On March 20, under the swept of the new crown epidemic, the smartphone industry and market have been significantly impacted. Huawei mobile phones with high inventory have started to cut orders for the second time, directly affecting most core suppliers, including many domestic Panel suppliers. business, which has the greatest impact on BOE.

While digesting mobile phone inventory, Huawei also comprehensively reduced related orders in the 4G mobile phone supply chain. Huawei’s cut orders will not only affect its shipments, but also directly affect the performance of panel suppliers such as BOE. After all, among Huawei’s mobile phone panel suppliers, BOE has either a sole supplier or a single supplier. In addition, the postponement of sports events such as the European Cup and the America’s Cup will largely suppress TV sales, thereby affecting panel shipments. Industry insiders believe that the price of TV panels may fall again. For BOE, whose panel business accounts for nearly 90%, this is undoubtedly “worse”.

Source: icloudnews

Huawei’s mobile phone market share has continued to increase in the world. Currently, Huawei’s mobile phone sales ranks second in the world, second only to Samsung. However, this year, under the dual influence of the new crown epidemic and the embargo, the global sales of Huawei’s mobile phones have declined to a certain extent, resulting in high smartphone inventories. According to the latest report, Huawei’s inventory is relatively high, reaching 30 million units in December last year, and now there are at least 20 million units. In order to digest inventory and open the way for 5G smartphones, Huawei has cut orders from its supply chain.

An industry insider said, “Huawei’s orders a year ago were mainly 4G mobile phones, and orders were adjusted in March this year. In order to clear the inventory of 4G mobile phones, Huawei’s new orders for 4G models in the first half of this year were very few, and the impact was mainly in China. For mobile phones with terminal specifications, it is expected that the screen orders of the supply chain will be greatly lowered.” Affected by the cut-off of orders by terminal mobile phone manufacturers, the shipments of mobile phone panels also fell sharply. Wei Shunli, a senior market strategy researcher at BOE Technology Group, said, “Affected by the epidemic, the shipment of smartphone panels in the first quarter of this year was revised down from 414 Mil pcs to 336 Mil pcs, and the downward revision was 78 Mil pcs. Specifically, , smartphone shipments fell about 7% year-on-year in January, fell 9% year-on-year in February, and expanded to 18% in March.”

The panel suppliers of Huawei’s mid-range smartphones are mainly BOE, Shenzhen Tianma, CSOT, Samsung and other manufacturers. Among them, BOE and Tianma are the two most suppliers, and Huawei’s mobile phone orders will be reduced to BOE, Shenzhen Tianma and other panel manufacturers. have some impact on performance. In addition to cutting orders, Huawei P40 Pro may abandon BOE, which was previously preferred, and switch to panel products from Samsung and LG.

According to the revelations: “Industry news, Samsung and LG supply four-curved OLED screens to Huawei P40 Pro. BOE is crying again, once the first supply has become a second or third supply.” If such news is true, then BOE may want to Once again reduced to Huawei’s spare tire. In addition, BOE has some open projects that may be overtaken by other manufacturers.

According to reports, Visionox began to provide product samples to Huawei in February this year, and began mass supply in March, supplying Honor and Huawei nova series mobile phone screens. It is expected that Visionox will supply Huawei in 2020. 5 million to 1000 Thousands of mobile phone screens.

Industry insiders believe that the fact that BOE was kicked out of the P40 Pro supply list by Huawei may be related to technology. In 2018, Huawei launched the BOE flexible screen on the flagship P20 pro for the first time, which started the journey of domestic screen manufacturers in the first-line flagship, but the next Huawei Mate20 Pro was often complained about the green screen phenomenon, and its reputation declined.

Although Huawei still insists on using BOE’s screen in the follow-up, users still prefer Samsung and other manufacturers with better reputation on the OLED flexible screen.

According to the production capacity target set by BOE last year, production capacity in the first half of the year has been cut in half, and it may recover in the second half. BOE TV panel production capacity declined, and its shipment volume and shipment area were also pulled down from the “throne” by CSOT. According to CINNO Research’s monthly LCD TV LCD TV panel shipment report, in terms of shipments, panel manufacturers in mainland China accounted for 59.4% of total shipments in February 2020, nearly 60%.

TCL CSOT became the world’s largest LCD TV panel supplier for the first time with a market share of 18.8%, and BOE ranked second with a market share of 17.4%. In terms of shipment area, CSOT also won the first place with a share of 19.6%, BOE BOE, Samsung Display SDC, CLP CEC (including Panda, Rainbow), LG Display LGD with 18.7%, 12.6%, 10.8% and 10.2% ranked second to fifth. The European Cup and America’s Cup have been announced to be postponed to next year, and the Olympic Games may also be postponed. The postponement or cancellation of large-scale sports events will affect the sales of TV sets, thereby affecting the decline in panel market demand and causing panel prices to fall again.

According to data, the postponement of large-scale sports events is expected to lead to a sharp decline in overall purchase demand, which may affect TV sales of 29-31 million units, accounting for 10%-12% of the demand for large-size panels. Affected by the shortage of materials and the rhythm of resumption of work, the production side of the whole machine has not consumed as much panel inventory as in previous years; in terms of market demand, domestic Display terminal retail sales, including mobile phones and TVs, have suffered a huge impact.

The harsh reality and pessimistic atmosphere will make the whole machine manufacturers significantly reduce the purchase of panels in the second quarter. The panel rally is expected to come to a sudden stop in the second quarter, and it is very likely that the market will turn down. Further, we need to observe the adjustment and changes of the panel factory’s investment in glass.”

“The epidemic has led to greater uncertainty in the development of the global economy, which has a considerable impact on the terminal demand of the whole machine; the postponement of the event also increases the risk of a weak sales season in the second and third quarters; therefore, this year, it is expected that TV The panel size may decline significantly. Prices are also at risk of falling again in the second quarter.”

Another drop in panel prices will have an adverse impact on the operation of panel companies. For example, BOE, whose panel business accounts for nearly 90%, has seen its net profit continue to decline despite its revenue growth in recent years. From the current point of view, BOE’s net profit may continue to decline this year when Huawei’s mobile phone orders are cut and the panel price falls again.

BOE has been relying on huge government subsidies to “dress up” its performance over the years. For example, in 2018, BOE’s net profit attributable to the parent company was 3.435 billion yuan, of which government subsidies were 2.074 billion yuan, accounting for 60.38% of its net profit. The key for investors to look at a company is to look at the pricing power of the product. Generally speaking, the product pricing power is not high, and it is difficult to achieve profitability. Only companies that need to frequently rely on government subsidies to survive. However, government subsidies can support the development of an industry, but Unable to subsidize the bull stocks, BOE’s long-term “sideways” stock price performance in the past ten years is a clear case.