Recently, the long-quiet panel industry has made headlines with a monumental acquisition involving TCL Technology, led by Li Dongsheng, and South Korea's LG ElectronicsThis significant move marks a pivotal shift in the competitive landscape of the display sector.

At the end of September, TCL Technology issued a statement announcing that its subsidiary, TCL Huaxing, has acquired an 80% stake in LG Display's Chinese operations, specifically LG Display (China) Co., Ltd., and a 100% stake in LG Display (Guangzhou) Co., Ltd., for a staggering 10.8 billion yuan (approximately $1.5 billion). This acquisition not only enhances TCL's manufacturing capabilities but also secures its position in the increasingly competitive display market.

LG Display (China) operates an 8.5-generation large LCD panel factory in China, primarily producing large LCD panels for televisions and commercial displays, with a monthly production capacity designed for 180,000 large panels

Meanwhile, LG Display (Guangzhou) focuses on manufacturing LCD display modules, with a planned monthly output of 2.3 million unitsThus, in simplistic terms, TCL Technology has added significant manufacturing horsepower to its operations with this acquisition.

The LCD display industry has seen a pronounced trend of "Chinese progress and Korean retreat" over the past few yearsHistorically dominant Korean and Japanese manufacturers have gradually exited the LCD market, presenting an opening for domestic firms to gain substantial market shareTCL's acquisition of LG's assets is a strategic move that places TCL Huaxing in closer competition with another display giant, BOE Technology GroupThis consolidation of power among Chinese panel manufacturers crystallizes a "dual-hero" dynamic within the industry.

TCL did not enter the panel industry until 2009 when it partnered with the Shenzhen municipal government to establish Huaxing Optoelectronics, embarking on the establishment of the first 8.5-generation LCD production line in mainland China

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This decision was driven by an internal industry logic as TCL aimed to exert more control over its supply chainThe home appliance sector has demonstrated that while white goods (large home appliances such as refrigerators and air conditioners) have higher profit margins, black goods (such as televisions) often suffer from low margins due to their reliance on external suppliers for critical components like chips and screens.

Before the industry saw the mainstream acceptance of smart TVs, many black goods enterprises were viewed merely as assembly operations, which significantly limited their profitabilityIn contrast, white goods had quickly begun to localize the production of core componentsAs a result, the Chinese television industry once faced challenges with supply, experiencing a period of "shortage of chips and screens," which severely impacted domestic companies when Korean panel manufacturers banded together to inflate prices.

Huaxing Optoelectronics was formed against this backdrop

Over its short history, Huaxing has rapidly expanded, now boasting nine production lines that cater to various sizes and types of panelsBy integrating the recently acquired LG Guangzhou factory, Huaxing’s total panel production lines will rise to eleven, showcasing its swift growth trajectory.

According to data from Lottu Technology, as of 2023, Chinese panel manufacturers hold a commanding market share of 68.7% in the LCD television panel sector, up from 66.9% the previous year, while the share of Korean and Japanese manufacturers has dropped from 15.4% to 10.8% within the same periodThis shift illustrates China's gradual but definitive mastery over the panel industry, with Huaxing Optoelectronics emerging as the fastest-growing player.

Even as the focal point of the global display panel supply chain has shifted towards mainland China, Huaxing is not resting on its laurels

The company has contributed the largest capacity increase in the past three years, adding significantly to its operations with four new production lines that yield an additional 360,000 panels per month from 2020 to 2023. In 2023 alone, TCL Technology recorded revenue from its semiconductor display business reaching 83.655 billion yuan, a staggering increase of nearly 79% compared to 2020.

In comparison, BOE Technology Group, another major player in the panel industry, reported only an 11.43% increase in its display device business over the same three-year timeframe, while its panel sales experienced a mere 40.87% riseHuaxing's growth has been notably quicker than that of BOE, closing the gap significantlyIn 2020, Huaxing's panel shipments accounted for only 51.82% of BOE'sBy 2023, that figure had escalated to 67.05%.

Despite these impressive figures, there is an inherent volatility in the panel market due to its cyclical nature

With production capacity consolidating around industry leaders such as BOE and Huaxing, some analysts believe the cyclical fluctuations may begin to stabilizeThe sentiment in the industry is shifting from being production-driven to market-driven, especially in light of the current lukewarm demand for end-market products.

Throughout the past fifteen years, Huaxing Optoelectronics has been a significant variable within the global display industryIts success story has been fueled not only by the expansion of its own production lines but also by strategic acquisitions of Korean and Japanese assets as these firms withdrew from the marketIn 2020, TCL Technology spent around $1.08 billion to acquire a 60% stake in Suzhou Samsung LCD Technology Co., Ltd., alongside a full acquisition of Suzhou Samsung Display Co., Ltd.

Fast forward to today, TCL's repeated bold moves underscore Li Dongsheng's strategic vision

Under his leadership, TCL has not only enlarged its portfolio but has also ventured into renewable energy through the acquisition of China’s leading Silicon and photovoltaic material manufacturer, TCL ZhonghuanThis marked a significant evolution of TCL from traditional home appliances to high-tech industries.

However, with rapid expansion comes riskTCL's foray into international investments has seen mixed resultsNotably, its substantial investment in the Japanese display company JOLED resulted in a bankruptcy protection filing within three years of their partnership, culminating in factory shutdowns and substantial employee layoffsThis setback has resulted in TCL recording significant impairments on its investments in the past two years.

Despite these challenges, TCL remains fundamentally strong, holding over 19 billion yuan in cash as of mid-2023, alongside liquid financial assets totaling nearly 45 billion yuan