Industrial: Decoupling of the display industry and upgrading of the entire industry chain value

Industrial released a research report stating that the display supply chain is transitioning from the traditional manufacturing sector characterized by strong cyclical properties to a stable growth track with long-term certainty. The global television industrys influence is rapidly shifting towards China, complemented by improved distribution channels and marketing efforts for events, leading to the opening of growth ceilings for domestic brands in overseas markets. Overall, the current upgrade of black electronic products effectively enhances the entire value chain of the display industry, driving synchronized profit increments for both upstream and downstream sectors, thus raising the industry's profit center. The main points from Industrial are as follows: Optimizing the landscape and upgrading terminal products will drive the display industry to weaken its cyclical nature and move towards stable growth. Reviewing the global display panel industrys migration history, the industry has gone through four rounds of iteration in the U.S., Japan, South Korea, and Taiwan, and has now completed a full-chain capacity transfer to mainland China. By 2025, BOE and TCL Huaxing will establish a stable duopoly competitive structure, with mainland panel manufacturers accounting for over 70% of overall shipments and over 60% of capacity share, significantly improving the industry's supply structure. As the industrys traditional strong cyclicality gradually converges, driven by two factors: the large-screen terminal trend and the high-end penetration of Mini LED, the display supply chain is transforming from a traditional manufacturing sector with strong cyclical properties to a stable growth track with long-term certainty. On the supply side, the continuation of supply clearing and alleviation of depreciation pressure is optimizing the panel industry landscape. Japan and South Korea are continuously reducing LCD production lines, and there are no new high-generation LCD production line plans globally, marking a transition from an expansion cycle to a stable capacity phase; leading manufacturers are implementing a sales-based production approach to smooth out supply and demand, leading to reduced fluctuations in panel prices and significantly weakening cyclical attributes. Simultaneously, domestic high-generation LCD production lines are nearing the end of their depreciation phase, with significant depreciation amortization pressure continuing to ease, providing a medium to long-term basis for improvement in gross margin centers of panel manufacturers. The logic of profit recovery in the supply chain is clear. On the demand side, the black electronics industry is undergoing a dual upgrade driven by large-screen adoption and the high-end penetration of Mini LED. The global average television size is steadily increasing by one inch each year, with the average size of domestic televisions reaching 62.4 inches by 2025, leading the global average of 51.6 inches. Domestic demand for large screens has been fully released, while the average size in overseas markets still has significant potential for upward growth. As a high-end improvement route for LCD, Mini LED possesses advantages in picture quality, lifespan, and cost. According to Omdia data, the penetration rate of Mini LED in China is expected to reach 14.3% by 2025, with a global penetration rate of 6.1%, leading to significant global shipment volumes surpassing OLED and entering a phase of scaled release. In terms of pricing, the average price of similarly sized televisions overseas is significantly higher than in China. Considering the natural cost and pricing advantages of domestic integrated products, there is ample room for profit enhancement abroad. Overall, under the dual drive of large-screen popularization and high-end Mini LED penetration, the competitive logic of the black electronics industry is shifting from previous low-priced homogenization to upgrading and improving high value-added structures, continuously enhancing the entire value chain and synchronously realizing profit increments upstream and downstream. In terms of terminal brands, the overseas landscape for black electronics is being reshaped, with Chinese brands accelerating their international expansion to capture market share. From 2020 to 2025, the global market share of TCL and Hisense has increased by 4.3 percentage points and 6.1 percentage points, respectively, while the gap with Samsungs shipment volume continues to narrow; in the high-end Mini LED sector, the combined market share of these two Chinese black electronics leaders exceeds 56%, and their overseas market share has surpassed 51%, while South Korean brand shares continue to face pressure and operational strain. The global television industrys influence is rapidly shifting towards China, supported by improved distribution channels and marketing empowerment for events, thus opening growth ceilings for domestic brands in overseas markets. According to estimates, with the expansion of market share combined with the high-end upgrade of products resonating in both volume and price, the revenue elasticity for Hisense and TCL ELECTRONICS display businesses will reach 153% and 76%, respectively (excluding Sony). Considering the expected integration of the Hisense system, it is estimated that in the final stage, the overall revenue of Hisense could reach 126.6 billion RMB, corresponding to an elasticity space of 119%; if TCL ELECTRONICS includes Sony TV assets in its assessment, the overall revenue in the final stage could reach 246.3 billion HKD, corresponding to an elasticity space of 115%, indicating sufficient medium to long-term growth space for industry chain leaders. Risk warning: Terminal demand may fall short of expectations, fluctuating panel prices, and intensified industry competition.