The domestic LCD two giant red performance funds stuck together

The first quarter loss of 450 million BOE, SVA profits last year minus 50% domestic LCD two giant red light performance

The capital and technology to get stuck together

In no time: the end of 2004, the LCD panel SVA, BOE officially put into operation, and launched the LCD, with independent intellectual property rights respectively. However, when the global LCD panel price has shrunk by 50%.

Technology update Investment: it is understood that the LCD panel production line investment scale is quite large, dubbed the big money pit". Monthly production capacity of 60 thousand substrates for the production line, the four generation line investment to $7 billion 500 million, the five generation line to $10 billion, the six generation line to $20 billion.

The high risk of the industry: the operation of the multinational high-tech business by the BOE, facing higher industry risk, foreign exchange risk and business integration risk.

The two old state-owned enterprises competing in the upstream LCD panel business spending, such a gamble on will be caught in the plight of earnings caused by the industry cycle trough, and the global LCD technology, upgrade the competition brought huge risk elimination.

April 28th, BOE (000725) announced in 2004 earnings and first quarter earnings in the first quarter of a loss of more than $450 million yuan in 2005. Although the market had been expected, but the company in the first quarter so huge losses, investors are still surprised, because the loss is almost the same as the BOE and the first quarter of 2004 three yuan net profit of about $470 million. Announcement was released, the BOE A shares for three consecutive days limit, the share price fell by 8.25%. Prior to March 23rd SVA released its annual report also showed that its main business revenue fell 0.28%, total profit fell sharply by 37.74%, net profit decreased 48.78%.

LCD panel prices fell 50%

For more than four hundred million yuan of the deficit, the BOE Market Manager Song Chao also acknowledged that the main impact of the industry cycle fluctuations. The market a few years ago a huge demand for LCD panels, the SVA and BOE have launched LCD five generation line project. When in 2004, SVA, BOE LCD panel and launched officially put into operation, liquid crystal display, with independent intellectual property rights respectively. However, when the LCD panel prices fell 50%.

According to the statistics of the authoritative survey of WitsView, the second half of 2004 to the mainstream 17 inch LCD display panel in December last year, price of approximately $160, compared with $300 last June, or up to 47%; 15 inch panel also decline 40%; panel prices this season are still in decline of $3-5.

Panel price "diving", directly erode the profitability of panel manufacturers.

Samsung Market Department official told reporters that last year, the price of LCD products and panel supply oversupply. Major manufacturers are stepping up inventory cleanup. SVA SVA NEC, President of the company chairman Gu Peizhu earlier in an interview with this reporter expected, LCD display price has entered a stable period, the two quarter of this year is expected to begin a rebound.

Tens of billions of money to build five generation line

In addition to the price decline in profits shrink, the BOE and SVA also cannot avoid the rapid escalation of military buildup in the competition pressure from the global technology.

Overseas has been put into production or even mass production of sixth, seventh generation LCD production line, is bound to cause pressure on the domestic fifth generation production line." LCD concerned about the long-term industry of the Milky Way Securities Industry Research Center Wang Guoping think, "because of the new production line put into production continuously, the low-end LCD industry because of substantial decline in prices began to pile up in excess of requirement, and to maintain profits, we must start the new production line." It has just entered the LCD panel industry, its size and strength are far unable to compete with foreign giants such as Samsung and SHARP compared to the BOE, SVA, is undoubtedly a huge pressure.

In this regard, Gu Peizhu told reporters that the SVA Group also plans in three to five years, the construction of two five or five generation TFT-LCD production line, and the completion of SVA Chinese optoelectronic display R & D and manufacturing base. BOE insiders came news, BOE decided in 2009 to build two more than five generations of LCD production line.

Technology upgrades make the two corporate funds increasingly obvious dilemma. It is understood that the LCD panel production line from the first generation to the development of the most advanced seventh generation, its investment scale is quite large, was dubbed the big money pit". Monthly production capacity of 60 thousand substrates for the production line, the four generation line investment to $7 billion 500 million, the five generation line to $10 billion, the six generation line to $20 billion, the current SHARP investment in the construction of the seven generation line up to $302 billion. In other words, even if the two generation of the same line to build the next generation, but also need $20 billion five.

In the race to the LCD production line, BOE and SVA has hit a lot of money. In September 20th last year, the BOE in Beijing announced its investment of nearly $1 billion 200 million in the five generation line has entered the equipment installation and commissioning phase. Two months later, Shanghai radio and television group and NEC hand in hand to spend $1 billion to build the production line of the production of the five generation, and launched the latest models of liquid crystal display.

Loan debt ratio of nearly 70%

Huge investment come from? April 8th, BOE announced that its TFT-LCD fifth generation LCD production line to obtain $740 million loan. This led by the China Construction Bank, Beijing branch, a total of 9 banks consisting of syndicated loans for the boe. Including $3 in liquidity loans for the period of $560 million and $5 in fixed asset loans for the year of the year, all of which are used in the construction of the TFT-LCD line of the BOE's five generation