Samsung'S Profit In The First Quarter Has Increased Slightly, And The LCD Production Line Has Been Cut Down Or Cut Meat.

[ The wind direction of electronics industry in the first quarter

Samsung Electronics quarterly forecast better than expected, from the leading Samsung to see the global electronic market, semiconductor business benefited from the epidemic demand for memory chips, but consumer demand for smart phones and other electronic products declined. The performance of the electronics industry chain in the first quarter of this year is also mainly affected by the insufficient operating rate in February. Instead, the market demand is accelerating in March, and the order has been very full in March. The impact of demand side on the industry is likely to emerge in the two quarter.

The impact of the new crown epidemic on the electronics industry can be seen from the latest quarterly performance guidelines of Samsung Electronics.

In April 7th, Samsung Electronics released its first quarter results for the first quarter of March 31, 2020. Samsung Electronics revenue in the quarter was 55 trillion won (US $44 billion 700 million), an increase of 5% over the same period last year, which is basically in line with market expectations.

In terms of operating profit, Samsung's operating profit in the quarter was 6 trillion and 400 billion won (US $5 billion 200 million), an increase of 2.7% compared to the same period last year, lower than the market average of 29.7%.

Samsung's performance guidelines reflect to some extent the impact of the new crown epidemic. As a technology giant with chips, smart phones and display panels, Samsung Electronics has been hit by the new global contagion in the past three months. In April 3rd, Samsung's chip factories found in South Korea, the United States and Brazil had employees infected with the virus. In late March, Samsung shut down retail stores and battery factories in the United States, Brazil and India as a result of the epidemic.

The epidemic continues. What is the present and future of Samsung Electronics?

Chip business "filling holes"

In the first quarter of this year, global technology companies were affected by the new crown epidemic. But in terms of overall performance, Samsung came up in the first quarter of this year.

Specific to different businesses, the performance varies. Although Samsung did not disclose the net revenue and sales performance of various departments in its preliminary performance guidelines, it can be predicted that Samsung's performance in smart phones and home appliances business in the quarter was not satisfactory.

In fact, Samsung released the new flagship smartphone Galaxy S20 series and folding screen mobile Galaxy Z Flip in February, but the mobile phone market in the first quarter of this year is relatively low. According to the report released by Counterpoint, the sales of global smart phones decreased by 14% in February compared with last year, and the global smartphone shipments declined by 18% over the same period last year.

In addition to the market downturn, Samsung itself is in the mire of the epidemic. With the outbreak of the global outbreak, Samsung has temporarily closed manufacturing plants and retail outlets in many parts of the world in the delivery period of the new mobile phone. Hwa investment securities expects Samsung Electronics's first quarter smartphone shipments to be about 62 million 200 thousand, down 13% from 71 million 500 thousand in the same period last year.

However, as the world's largest storage chip and display manufacturer, Samsung's performance in storage business this quarter may have filled the "pit" of mobile business.

With the spread of the epidemic in the world, home office has become an upsurge for a while, thus improving the market demand of server chips.

This is evident from the rising price of storage chips. According to the data of InSpectrum Tech Inc., the contract price of 32GB DRAM server module increased by about 12% in March, and the price of 128GB MLC NAND flash chip increased by about 5.6% in the first three months of 2020. TrendForce will increase the price growth of server DRAM to 20%, and predict that the price of SSD will increase by 15%.

"The surge in demand for Samsung server chips may offset the decline in other performance." An industry analyst who declined to be named said that if the new crown epidemic continues, the growth trend of storage chip demand may also face risks as the downstream demand shrinks.

"Cut meat" LCD panel

In addition to storage and mobile services, Samsung's display panel business has also attracted much attention this quarter. Following the announcement in January of this year that LG Display will close the LCD panel factory in Korea after the end of the year, in March 31st, Samsung announced that it would stop all the production of LCD panels in Korea and China by the end of this year.

It is understood that the shutting down plan involves three large size LCD panel factories in South Korea, and the 8.5 generation line of Suzhou which had not yet heard the news of the factory. In 2019, Samsung showed that over 7 generations of large LCD capacity in Korea accounted for about 12.2% of the world's total, and the proportion of 8.5 generation lines in Suzhou increased to 15.7%.

The trigger for this move remains the impact of the new crown pneumonia epidemic. Earlier, Samsung showed that despite repeated rumors of shutdowns, the exit plan remained vague. Today, the epidemic affects downstream terminal market sluggishness, upward conduction to the slump of panel demand, and then Samsung has finally made up its mind to speed up the process of closing LCD capacity and transferring OLED.

Despite the impact of the epidemic on the LCD panel, the competition for Samsung's withdrawal from the LCD panel market is mainly due to the rise of Chinese manufacturers, and LCD panel profits are further squeezed. With Samsung and LG closing the LCD production line, the global market for large-size LCD panels will shift from competition between China and South Korea to China's dominance.

Focusing on Samsung's demonstration of shutting down related production lines, Kevin Chen, senior analyst at IDC global hardware integration, said in an interview with the twenty-first Century economic report reporter that the industrial concentration of global TFT-LCD display panels will be more concentrated. "The competition pattern of big and everlasting industries will be clearer. In 2020, the capacity of TFT-LCD display panels in mainland China's panel plant will be as high as 57%."

    In view of Samsung's closure of L7-1 and L8-1 production lines in 2016 and last year, it sold equipment to manufacturers wishing to enter the LCD industry quickly. In twenty-first Century, the economic report reporter learned that the Samsung closed the production capacity of China and South Korea LCD panels, and did not rule out the possibility of selling the production lines, while China's panel makers giant BOE, TCL's Huaxing photoelectricity and other LCD enterprises will become " Potential providers.

In fact, before that, the relationship between Huaxing photoelectric and Samsung show has been inextricably linked. According to the company's data, as one of Samsung's Holding Company, two other shareholders of Suzhou Samsung Electronics liquid crystal display technology Co., Ltd. are TCL Huaxing Photoelectric Technology Co., Ltd. and Suzhou Industrial Park state-owned assets holding Development Co., Ltd., and one of the four largest shareholders of Shenzhen Huaxing photoelectric semiconductor display technology Co., Ltd., Samsung is also listed in a 5 stake. .02%.

Therefore, in the view of some people in the industry, Samsung shows that it is more feasible to sell the business with Huaxing optoelectronics. In fact, TCL Huaxing optoelectronics 2019 annual report also mentioned that in 2020, "we will increase the scale and efficiency through internal development and merger and reorganization."

In April 7th, a TCL insider told the economic news reporters in twenty-first Century that they could not comment on the acquisition rumors. But at the same time, it confirms that TCL will not rule out expansion of LCD production line this year.

Of course, everything is still possible before the transaction has fallen. Although BOE has already said that this year, in addition to the Wuhan production line, there will be no additional investment in LCD related production lines. However, a boe insider also pointed out to reporters that the new production line is no longer aimed at the new production line. As for the existing production capacity acquisition of the mature production line, the person refused to comment, indicating that he still had to wait for further official information.

Recently, however, the price of panel has obviously suffered from "epidemic fluctuation". From the end of last year to February this year, when the outbreak broke out early in China and South Korea, due to the shortage of panel supply, the downstream enterprises began to "hoarding goods", which led to a rebound trend in the price of LCD panels. However, with the control of the epidemic situation in China and South Korea, especially in China, enterprises gradually resumed their work and resumed production, and the supply and demand of LCD panels reversed again, and the price of LCD panels fell.

In this regard, Kevin Chen told the twenty-first Century business news reporter, "when Korean manufacturers have dropped out, and China's panel makers occupy most of the capacity supply, if there is no significant reduction in terminal panel demand, it is expected that the 2020 large size TFT-LCD display panel price will not show a sharp decline in 2019."