BOE accepts survey: Future capital expenditure will mainly focus on semiconductor display business

On February 14, BOE A (000725) issued an announcement disclosing the record of investor relations activities on February 13, 2025. During the event, investors visited the company's G10.5 production line in Wuhan and communicated with the company. 1. How do you view the competitive landscape of the LCD industry? Answer: From the brand side, in recent years, with the continuous upgrading of display technology and the business strategies of brand manufacturers, mainland China's brand manufacturers have gradually moved towards globalization, and the proportion of product shipments worldwide has continued to increase. From the supply side, as the expansion of LCD production lines in the industry has gradually come to an end in recent years, the release of production capacity in the industry has tended to be flat, and some overseas manufacturers have withdrawn. The proportion of production capacity of mainland China companies in the world has gradually increased, and the display industry chain has concentrated in mainland China, and the supply pattern has continued to improve. Against this background, since 2023, manufacturers in the industry have continued to adhere to the "production on demand" business strategy, flexibly adjust the production line utilization rate according to market demand, and promote the healthy development of the industry. Overall, the proportion of panel production capacity in mainland China has gradually increased. Brand manufacturers will reshape the global TV industry landscape through global layout and industrial chain advantages, and mainland China panel manufacturers will gradually lead the frontier market of large-size. 2. How do you view the supply and demand of LCD? Answer: Due to the "production on demand" business strategy of panel manufacturers and the adjustment of brand manufacturers' procurement strategies, the rhythm of LCD TV shipments has reversed from the off-season to the peak season, gradually evolving from "low at the beginning and high at the end" to "high at the beginning and low at the end". Panel manufacturers have gradually shifted from the stage where the production line utilization rate has been maintained at a high level all year round and the competitiveness has been improved by the scale of shipments to the stage of flexibly adjusting the utilization rate and controlling inventory. On the demand side, according to data from third-party consulting agencies, the overall demand area of LCD TVs has continued to grow thanks to the continuation of the large-size trend. In 2024, the average size of global LCD TV terminal sales will be about 51.6 inches, an increase of about 1.1 inches year-on-year; among them, the average size in the Chinese market will be about 65.8 inches, an increase of 3.4 inches year-on-year. In the future, it is expected that the average size of LCD TVs will continue to grow, and is expected to grow to 54.5 inches by 2029, further promoting the long-term growth of LCD TV demand. 3. How do you view the product price situation and production line utilization rate in the first quarter? A: According to consulting agency data, in 2024, global TV panel shipments and shipment area will both grow. In the first half of the year, driven by demand from sports events in overseas markets, the second quarter ushered in a peak in demand; in the second half of the year, stimulated by the "old for new" subsidy, the Chinese mainland market regained its growth trend, and the degree of large-size reached a new high. Entering 2025, with the confirmation of the continuation of the "old for new" policy in mainland China and the gradual recovery of demand in overseas markets, the demand for TV panels is expected to show "off-season is not dull". In terms of product prices, according to consulting agency data, affected by demand fluctuations, the prices of some large-size LCD TV products began to rise first from December 2024. In January 2025, the mainstream sizes rose across the board, and the increase in some products expanded. It is expected that the upward trend will continue in February. In terms of production line utilization rate, according to consulting agency data, due to the gradual recovery of terminal demand, the industry utilization rate began to pick up in November 2024. Entering 2025, the industry utilization rate continued to remain above 80% in January. 4. Does the company have a plan to repurchase minority shareholders' equity in the 10.5-generation line and what will be the future capital expenditure? Answer: The company will consider the plan to repurchase minority shareholders' equity at an appropriate time based on its operating conditions and cash flow. At present, the semiconductor display industry has gradually entered a mature stage from the high-speed development stage of large-scale expansion, and the company's future capital expenditure will mainly focus on the company's strategic planning. The company firmly implements the "Screen Internet of Things" strategy and focuses on its main business. The main direction of capital expenditure is around the semiconductor display business, and based on core capabilities and value chain extension, it is deployed in the four high-potential channels of IoT innovation, sensing, MLED and smart medical engineering, as well as the "Nth Curve" business to promote the implementation of the IoT transformation strategy.