Dec 14, 2021 06:00:00

How did the Chinese company 'BOE', which is attracting attention as a supplier of Apple's organic EL displays, grow?

Apple has

iPhone 12 and theiPhone 13 of organic EL (OLED) as a display of the supplier, the Chinese companies BOE Technology Group has adopted, BOE is 2021 to match the iPhone 12 and the iPhone 13 during the year of 15 million sheets OLED display Is supposed to supply. Asianometry, the media on finance, industry and culture in Asia, explains how BOE, which used to be a deficit vacuum tube factory, has grown into a large company with the world's largest share in the LCD display manufacturing field. ..

BOE Technology: Apple's Next OLED Supplier?-YouTube


Apple's Newest OLED Supplier-by Jon Y
https://asianometry.substack.com/p/boe-technology-apples-next-oled-supplier

Based in Beijing, BOE is the most advanced display manufacturer in China, boasting the world's No. 1 share in the LCD manufacturing field and the world's No. 2 share in OLED displays. It also supplies OLED displays for iPhone 12 and iPhone 13, and it is reported that there is a possibility that LG displays in South Korea will be overtaken in the number of OLED displays supplied for Apple in 2023.

Such BOE was originally a state-owned vacuum tube factory in China called 'Beijing Electronic Tube Factory'. Following the privatization of the Beijing Electronic Factory as part of the economic reforms of Beijing, the founder, Mr. Wang Dong, raised RMB6.5 million (about 120 million yen at the rate at that time) in 1993. And privatized. At the time of writing the article, various local governments such as Beijing own the shares of BOE from the remnants of the time when it was a state-owned factory, and 9 of the top 10 shareholders are state-owned enterprises.

BOE, which was technically behind in the display industry, plans to transfer technology from foreign countries to catch up with advanced companies and establish a joint venture with foreign display companies by providing cheap labor. I took it. As a result,

we succeeded in establishing a joint venture with Asahi Glass (currently AGC) in Japan and Admiral Overseas Corporation (AOC) in Taiwan, and succeeded in gaining a foothold in the market.

In addition, BOE will invest in

TFT liquid crystal (thin film transistor liquid crystal) technology, which has superior contrast ratio and refresh rate to conventional displays, in order to differentiate it from other manufacturers. At the time of writing the article, TFT LCD, which is widely used in mobile phones, PCs, and handheld game consoles, was originally a technology developed in the United States, but it was Japanese and Korean companies that succeeded in commercializing it. It is said that these companies have solidified their superiority in the industry by acquiring innovative and excellent patents.

It was difficult for new companies to enter the market because TFT LCDs have low gross profits and require a large amount of capital to increase supply capacity.

However, in 2001, the Korean semiconductor manufacturer

Hyundai Electronics Industry (currently SK Hynix) fell into a financial crisis in the wake of the Asian financial crisis. Under political pressure, the South Korean government put the company, which changed its name to Hynix Semiconductor, under the control of the creditors bank group, separated it from the Hyundai Group, and rebuilt its business. Hynix Semiconductor has begun selling its business to repay its debt, including the display business.

First, in 2001, Hynix semiconductors were

sold to BOE for STN LCDs , which were not strategically important, and for the OLED business, which was at the prototype stage at the time. And a year later, the TFT LCD business was sold for $ 350 million (about 43 billion yen at the rate at that time), in which comprehensive intellectual property and patents related to 4th and 5th generation TFT LCDs were sold. Was included.

The acquisition, which was also criticized at the time, quickly made the BOE the 13th largest company in China. In an interview in 2003, CEO Wang said, 'The only way to get the core technology that was in the hands of this Korean and Japanese company was the acquisition.'

BOE, which absorbed the display technology and capabilities of Hynix Semiconductor, built a state-of-the-art LCD factory with the financial support of the Beijing Municipal Government, as well as to build a distribution network and capabilities in the international market. It strengthened its power by acquiring a 26% stake in

TPV Technology , a major monitor manufacturer in Hong Kong. As a result, in 2006, it became the ninth largest TFT LCD manufacturer in the world.

In addition, as Chinese companies such as Huawei and Xiaomi gained global influence, the BOE, which is closely related as a core supplier, also grew.

BOE's core business is display technology, which owns a factory that includes a state-of-the-art 10.5th generation TFT LCD production line and the only 6th generation flexible

AMOLED display factory in China. In addition, it is investing a large amount of research and development to continuously improve the product, and has obtained more than 70,000 patents so far, such as applying for 9655 patents in 2019. That.

As a unique version of Moore 's Law, which discusses long-term trends in semiconductors, founder Wang advocated the law that 'if the price of the display does not change, the product performance needs to double every 36 months.' We pushed ahead with technological development. As a result, we are the third-largest patented company in the industry in terms of OLED technology, after Samsung Display and LG Display.

In the flexible AMOLED display that is also used in Huawei's folding smartphones, we hold the second patent after Samsung display. In recent years, we have also been investing in the IoT and medical fields.

However, the low gross profit in the liquid crystal display field and the large loss due to aggressive investment have caused the BOE to record a chronic operating loss for the fifth consecutive year from 2008 to 2012.

In 2019, the core display sector lost 237 million dollars (about 27 billion yen), and the gross profit is only 13%, which is lower than the average fast food restaurant. , BOE relies heavily on government subsidies to become the world's largest LCD display maker. In 2019, we received subsidies of 400 million dollars (about 44 billion yen) from various local governments, and from 2010 to 2019, we received a total of more than 1.7 billion dollars (about 190 billion yen). Subsidies account for 50% of net income during this period.

At the time of writing, BOE has made a significant investment in OLED displays, which are expected to dominate the display market in the future. Asianometry points out that passing Apple's quality tests and becoming an OLED display supplier would be beneficial in gaining an advantage in OLED displays.