China's touch panel has surpassed Taiwan?

Mainland China, which has been driven by the global shift of touch panel production capacity from Taiwan to the mainland and huge domestic demand, has become the largest consumer and manufacturing base for touch panels worldwide. Taiwan was once the world's major touch screen production area, its share is gradually falling, while mainland touch screen companies grasp the market opportunities, rapid expansion momentum, the global share continues to grow. In 2013, shipments of touch panels for mobile phones in China's mainland will exceed 500 million units, accounting for 40.5% of the global total for mobile touch panel shipments, accounting for approximately 85.4% of the mainland's total touch panel shipments.

As Taiwan's big manufacturers have a slight technological advantage, mainland touch panel companies have overtaken Taiwan in all respects, and the global touch panel industry landscape is gradually being rewritten.

Advantages change

The touch panel was quickly popularized in electronic products such as mobile phones with the advent of the iPhone. The Taiwanese TPK companies such as Yu Hong and Shenghua, which were originally supplied by Apple, quickly developed into global leading manufacturers. However, since 2013, the touch panel industry in Taiwan has undergone severe tests. In addition to the rise of Chinese mainland manufacturers, the performance of many touch panel makers in Taiwan has turned out to be unsatisfactory due to Apple product adjustments and NB touch panel demand. Quite disappointing.

Take the two major leading touch panel makers TPK Chunhong and O Feiguang as examples. Both are presenting differentiated development paths. TPK Yuhong adheres to the OGS business and is intensively working toward the adjustment of production capacity. After completing the vertical integration of the touchscreen industry chain, Ophelia has become a platform-based technology company and has moved forward through the horizontal integration towards China's leading science and technology enterprises.

In the face of O Feiguang's rush to catch up, TPK Xiaohong appeared to be innovated and stopped in place. In the prime time, TPK Yuhong won many users' favors with Apple. However, starting from iPhone 5, Apple switched to the Japanese manufacturer's in-cell structure. TPK Xiaohong could not do this technology, resulting in a large area of ​​TPK Haohong production line. Idle, the utilization rate of the production is reduced greatly, have to adjust to the production line and factory area, the number of layoffs exceeds 8700 people, the executive also reduces wages comprehensively.

In terms of next-generation technology development and forward-looking layout, Ophelia's response speed is getting faster and faster. Take the technology of MetalMesh, Ophelia has formed a complete patent group of 429 products, and take the lead in volume production. At this time, TPK Yu Hongcai began targeting of Metal Mesh, through cooperation with the Japanese photo plan, plans to launch low-cost nano silver touch panel. From this point of view, TPK Yuhong has technically become a follower from a leader.

Dissatisfied with land and water, miss the opportunity of domestic demand

China is already the world’s largest consumer electronics manufacturer. With the popularity of smart machines, China's manufacturing has begun to move toward the stage. Especially the rise of independent brands represented by Xiaomi and China Kuailian has brought tremendous opportunities to the touch panel industry. According to the latest data from the British market research company Canalys, the global smartphone shipments in the first quarter of 2014 were 279.4 million units, accounting for as high as 35% in China, ranking first in the world. Half of the top ten vendors are Chinese manufacturers. They are ranked third in Huawei, fourth in Lenovo, sixth in millet, eighth in Yulong Communication (mobile phone brand is Cool), and ranked first. Nine of ZTE.

TPK Han Hong, Sheng Hua, Mu Dong and other Taiwanese touch makers have entered the mainland in the west and sought to break through. Behind the frenzied expansion, the sinuous crisis has slowly been revealed. Even with the benefits of Taiwanese businesses such as government subsidies and low-cost land, Taiwan’s touch brands have already collectively lost the mainland market. Shipment orders for shipments to mainland manufacturers are irreversible and fall into the operating gaps of factories, production cuts and layoffs.

The reason is that the lack of localization is an important reason for this situation, and the arrogance of Taiwan's touch manufacturers is also reflected in this - they believe that they possess technical advantages and lack innovation. The downstream mobile internet terminal brands have responded to more and more fierce market competition and have imposed higher and higher requirements on the R&D capability, response speed and scale production capacity of upstream component suppliers.

According to industry sources, Taiwanese companies have enjoyed various support from the mainland government for taxation, funds, and land for many years. They have even enjoyed political advantages like the one Apple enjoyed in the United States. They are like flowers in a greenhouse. Loss of the vitality of innovation, and mainland companies such as Ophelia, Leslie, and Truly Optoelectronics, through their own intrinsic motives, carry out management innovations, business model innovations, and technological innovations to create value for their customers and become powerful.

Smear opponents and make competition worse

The dramatic changes in the global touch panel market are the result of technological progress and market innovation. However, the touch panel industry is showing a taste of competition.

A few days ago, some Taiwanese media dished out Ophelia’s rumor of seeking help from TPK Yuhong. In this regard, Ophelia Dong secret secretary Hu Jinghua reprimanded, the company does not have the issue of back end fitting yield, and seeking cooperation with Yu Hong is even more nonsense. Yu Hong said that it has not heard so far.

Industry insiders commented that discrediting Ophelia was the real purpose of playing sad cards and squeezing Ophelia.

Is Ophelia's rapid rise some kind of "lucky"? Some say that O Feiguang's "miracle" is nothing more than a low price war. However, according to the author's observation that Ophelia has already had a more comprehensive core competitiveness, a capability to take out customized products according to customer needs in a short period of time. This is also one of the reasons why Ophelia in the short span of several years, smart phone touch screen shipments can exceed Taiwanese companies, ranking first in the world.

In terms of gross profit margin, the gross profit margin of TPK Haohong fell to 13.2% in 2013. However, Ophelia's gross margin remained at 16.34%. The “high price” and “low-paid” TPK Xiaohong’s gross profit margin is even lower. The reason is its lack of competitiveness.

In the context of globalization, touch-control companies in Taiwan should proceed from their own interests and use the complementary value of cross-strait and even global resources to create a more core-competitive enterprise form.