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Taiwan's two major industries of panel and semiconductor will soon be surpassed by the mainland
The mainland, as the world's second-largest economy, holds strong positions in sectors such as aerospace, equipment manufacturing, new energy, and advanced materials. However, its semiconductor and optoelectronics industries have historically lagged behind, particularly when compared to Taiwan. For many years, these sectors represented a major weakness in the mainland’s economic development, with critical components like chips and large-size panels heavily reliant on imports from Taiwan and South Korea.
In recent years, the mainland has made significant efforts to bolster its semiconductor and optoelectronics sectors. Through government support, increased investment, and strategic partnerships, progress has been substantial. The production value of key products is steadily rising, and some segments are now beginning to match or even surpass those of Taiwan. This trend is expected to continue, with the mainland gradually closing the gap in global market share.
One of the core areas of the optoelectronics industry is the panel sector. Globally, panel production is concentrated in Japan, South Korea, Taiwan, and the mainland. However, the most advanced technologies remain under the control of multinational firms based in the U.S. and Japan. Large-size panel manufacturing, in particular, has long been dominated by South Korea and Taiwan, while the mainland has struggled to keep up. Despite this, the mainland remains a major producer of LCD TVs, with TV LCD panels largely sourced from Taiwanese and South Korean manufacturers.
In 2013, several optoelectronics companies from Taiwan and South Korea were found guilty of price manipulation in the panel market, leading to investigations by the National Development and Reform Commission. This incident highlighted the mainland’s dependence on foreign suppliers and spurred domestic efforts to develop local capabilities.
To address these challenges, the mainland has focused on encouraging foreign investment while simultaneously supporting local enterprises. Over time, several prominent panel manufacturers have emerged, with BOE (Beijing Optronics) standing out as a leader. Backed by the Beijing Municipal Government, BOE has become a globally competitive player in the industry.
From 2003 to 2016, BOE invested over 300 billion yuan to establish 11 panel production lines across various regions. By 2017, its operating income reached 69.4 billion yuan, marking a 51.4% annual increase. Its global market share for large-size LCD panels grew from 8.5% in 2014 to 12.1% in 2016, with projections reaching 20.8% in 2017. With this growth, BOE was expected to overtake LG Display of South Korea as the world’s largest LCD panel manufacturer in 2018.
Moreover, BOE achieved notable success in the monitor market, securing top positions in LCD monitors, tablet PC monitors, and notebook PC monitors globally. In 2018, the launch of BOE’s 10.5-generation panel plant marked another milestone, with the mainland’s TV panel market share expected to reach 38.64%, surpassing both South Korea and Taiwan.
While South Korea’s Samsung dominates the OLED market, especially in mobile devices, Chinese companies like BOE are making strides. In 2017, BOE announced the successful operation of its flexible AMOLED line in Chengdu, supplying Huawei and other manufacturers. This marks a step toward breaking Samsung’s monopoly and positioning China as a strong competitor in the OLED space.
In the semiconductor industry, Taiwan has long held an advantage, especially in foundry manufacturing. However, the mainland is catching up rapidly. According to reports, the mainland’s semiconductor output is expected to surpass Taiwan’s by 2020. While TSMC leads the global foundry market with a 59% share, SMIC, the mainland’s leading chipmaker, is advancing quickly. Recent investments, including a $10.24 billion joint project with the National Fund, aim to push SMIC toward 14nm technology, further narrowing the gap.
In memory and storage, Chinese manufacturers are also making impressive progress. Companies like Hefei Changxin and Yangtze River Storage are developing advanced 12-inch memory wafers and 3D NAND flash chips. Yangtze River Storage, in particular, successfully developed a 32-layer 3D NAND chip ahead of schedule and plans to scale up production in 2018, with potential capacity matching that of global giants like SK Hynix and Toshiba.
Overall, the mainland’s advancements in semiconductors, optoelectronics, and memory technologies reflect a growing industrial strength. While challenges remain, the pace of development suggests that the mainland is well on its way to becoming a global leader in these critical sectors.