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

From this, it is not difficult to see that domestic chips have begun to catch up in the field of advanced foundry after experiencing the impact of the US revised rules. Independence and autonomy in chip manufacturing technology will become the “main theme” of domestic chips in the future.

Lithography machines and graphene wafers are here! The continuous development of domestic chip technology has also brought more and more good news. In the field of lithography machines, the 28nm lithography machine designed by Shanghai Microelectronics is expected to be delivered within the next two years. In October last year, the Shanghai Research Institute of the Chinese Academy of Sciences also announced an 8-inch graphene wafer, which has attracted the attention of many people in the industry. As a key material required for third-generation semiconductors, Graphene wafers are likely to bring “curve overtaking” opportunities for domestic chips. At the same time, due to the rapid development of domestic lithography machines, the president of ASML has also stated many times that he hopes to sell more lithography machine products to Chinese companies. Then, Will the time for domestic high-end chips be far behind? TCL founder Li Dongsheng recently stated that Bill Gates did not make a mistake before!

TCL Li Dongsheng expressed his opinion Mr. Li Dongsheng said in an interview “It will take at least 5 years to solve high-end chips.” For any country, It is very difficult to solve the production problem of high-end chips in about 5 years. . It is not unreasonable for Li Dongsheng to make such an estimate. First of all, domestic chips are not without accumulation in the field of advanced foundry technology. For example, SMIC Liang Mengsong once officially announced that the company’s eight most difficult tasks for 5nm chips have also begun. As long as the EUV lithography machine arrives, SMIC can carry out actual tests on 5nm chips, greatly reducing the time required to develop the process. Secondly, in some high-end chip manufacturing equipment, domestic equipment still exists. For example, the etching machine designed and produced by China Micro Semiconductor has successfully entered TSMC’s high-end process production line. . With these high-end equipment, the possibility of domestically-made high-end chips will continue to increase. Finally, key universities such as the Chinese Academy of Sciences and Tsinghua University have begun to deploy integrated circuits. Technical research on advanced equipment such as lithography machines is also proceeding in an orderly manner. In the field of research and development of high-end chip technology, the outdated concept of “buying is worse than making” has been overturned, and the development of the domestic chip manufacturing industry has already had a brand new situation.

Bill Gates was right! Microsoft founder Bill Gates once said that “limiting chip companies’ supply to China will cause some Americans to lose their high-paid father-in-law, and China will gradually become self-sufficient in this process.”

Today, the domestic layout under mature craftsmanship just confirms Bill Gates’ prediction. Starting from chips with mature technology, domestic chips will gradually complete localized production. In the field of high-end chip manufacturing, we have also never been absent. The good news of lithography machines and graphene chips has confirmed the feasibility of domestic high-end chips.

Under the layout of enterprises and key universities, the problems encountered in chip manufacturing will be gradually solved. However, we cannot be too conceited, as Li Dongsheng said, In the manufacturing of high-end chips, we It will take at least 5 years.