BOE Benefiting from LCD, First Half Net Profit Increases 10-Fold... Will Changes Come in the Second Half?

[Asia Economy Reporter Jeong Hyunjin] BOE, China’s No.1 display company, has posted a net profit exceeding 2 trillion won in the first half of the year, driven by strong panel demand and rising LCD panel prices. This is about 10 times the net profit of the same period last year. Attention is focused on whether the display market, affected by COVID-19, will face another change in the second half of the year as LCD panel prices are expected to decline.

According to industry sources and foreign media on the 15th, BOE recently announced that its net profit for the first half of this year is expected to increase by 1001?1018% year-on-year to 12.5?12.7 billion yuan (approximately 2.25 trillion won). BOE’s net profit last year was 5.04 billion yuan, which was already surpassed in the first quarter of this year, and in the second quarter, it earned about 7.2 billion yuan in net profit, achieving results exceeding the entire net profit of last year. Taiwan’s Digitimes described it as "the largest scale in the history of the display panel industry."

This strong performance by BOE is interpreted as a result of the rising LCD panel prices that continued throughout the first half of the year. Since COVID-19, demand for LCDs for devices such as TVs, laptops, and monitors has greatly increased, causing LCD panel prices to rapidly rise from May last year until recently. According to market research firm DSCC, the price of a 32-inch LCD panel rose from $32 in May last year to $88 last month. Prices for 43-inch and 65-inch panels also increased by 110.6% and 74.8%, respectively, during the same period.

BOE’s main business is LCD panels. Last year, BOE held the No.1 market share in the LCD panel market with 22.9% in large-size and 19.6% in small- and medium-size panels. The LCD panel market had dominant shares for over a decade since the mid-2000s, but Chinese display companies like BOE rapidly grew with government support and secured market dominance since 2017. As a result, BOE has fully benefited from the rise in LCD panel prices.

However, from the second half of this year, LCD panel prices are expected to decline, and the display industry is closely watching market changes. DSCC recently reported that LCD panel prices, which surged due to strong demand from COVID-19, peaked in June?July and are expected to fall afterward. For example, the 32-inch LCD panel price, which peaked at $88 last month, is expected to continue declining and drop by more than 20% to $68 by December this year.

Domestic display companies have been pushing to withdraw from the business since 2018 when Chinese companies’ low-price competition intensified, causing TV LCD panel prices to fall and profitability to worsen. However, with the recent sharp rise in LCD panel prices after COVID-19, production was extended. Samsung Display and LG Display are maintaining their plans to stop LCD panel production and are expected to finalize the suspension timing while monitoring future price trends.

This content was produced with the assistance of AI translation services.