertical integration.


Manufacturing capacity is very strong Japanese companies, refused to become Honghai as a foundry business. They adhere to the original design, manufacturing one enterprise shape, want to be Apple + Hon Hai. But the result is, neither become an apple, nor become Hon Hai.


Japan's electronics industry's domestic output reached its peak in 2000, about 26 trillion yen. By 2013, the figure plunged to 11 trillion yen. Once in the world far ahead of the Japanese electronics industry, has a large area of recession, many companies into a loss.


The Japanese used to sell electronic products all over the world, but now, electronic products in Japan is already a trade deficit.


Electronics manufacturing, is no longer vertical integration, is a business from design to production what are dry. But with the horizontal supply chain to organize production, in the global division of labor. What is the benefit of this? Why the Japanese deviated from this trend, it will lag behind it?


You think, the electronics industry changes particularly fast, a product design, or a year or two on the out. If you put the design and manufacturing, all pinch in their own hands. Design a change, a product upgrade, it is necessary to adjust the production line to meet, that the cost of innovation is too high. Even the enterprise will instinctively think, only minor to do some repair, no longer consider the revolutionary innovation. That year of Nokia, the reason why so dead, and this factor is related.


And such as Apple's company, only need to consider the product on the replacement, manufacturing problems to Foxconn such a foundry to solve, they can light up battle to innovation. Understand this point, it can explain why the Chinese manufacturing so strong. Made in China, not as some people say, just because people are cheap. Now China is not cheap labor, even if it is cheap, but also cheap, but India and Africa. Where is the advantage of Chinese manufacturing?


Is efficiency and flexibility


China's southeast coast gathered a large number of small and medium enterprises, formed a tightly integrated supply chain network, a single enterprise specialized division of labor, reached the incredible degree.

A contracting mission came, China's supply chain network can be quickly reorganized, it completed. Hair package a change, you upgrade the innovation, and my reorganization and immediately occurred. This combination of production scale, efficiency and flexibility of the network, in the world are not, this is the real power of China's manufacturing.


With the separation of software and hardware, the electronics industry there has been an important change. From the original one vertical integration of the entire industry chain, is the "vertical integration", into a "level of integration" - that is, every business has joined the global supply chain, from which to find their own division of labor and location.


The Japanese electronics companies, too obsessed with their original good at things, too much emphasis on carved "artisan spirit", missed the wave of this wave of innovation.


Originally, the LCD industry has a unique "LCD cycle", each cycle of the trough, have created a new business to enter the opportunity. Korean people because of the tread of the "LCD cycle", in the trough, but to take a radical investment strategy. Wait until the industry a warmer, more LCD application scenarios appear, South Korean companies to go against Japan, accounting for the upper hand.


Somebody predicted

In the context of rapid economic development, with huge investment capacity of Chinese enterprises, sooner or later will reach the LCD industry, copy the success of the Korean people. If only investment capacity, China is not bad money ah.

The earliest, no one believed this prophecy. We believe that the LCD so high on the industry, the Chinese people simply do not play. Of course, the later facts completely changed the idea of everyone. Like the Beijing Oriental LCD enterprises, in just a few years within the rapid rise, changing the pattern of the world's LCD industry. Although not yet fully overwhelmed South Korea, but the situation in China and South Korea has been formed.


In the introduction of China's LCD industry before the rise, we have to talk about the LCD industry is an important feature, which helps to understand the rapid rise of China's LCD enterprises key points.


Japan's patent in the field of liquid crystal far more than South Korea and China Taiwan, and Japan's patents are often technical aspects. What are the aspects of Korea and Taiwan's patents? They are not the design of the patent, mostly LCD panel large-scale manufacturing innovation.


What does it mean?


Speaking of science and technology, our minds often think of the laboratory, wearing a white coat of scientific research personnel, a variety of laboratory equipment and so on. Technology developed by the researchers in the laboratory, and then get to the factory to large-scale production, we can call this technology as laboratory technology. Japanese patents in the field of liquid crystal, most of which belong to this laboratory technology.


Unlike laboratory technology, the development of the LCD industry shows another equally important - perhaps more important - technology, that is, factory technology. South Korea, China Taiwan and mainland China's LCD business, and later accumulated a lot of factory technology. Korean companies crazy offensive investment strategy, so that they lead in the factory technology in one fell swoop, catch up with Japanese companies.


What is factory technology?


For example, in the LCD production, to avoid dust is a big problem. Moreover, the requirements of liquid crystal production on the dust, than with the same semiconductor CPU even higher. Production of CPU, is a large silicon wafer cutting a lot of small silicon, were made into CPU. If there is dust to enter, but the corresponding that a few pieces of CPU affected, most of the other silicon is not affected.


But the LCD does not work, the LCD screen is a large piece of glass. The same is mixed with 10 dust, CPU production as long as the removal of that 10 CPU can be, the other is qualified; LCD screen is the emergence of 10 non-glowing dead pixels, even if the whole screen failed, completely scrapped.


Therefore, the requirements of liquid crystal production on the dust-free workshop is very high. Clean technology itself is not complicated, in the laboratory is very easy to do small-scale. But in the laboratory to do no sense, important and difficult to do in large factories. Tens of meters high, a variety of equipment boom operation, people coming and going of the huge plant, built dust-free workshop, which is completely another set of technology. The focus is that this technology can only be gradually explored at the time, improved, can not be completed in advance in the laboratory, and then simply transferred to the factory.


This can only be in the local, combined with the actual production and accumulation of technology, is the factory technology. Compared with the laboratory technology, a single factory technology may not be so deep, even very humble, but a lot of small improvements, bit by bit trick to build up, it becomes a more difficult to copy and beyond the big technology competitors. This technology can not even use a manual to teach you, a lot of technical details exist in all levels of staff in the mind.


"Light change," the book said that the BOE just put a liquid crystal production line, the biggest problem is the low yield, only about 60%. Low yield will certainly make the product cost is high, the workers every day to wipe the sledgehammer smashed substandard LCD panel - simply distressed. How to improve the yield? Do not know, we can only want to get a little bit of improvement. Get here today, get there tomorrow, the number of dust gradually reduced. After a period of effort, contrary to everyone expected, the yield actually reached 95%! In the whole process, there is no great black technology, and some only in the production site numerous improvements and adjustments.


This process is the process of developing factory technology. Once the accumulation of such technology, it is not only in the paper, in fact, also stored in the minds of each colleague, and their cooperation between the relationship, this advantage is great.


Many people's thinking errors are: respected laboratory technology, despise factory technology. This is actually the lack of industrial thinking performance. Industrial thinking is to consider the problem from the scale up. Raising a cow, carefully feeding, the problem is not large, but raised 10,000 cattle it? It is a huge system, many links, the risk is huge, not to raise a cow's technology to copy ten thousand times so simple.


China 's LCD industry territory


BOE in the LCD industry, it is the assets, profits, production, the number of production lines, technical level, and many other are the first in the country.


BOE's predecessor is a veteran state-owned enterprises, Beijing tube factory. It is the number of 774, is the beginning of the founding of the Soviet Union to build one of China's 156 key projects, a little Big Brother's meaning. "51" period, the national electronics industry a total investment of 550 million yuan, 774 tube factory accounted for a total of 103 million yuan - this is the 1950s 100 million yuan, we can see how important it is.

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But after the reform and opening up, the door opened, the tube factory found that the core of the advanced countries now electronic components is not a tube, but the transistor and integrated circuits. You really big, status and then important, but also can not carry your product no one wants to.


At that time, the country is the rise of "color hot", the market is incredibly big. Provinces and cities are actively from abroad to introduce color TV production line, Beijing think, tubes and color TV with the tube tube are vacuum tube technology, 774 factory production of color TV, but also technical advantages. But later, for various reasons, this project did not fall into the 774 tube factory itself, but with the Panasonic joint venture, a separate plant.


1987 Panasonic CPT was established, which was the largest Sino-foreign joint ventures in Beijing, the factory built from the 774 plant not far from the place, but it is a separate factory. 774 factory although the name has a 25% stake, but there is no right to speak, but also not much dividends.


Missed the color TV production, the 774 plant emergency treatment, on a lot of absurd projects, including what health care tea, refreshing liquid, refrigeration equipment, energy-saving lamps, taxi companies and so on.


What about the joint venture? Panasonic CPT, thriving in the color TV market those years, earn a lot of money. But on the one hand, 774 plant as a weak shareholder, benefit much. In the most difficult years, the urgent need to spend money, where the number of Panasonic CPT number of money hand soft, electronic tube factory to point dividends are very strenuous.


More importantly, on the other hand, due to the technical blockade of Panasonic, from 1987 to 2009 to stop production, after 22 years, China still can not independently design picture tube. The position of the Chinese company in this company is similar to that of running errands.


The turn came


June 10, 1997 Beijing Electronics Factory, listed in Shenzhen B shares, all of a sudden raised to 350 million Hong Kong dollars. 774 factory set up for so many years, the first time the enterprise has such a large sum of money can be dominated by their own, it can seriously consider, can not find a new main business.


In 2001, the Beijing tube factory has two major events:


First, is renamed the BOE Technology Group


Second, is eyeing the LCD industry

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At that time, the LCD industry once again into the trough of the LCD cycle, Hyundai Hyundai is eager to get cash at this time, so intend to sell its LCD production line. So, what about the acquisition of BOE? Please note that there is a big problem here to clarify: in the past, Chinese companies are familiar with the joint venture, and now the face of the acquisition of BOE, there is a big difference.


If it is a joint venture to introduce production lines, the production line packaged shipped to the country, the production will be responsible for foreign companies, they have the responsibility to ensure the normal operation of the production line to ensure that the final product qualified. Since it is the other party responsible, the other side of course there is reason to control the entire production process, you come in to want to "dry school" in the actual production of secondary school technology, if the impact of production,


In this way, the entire production management, equipment parts procurement, supplier management, technology research and other follow-up research and other aspects, by the joint venture to bear. The Chinese can get, but the production of products after the sale of profit. You can not go deep into the production process, it is impossible to develop and accumulate plant technology opportunities.


While the BOE facing the overall acquisition model, is quite different.


After the acquisition of foreign advanced technology enterprises, the Chinese side has become the owner of the enterprise, with complete independence and production arrangements, the Chinese side rather than the ultimate negative responsibility for the enterprise. In this case, the Chinese side of course to deep into all aspects of production, and then need foreign experts to teach technology, it is not a problem. This is our business, we have the final say.


Like now, China engaged in large domestic aircraft project. Some of the key components of the large aircraft are foreign production, and thus ridiculed the large domestic aircraft is not real. This is a typical misunderstanding.


In fact, the parts are not important to the production, it is important for those who are responsible for the overall product. Since it is linked to the Chinese brand of large aircraft, parts can be purchased from abroad, but since they have to bear the ultimate responsibility, the Chinese enterprises must have all aspects of aircraft manufacturing are fully grasp and control. Therefore, China can build a large aircraft that the significance of this matter is very important. This is tantamount to creating a platform for learning and developing large aircraft technology. With this platform, the progress of the back will be much faster.


LCD production is the same reason. In the process of large-scale production, based on the local and actual production of factory technology, than the general laboratory technology is more important. In fact, most of the liquid crystal laboratory technology can be obtained in public publications, and the difficulty lies in a large number of factory technology, this factory technology can not even teach, can only rely on their own enterprises in the "dry school."


If still in accordance with the kind of joint production of Panasonic CPT model, how many years of production, Chinese enterprises can not grasp the LCD production technology. And now if the opportunity to take the whole acquisition of foreign enterprises, and then take over thoroughly thoroughly understand the production process, and in the process of independent construction, little by little accumulation of industrial technology, Chinese enterprises to really grasp the LCD industry.


 

In fact, when the South Korean people catch up with the Japanese LCD business, but also to do so.


From the start of the acquisition, and then desperately thoroughly understand, master all aspects of production technology.


 

In the acquisition of modern LCD liquid crystal enterprises in Shanghai, Shanghai SVA Group (SVA) is also preparing LCD production line, but it chose a relatively easy way to start a joint venture. The end of 2003, on the radio and NEC joint venture, put into production in Shanghai 5 generation LCD production line. On the surface, the strength of the radio and television was even stronger than the BOE.


But because it is a joint venture production, radio and television has not been able to grasp the LCD production technology and supply chain, and therefore not determined to continue to invest in expansion of production. In 2006, the LCD cycle trough arrived, BOE and SVA are caught in a huge loss, but BOE because of mastering independent technology and supply chain, dare to seize the opportunity to counter the market investment and expand production. After the cycle, in 2007, BOE because of the rapid increase in production and profitability 7, on the radio and television continued to lose 300 million, and finally in 2009 sadly transferred. Well, the BOE is the way to go.


Later, the competition of the LCD industry, mainly investment strategy of competition, dare to invest in the LCD cycle is the key to large-scale investment.


At present, BOE has 11 LCD production lines in the country, with a total investment of more than 300 billion yuan, is the largest investment in the history of Chinese enterprises in the history of the largest investment so far. BOE's shipments currently account for 22.3% of the world, more than South Korea's LG, becoming the world's first.


Well, the question is coming. Even successful listing and financing, BOE, but get billions of dollars of funds, from the hundreds of billions of investment is still far worse, where is the money from? Where did the BOE get such a big money?


In general, the enterprise development needs investment, in addition to its own funds, the source is nothing more than a bank loan or stock market two roads. However, BOE gradually realized that these two roads, are not suitable for LCD production of this "offensive" investment strategy.


January 2003, BOE officially announced that with the acquisition of 380 million US dollars a modern Korean LCD production line. At the same time, they also want to build a 5-generation LCD production line in Beijing. The size of the funds required for these two projects is great.


Originally prepared to finance through the Hong Kong stock market, but because of some misfortune, did not make. BOE only to turn to the bank loans, loans amounted to 750 million US dollars, by the State Development Bank (CDB) led the nine banks formed a group, provided the loan.


But the acquisition did not take long, from the second half of 2004, the LCD cycle began to get angry, panel prices plummeted. By 2005, BOE had a huge loss of 1.6 billion. Banks immediately face, in addition to the National Bank, the banks have the BOE credit rating down, as follow-up loans are not the door are not.


In 2006, BOE continued to lose 1.7 billion. By April 2007, the bank loan was due. BOE is simply unable to repay, had to call up the banks struggling pleading, hoping to postpone the loan, the Beijing municipal government also help say good words. After several efforts, the bank finally agreed to postpone the loan.


However, a good day soon came.


To the second half of 2007, LCD panel prices finally out of the trough, all the way up. 5 on behalf of the line of sales situation is excellent, Jingdong was considered slow to recover.


Later, the size of the BOE gradually bigger, but after a few years before the toss, let it realize that a problem - listing financing and general bank loans, these two financing methods are not suited to the LCD industry, "the more losses, the more investment "Offensive investment strategy. Stock markets or banks are very short-term financial indicators, they may be able to icing on the cake, but it is difficult to timely.


After several groping, BOE finally built in Chengdu 4.5 generation production line, found a suitable way of financing. This new way of financing is to the local government private placement of shares in order to obtain sufficient capital. Chengdu 4.5 generation production line project, the Chengdu municipal government not only provides the land, tax support, also provides 1.8 billion in capital support. At the same time, CDB as a strategic investor, provided a $ 1.6 billion 10-year loan.


Some people may say, said for a long time, that is, from the government side of the money, ah, what is fresh!


And slow, do not confuse government shares and government subsidies.


Government subsidies are often inefficient and wasteful. Because the government has provided subsidies, often too lazy to track how the business in the end, anyway, subsidies can not be recovered. Government subsidies on the internal assessment requirements are: on time to issue, do not be corrupt, and finally let the enterprise afterwards to come up with some reports, fill in some figures reported.


In addition, the government subsidies are often sesame salt, all enterprises are a bit, we all interests are stained, and not to a number of enterprises subsidy, the government is not so much money Well.


In addition, there is a more important point. Like LCD such a large industry, we all know that must be capital-intensive, technology-intensive, but there is a dense often overlooked - is policy-intensive.


What does that mean? Give an example


BOE in Inner Mongolia Erdos built a 5.5 generation production line. Inner Mongolia was no shortage of electricity, but the power grid level is poor, there will be a short power outage. The local government that this is not a big thing, not a long blackout, stop soon to recover, why fuss.


But the government did not know, LCD production line, carrying the glass plate is by electromagnetic force, power failure 0.1 seconds, the glass plate will fall to fall and crush. The glass plate is a pity, but more importantly, clean the glass at all for at least two hours. That section of the production line investment is a total of 22 billion, not the price of glass, the annual interest rate of 5% to count, 24 hours production downtime 2 hours, we must pay 25,000 in vain interest.


In addition to power stability, the recruitment of workers, land, roads, water, sewage, logistics, green and other aspects, the construction of LCD production line of such a large project, the need for local government policy support, so called policy-intensive industries. Moreover, the local government is not only attitude support can, but also must "wait" this industry.


Therefore, in order to allow local governments to provide such policy support, take the initiative to improve all aspects of the practice, the only way is to let the government shares, share the profits of LCD production, of course, share the risk. This process, in fact, the government, the common process of business growth.


This is the BOE to explore out, suitable for the characteristics of the LCD industry and China's new financing of the road.

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We are actually trying to explain some of the characteristics of the modern electronics industry, and some of our past understanding of the industry is not the same place.


Simply make a review it, probably so five cognitive:


Modern electronics industry, the change is particularly rapid. So, do not expect one step to achieve the intended goal, you can start from small, while making money while investing in research and development, and gradually raise the industry. This is the lesson of the Americans.


The importance of modern electronics industry, the importance of operations, is overriding the importance of manufacturing; the importance of capital strategies is overriding the importance of technology. This is the first lesson of the Japanese.


Modern electronics industry, the division of labor is no longer vertical integration, but the level of integration, is the global industrial chain division of labor. Always think of their own all the work done, all the money earned, and ultimately will lose competitiveness. This is the second lesson of the Japanese.


Modern electronics, laboratory technology and factory technology are equally important. Factory technology refers to the kind of hard work in the accumulation of the details of technology, it often determines the size of your industry expansion capacity. This is the third lesson of the Japanese.


Modern electronics industry, the conditions required are particularly complex. So, it is not just business things, it is the government thing, the whole society thing. Only a country's overall ability to keep up with the electronics industry to grow. This is our Chinese enterprises to explore out of the experience.


I hope more than a few, for you to understand the laws of the modern electronics industry helpful.


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