Guests of this issue: Li Dongsheng, founder and chairman of TCL
Produced | Sohu Think Tank
Edit | Liu Shijiao
Chief Editor | Wang Demin
Since the third quarter of 2020, the panel industry has ushered in the strongest price increase cycle in history. From the end of May 2020 to April 2021, the growth rates of 32/43/55/65-inch TV panels were 141%/91%/100%/56% respectively. At the same time, the problem of upstream chip shortages continues, and to a certain extent, the increase in panel growth has also intensified.
According to a recent study by Goldman Sachs, there are as many as 169 industries in the world that are affected to some extent by the shortage of chips, ranging from automobiles, steel products, concrete production to air-conditioning manufacturing, and even soap production.
How do you view the trend of the panel industry this year? How to solve the problem of chip shortage? How should companies travel through the cyclical fluctuations of the industry? Sohu think tank “To Know 100 People” talked with TCL founder and chairman Li Dongsheng.
Li Dongsheng said that this round of panel price increases was mainly caused by the strong growth in demand for display products since the epidemic and the cyclical fluctuations in the industry. The current shortage of supply and demand is mainly concentrated on large-size products, and the supply of small and medium-sized products is relatively sufficient. It is expected that a basic balance of supply and demand can be achieved within this year. Li Dongsheng pointed out that in the past ten years, the entire display industry has experienced two cyclical fluctuations, and now it is the third time. For enterprises, it is necessary to have the ability to operate and manage through industry cycle fluctuations. In the management through this cycle, one aspect of the company must have strategic control capabilities, and the other must rely on improving its own core capabilities, especially product technical capabilities. “The development of the semiconductor display industry is not just driven by market demand, but also driven by innovation. So for TCL, we are constantly expanding our production capacity, but every increase in production capacity is not simple. The expansion of scale must make progress in the iterative upgrade of products.” Li Dongsheng said. Talking about the shortage of chips, Li Dongsheng believes that there are two main reasons. One is the rapid growth of the demand side, especially the rapid development of the electric vehicle market, and the other is the insufficient new investment on the supply side. Although the investment has increased rapidly in the past two years , But it still takes time to form an effective production capacity. Li Dongsheng predicts that the current chip shortage will continue for 9 to 12 months. In Li Dongsheng’s view, the development of the chip industry is not just about having funds, but also related to technical capabilities. The lack of domestic high-end chip manufacturing capabilities and the lack of core equipment are currently the bottleneck restricting the development of the chip industry. Facing the technological blockade, China is increasing its investment in equipment, technology, and materials to accelerate the development of China’s chip integrated circuit manufacturing industry. “But everyone should not have too optimistic expectations about this process. I believe it will take at least 3 to 5 years.” Finally, Li Dongsheng pointed out, In the long run, the science and technology industry must have a global division of labor. It is not the most competitive method for a country to fully complete its industrial chain behind closed doors. In the future, we must be more open and win-win cooperation to better promote the healthy development of the industry. TCL founder and chairman Li Dongsheng The following is a compilation of interviews: Sohu Finance: You once said that globalization is a sustainable way for companies to cope with changes in the global economic landscape and the new challenges of trade protectionism. What is the current progress of TCL’s global layout? Can you share a few successful experiences of TCL in expanding the international market? Li Dongsheng: TCL has initially formed a complete global industrial layout. We have established eight industrial bases in major overseas countries and regions. In the near future, our ninth industrial base in India will also be built. We have established industrial supply chains around the world so that our industrial supply chains can penetrate into major countries and regional markets. One is that tariffs and trade protectionism can be avoided, and this new business model can also be recognized and recognized by the host country. stand by. We do not simply sell products to relevant countries and regions, but set up our industrial parks locally and establish corresponding supply chains. In this way, while developing our own global business, we can also contribute to the local social and economic development. So this kind of business model has been developing smoothly in all countries and regions so far. Sohu Finance: Starting from the third quarter of 2020, the panel industry has ushered in the strongest price increase cycle in history. How do you see the trend of the panel industry this year? Li Dongsheng: China is now the world’s leading producer of semiconductor display products. Taking the LCD industry as an example, we have accounted for more than half of the global production capacity. In other emerging display technology areas, we are also catching up quickly. This round of panel price increases is affected by the cyclical effects of the industry on the one hand, and during the epidemic, the demand for display products has grown very strongly. The current cycle of relatively tight supply may continue for a while, but in the end it will tend to balance supply and demand. The current supply and demand shortage of semiconductor display products is mainly concentrated in large-size products, and the supply of small and medium-sized products is still sufficient. China’s semiconductor display production capacity has been relatively large in investment in the past few years, so to alleviate this gap in supply and demand, it should be possible to achieve a basic balance between supply and demand within this year. Sohu Finance: How do you think companies should travel through the cyclical fluctuations of the industry? Li Dongsheng: For enterprises, we need to have a long-term business plan, and have the ability to operate and manage through industry cycle fluctuations. In the past ten years, the entire display industry has experienced two cyclical fluctuations, and now it is the third time. In the management through this cycle, one aspect of the company must have strategic control capabilities, and the other must rely on improving its own core capabilities, especially product technical capabilities. The development of the semiconductor display industry is not just driven by a force of market demand, another very important driving force comes from Driven by innovation . The development of some new display technologies and display products will create a new market demand. So for TCL, we are constantly expanding our production capacity, but Every increase in production capacity is not a simple scale expansion, it must be progress in the iterative upgrade of products. The two projects we started building in Guangzhou recently are a new attempt. We want to make a breakthrough in new display technology and open up a new market demand. Sohu Finance: How do you view the problem of chip shortage and how much impact will it have on TCL? Li Dongsheng: Chip supply has indeed been in short supply since last year, I think It is mainly caused by the rapid growth on the demand side and the insufficient growth on the supply side. On the demand side, especially with the development of electric vehicles, the demand for related chips is growing very fast. On the supply side, due to insufficient investment in the entire chip industry in the past few years, although domestic investment has increased relatively rapidly in the past two years, it will take some time to form effective production capacity. I think, The current chip shortage may continue for 9 to 12 months, but in the end it will be faster to balance. . The chip industry is actually divided into two parts, one is chip design, and the other is chip manufacturing. TCL will focus on chip design. At this stage, we will not consider investing in large-scale wafer manufacturing plants for the time being. As a terminal product manufacturer, we have an advantage in chip design. In fact, in the development of many smart technologies, it will integrate this technology into the chip, so if we have the capability of this chip, we will be even more powerful in the development of related smart product technologies. Sohu Finance: What do you think is the biggest dilemma in the development of the chip industry? Li Dongsheng: The bottleneck in the development of the chip industry, I think one is the accumulation of capabilities, and the other is the lack of core equipment. At present, the manufacturing process capability, technology and team capability of domestic chips are still far behind compared with Taiwan, South Korea, the United States, and Japan. Therefore, the construction of this project is not only about funds, but also related to technical capabilities. The second is limited by equipment. At present, some core equipment for chips cannot be produced in China. Everyone may have paid attention to many reports on the Internet. For example, SMIC’s current production process is 28 nanometers. If you go forward, the equipment will not be sold to us abroad, and the domestic development of this equipment, I believe It takes a relatively long time, so the manufacturing capacity of this higher-end chip is also a constraint. However, this round of technological blockade of China will promote China’s equipment, technology, or materials, we will increase investment in this area, and will accelerate the development of China’s chip integrated circuit manufacturing industry. But this process should not be too optimistic. I believe it will be a process of at least 3 to 5 years. Therefore, in the long run, the science and technology industry must have a global division of labor. It is not the most competitive method for a country to completely complete its industrial chain behind closed doors. Some of the current practices are also forced by the situation. Therefore, in the future development, we still need to have a more open mind and a win-win mentality to better promote the healthy development of the industry
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