China’s Panel Industry Is Now the World’s Largest — Was the Price Worth Paying?
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1/9/2026
The ancient Greek philosopher Heraclitus once said, “No man ever steps in the same river twice.” Had Heraclitus observed Japan’s panel industry, he might well have revised that statement.
In the early 1990s, Japanese manufacturers accounted for 94% of global panel production, exercising near-total dominance over the industry. But as Japan’s economy slid into stagnation, corporate investment appetite weakened. Seizing the moment, South Korea poured massive capital into the panel industry during the Asian financial crisis—investing more aggressively the more losses mounted. Samsung and LG together captured nearly 50% of the market, emerging as the new panel overlords and leaving Japanese firms powerless to respond.
Unwilling to accept defeat, Japan attempted a comeback in 1998, shifting its focus to Taiwan, the region least affected by the financial crisis. Lacking the financial strength to compete head-on with Korea in capacity expansion, Japanese companies abandoned the capacity race and instead signed a flurry of technology-transfer agreements with Taiwanese manufacturers. In exchange for hefty licensing fees, Japan handed over core technologies and leveraged Taiwan’s lower-cost manufacturing to undercut Korean rivals.
With Japanese technology effectively escorting them from lab to production line, Taiwan’s panel industry rose rapidly, becoming one of the island’s four pillar industries.
Then came the 2008 global financial crisis. Taiwanese panel makers were hit head-on: downstream demand collapsed, upstream capacity went unsold, and Japan’s already weakened panel industry was dragged down with them.
In 2009, NEC shut down its LCD panel plant in Kagoshima. Two years later, Sony bundled and sold its LCD business to Samsung, while Mitsubishi Electric exited the panel business altogether. By 2016, even Sharp—the most resilient of Japan’s panel champions—could no longer hold on and was acquired by Foxconn. Today, only one Japanese panel maker remains: Japan Display Inc. (JDI), long since left far behind by competitors in South Korea and mainland China.
After two failed counterattacks, Japan’s panel industry collapsed from its peak to near extinction in just two decades.
Across the mainstream LCD market, Japan, South Korea, Taiwan, and mainland China took turns launching offensives, unleashing multiple rounds of price wars so brutal they resembled a strategy of “starving the enemy even if it means bleeding yourself dry.” In the end, mainland China claimed victory as the latecomer—but at the cost of astronomical capital expenditures.
BOE alone invested close to 500 billion yuan.
As a segment of the electronics industry, the history of display panels distills its most ruthless—and absurd—traits: invented in the United States, industrialized in Japan, then fought over by mainland China, Taiwan, Japan, and South Korea. Four players locked in endless combat, each burning vast sums of money—yet none ever fully killing off the others.
A History of “Chip Shortages and Screen Shortfalls”
In 2004, as Japan and South Korea were locked in a fierce panel price war, China’s display industry—eager not to be left behind—delivered three textbook examples of failure in rapid succession.
One was TCL’s high-profile acquisition of the television and DVD businesses of France’s Thomson, instantly turning TCL into the world’s largest TV manufacturer. Another saw Henan Ancai Group spend $50 million to purchase nine CRT glass-shell production lines from U.S.-based Corning, briefly making it the world’s largest glass-shell supplier. The third involved Rainbow Electronics tightening its belt to scrape together RMB 600 million to import an ultra-large CRT production line from Japan’s Hitachi.
Each deal ended worse than the last.
Thomson was already losing money before the acquisition; after TCL took over, the deal resulted in nearly RMB 700 million in net losses in a single year. Rainbow Electronics’ costly production line became obsolete before it even entered mass production. Ancai Group drained its cash flow to fund the acquisition and went bankrupt just a few years later.
The reason was simple: Chinese companies had paid a premium for technologies that were already obsolete—CRT technology, the “big-back” televisions that dominated the 1990s—while Japanese and South Korean firms had long since shifted their focus to next-generation LCD displays.
At the time, every Chinese panel maker made the same misjudgment. None captured it more clearly than the now-infamous remark by Rainbow Group’s chairman:
“CRT still has at least ten glorious years ahead of it.”
Sony’s iconic Trinitron TVs were part of the CRT technology lineage
As early as 2000, CRT and LCD had already split the market roughly down the middle. Yet within China’s industrial circles, the prevailing belief remained that even if CRT could not defeat LCD, the two technologies would at least be locked in a long war of attrition. What followed instead was a collective leap into danger by Chinese companies—only to get exactly what they asked for. CRT was rapidly swept out of the market.
Another key factor was that even when companies wanted to pivot to LCD, they simply did not possess the necessary technology.
This is what people mean when they say China’s electronics industry “lacked chips and screens.” The “lack of screens” referred specifically to LCD panels. As late as 2012, mainland China was still importing as much as $50 billion worth of display panels (mostly LCDs) each year—second only to integrated circuits, and even ahead of oil and iron ore.
Put simply, LCD technology uses electric currents to control light emission in semiconductor-based display elements. Compared with CRTs, LCDs offer more accurate color reproduction and significantly lower power consumption. Much like semiconductors, LCD technology was born in the United States, industrialized in Japan, and eventually became the subject of fierce competition among East Asian economies.
Among the many segments of the electronics industry, display panels are somewhat unique. Not only did the industry experience a major technological shift—from CRT to LCD—but within each technological path there were rapid generational upgrades, analogous to 28nm, 14nm, and 7nm nodes in semiconductors. As a result, early investment conferred little lasting advantage. Latecomers could leapfrog by adopting newer processes and equipment, while incumbents found themselves burdened by massive depreciation costs from outdated production lines.
In the 1990s, Japanese LCD capacity was concentrated in Generation 1 and Generation 2 fabs. During the financial crisis, Korean firms pushed aggressively into Generation 3 lines despite enormous pressure, while Japanese companies—hamstrung by economic stagnation—were unable to invest. The result was swift: Japan was overtaken.
For panel makers, profitability hinges on two things. First, staying tightly aligned with each wave of technological upgrades. Second, expanding market share through acquisitions during industry downturns. Panels are highly standardized products—buyers simply go with whoever is cheapest—so scale is the only way to dilute manufacturing costs.
The same logic explains why DRAM capacity has continued to expand without a corresponding increase in market value: brutal price wars.
This rule of the game is ruthless. But for mainland China’s panel industry in the early 2000s, the problem was even more fundamental—it lacked the qualifications to play at all. China had spent twenty years achieving 95% localization of the CRT supply chain, only to see LCDs become mainstream almost overnight, instantly forcing more than 80% of the display supply chain back into dependence on imports.
Just as the industry misjudged the future of CRT and the panel sector slid into desperation, fate opened another window.
Around 2003, South Korea’s Hyundai Group—then a major player in the panel industry—was hit on multiple fronts. Its memory-chip business entered a deep downturn, and a miscalculation of geopolitical risks led to disastrous losses from investments in North Korea. Desperate to raise cash, Hyundai decided to sell off its most valuable LCD assets.
The buyer was a Chinese company few outside the industry had heard of at the time: BOE Technology Group.
An Expansion Race in the Quagmire
In the very first year after taking over the Korean production lines, BOE happened to catch a global upcycle in the panel industry. The acquired fabs turned into nonstop money-printing machines. That year, BOE’s revenue surged to RMB 11.18 billion, up 133.77% year on year, with LCD contributing as much as RMB 6 billion.
Riding the momentum, BOE pushed ahead and brought new capacity online in Yizhuang, Beijing, choosing a Generation 5 line—then considered cutting-edge even by global standards.
But fate turned quickly. In 2005, the very year BOE’s new line entered production, the global LCD market slid into oversupply and prices collapsed. BOE’s flagship 17-inch monitor panels plunged in price. When the line was under construction, each panel sold for around $300; by the time mass production began, the price had already fallen to $150.
Fresh capacity barely online, BOE posted a RMB 1.6 billion loss that year—the company’s first annual loss in a decade. In 2006, it lost another RMB 1.7 billion. Not only was the Beijing municipal government unable to step in, even syndicated bank loans could not be rolled over. Extensions required unanimous consent from all participating banks, and one small lender—contributing the least capital—refused to agree. Only after repeated negotiations was the issue resolved.
The bigger shock came from public opinion. Media outlets launched fierce attacks over BOE’s massive losses, drawing the attention of regulators. Some outlets even accused BOE of “embezzling state assets,” pointing to its wildly fluctuating profits as evidence.
Eventually, the shouting died down when everyone realized this volatility was not unique to BOE—it was an industry-wide phenomenon.
This pattern can be summed up in one term: the LCD cycle. Over the past three decades, downstream applications have expanded continuously—from televisions to computers, smartphones, and automotive displays—while LCD fabs have evolved from Generation 3.5 to today’s massive Generation 10.5 lines.
Because capacity takes time to build, the industry swings periodically between shortage and oversupply. During the construction of new high-generation fabs, capacity tightens and prices rise. Once capacity saturates, oversupply emerges and prices fall. Then, as the next wave of even higher-generation fabs begins, shortages return and prices rise again.
As a result, the operating logic of the panel industry is brutally simple: the more you lose, the more you invest. Companies expand capacity and acquire rivals at the bottom of the cycle, endure the losses, and try to outlast competitors to gain scale.
Samsung’s famous strategy of counter-cyclical investment was born from this logic. Ironically, Japan—the pioneer of the LCD industry—was overwhelmed during the Asian financial crisis of the late 1990s, when Samsung and LG expanded aggressively at the industry’s nadir.
Latecomers, however, also get their chance. By building new high-generation fabs during downturns, they can narrow the competitive gap. Taiwan seized this opportunity between 2003 and 2009, pouring nearly NT$1 trillion into the panel industry in just six years and positioning itself to challenge Korea.
For incumbents, the situation is far harsher. Having sunk enormous capital into older-generation lines, exit costs are prohibitively high. Even when bleeding cash, they have little choice but to push on. That is why panel price wars are often extraordinarily brutal—total spending can rival that of a limited military campaign.
In this recurring cycle of shortage, expansion, and oversupply, the window for profitability is extremely narrow. Success depends on how many competitors are crushed at the bottom of the cycle—and whether the survivors at the top can form a “price alliance” to keep panel prices elevated.
From 2001 to 2006, six companies—including Samsung and LG from South Korea, and AUO and Chunghwa Picture Tubes from Taiwan—held a total of 53 so-called “crystal meetings,” explicitly coordinating panel prices and supply volumes. At one point, panels accounted for as much as 80% of the total cost of an LCD television.
When the global financial crisis erupted in 2008, Taiwan’s panel makers fell into collective distress. At the same time, China was rolling out its “home appliances to the countryside” program. Senior policymakers organized mainland TV manufacturers to proactively purchase panels from Taiwan, led personally by Bai Weimin, then vice chairman of the China Video Industry Association. The intended procurement value reached $4.4 billion.
The goodwill gesture backfired. Taiwanese and Korean suppliers joined forces to raise prices. In just five months, panel prices jumped by 30%.
This episode forced policymakers to confront the technological barriers facing China’s LCD industry and respond on two fronts. First, in 2013, China’s National Development and Reform Commission fined six companies RMB 350 million under the Price Law. Second, starting in 2010, a dense series of policy measures was rolled out to support the domestic LCD panel industry.
Compared with the EU’s €650 million fine and the U.S.’s $1.3 billion penalties, China’s punishment was relatively mild. More telling was what followed in Europe: facing massive fines, industry leader Samsung quickly turned whistleblower, securing leniency and shattering alliances overnight.
As a flood of official policy documents and fiscal subsidies poured into mainland China’s LCD panel industry, few at the time truly grasped just how enormous the cost would be to build an industry from the ground up.
A True Cash-Burning Machine
There are clear reasons why the electronics industry took root and flourished in East Asia. One is the availability of large pools of low-cost labor. The other is the central government’s strong willingness—and ability—to invest.
Japan’s electronics industry, for example, took off with the establishment of an institution known as the Very Large Scale Integrated Circuits (VLSI) Research Cooperative, created by Japan’s Ministry of International Trade and Industry (MITI). The goal was to bring together research institutions and semiconductor companies such as Hitachi, Mitsubishi, and Toshiba to pursue technological breakthroughs—backed by massive fiscal subsidies.
Although the paths taken by different East Asian economies varied, the underlying logic was largely the same. For latecomers, without powerful forces standing behind them, no company could withstand the seemingly endless losses that come with technological catch-up.
After the heavy losses of 2005–2006, BOE went on to lose nearly RMB 3.5 billion cumulatively between 2008 and 2010. In 2019, it lost another RMB 500 million. It was not until 2021 that BOE finally posted a net profit of RMB 30.4 billion—more than the total profits it had generated over nearly three decades from 1994 to 2020 combined.
Between 2000 and 2021, BOE raised a cumulative RMB 91.7 billion in financing, while distributing only RMB 16.735 billion in cash dividends—a payout ratio of just 18.3%. Such meager dividends earned the panel industry a reputation as an A-share “iron rooster,” a company that never pays—simply because it is perpetually short of cash.
BOE’s losses were hardly an exception. Historically, Samsung endured as long as 12 consecutive years of losses in its quest to become the world’s leading LCD manufacturer.
The book Inside the System records BOE’s grueling fundraising journey in detail. In the early 2000s, large-size televisions were the biggest market for LCD panels. After BOE’s Generation 5 line in Beijing achieved mass production, domestic TV giants such as TCL, Skyworth, and Konka sought to jointly address China’s LCD supply bottleneck. They brought BOE and the Shenzhen municipal government into talks, hoping to leverage Shenzhen’s financial strength to build a Generation 6 line.
During negotiations, however, Sharp stepped in and lobbied the Shenzhen government, proposing instead to build a more advanced Generation 7.5 line. BOE was sidelined. Later, Shanghai’s SVA Group proposed building a Generation 6 line with BOE in Kunshan—only for Sharp to intervene again, forcing BOE out once more.
Curiously, in both cases, once BOE was excluded, Sharp found excuses to withdraw from the projects altogether.
When BOE later approached Hefei, it reportedly asked a pointed question: What if Sharp comes again? Hefei’s response was unequivocal—“We will not waver.”
Another widely circulated story highlights the scale of the gamble. As a city without major natural resources, Hefei allegedly delayed civil servant salary payments and shelved metro construction in order to invest in BOE—making it one of the last provincial capitals in southern China to build a subway system. At the time, a single Generation 6 line required RMB 17.5 billion in investment, while Hefei’s total fiscal revenue in 2008 stood at just RMB 16.1 billion.
In hindsight, the bet paid off handsomely. Hefei’s Gen 6 line produced mainland China’s first 32-inch LCD panel. BOE later built Gen 8.5 and Gen 10.5 lines in the city, attracting a dense cluster of upstream and downstream suppliers and turning Hefei into a national hub for optoelectronics.
But the cost was enormous. Beyond direct local government investment in production lines, invisible hands were constantly at work. During construction of BOE’s Gen 8.5 line in Beijing’s Yizhuang zone, Yizhuang State-Owned Capital entrusted the Bank of Beijing with issuing a RMB 200 million loan to BOE—at an interest rate of just 0.01%.
In 2014, BOE conducted a RMB 44.9 billion private placement. The top three contributors were all local government investment platforms: RMB 8.5 billion from Beijing, RMB 6.2 billion from Chongqing, and RMB 6.0 billion from Hefei.
Between 2011 and 2020, BOE’s cumulative net profit totaled “only” RMB 25 billion—while government subsidies over the same period reached RMB 14.2 billion. Among China’s two panel giants, TCL’s subsidiary China Star Optoelectronics recorded RMB 19.7 billion in net profit from 2011 to 2020, alongside RMB 10.3 billion in government subsidies.
By 2021, China’s panel industry accounted for 41.5% of the global market, surpassing South Korea to become the world’s largest panel producer.
Government-led industrial policy and fiscal subsidies once created Japan’s global DRAM dominance, propelled Samsung and LG to the top, and ultimately enabled mainland China’s latecomer victory in the panel industry.
But in an industry where technology evolves relentlessly—is this enough?
A Technology on Its Way Out
In 2021, BOE posted revenue of RMB 219.3 billion and net profit of RMB 25.83 billion—a staggering year-on-year surge of 412.96%. Another panel maker, China Star Optoelectronics, reported RMB 163.5 billion in revenue and RMB 14.96 billion in net profit, up 195.3%. Even second-tier player Visionox delivered eye-catching results, with revenue growing 32.32%.
This profit boom had been set in motion as early as the second half of 2020. China Star took over Samsung’s Suzhou LCD plant and later acquired Samsung’s LCD patents in both the U.S. and South Korea. BOE, meanwhile, absorbed China Electronics’ CEC Panda Gen 8.5 production capacity.
After nearly three decades of brutal competition with Japan and Taiwan, South Korea finally exited the game. The defining moment came in May 2025, when Samsung’s last Gen 8.5 fab completed its final production run and shut down for good.
Yet even as China scored a decisive victory in LCDs, another reality became impossible to ignore. In the new OLED era, LG dominates large-size panels, while Samsung controls high-end small-size panels. Once again, Korea is ahead.
In 2016, Apple—the most powerful buyer in consumer electronics—formally joined the AMOLED camp, awarding Samsung exclusive supplier status. For many years thereafter, Samsung was the sole provider of AMOLED displays for flagship iPhones. Sony’s high-end OLED TVs, meanwhile, rely almost entirely on panels supplied by LG.
AMOLED can be understood as a small-format branch of OLED technology. Thanks to its low power consumption and flexibility, it is primarily used in smartphones. AUO was actually the first to mass-produce AMOLED panels back in 2006—but high costs and a lack of downstream brand adoption forced it to abandon the effort.
In 2017, Apple released its 12-inch MacBook. AUO, which had remained in Apple’s supply chain by supplying entry-level 13.3-inch MacBook Air panels, was unceremoniously cut out. Samsung and LG went on to nearly monopolize MacBook display supply.
Beyond OLED, the panel industry is currently exploring two other technological paths: Mini-LED and Micro-LED. Mini-LED falls short of OLED in absolute image quality but has clear advantages in cost and manufacturability. Micro-LED, often described as the “ultimate form” of Mini-LED, has yet to achieve mass production. As a result, many companies view Mini-LED as merely a transitional technology and have been reluctant to commit heavily.
Still, a new industry consensus is taking shape. After thirty years of relentless competition, LCD technology is approaching the end of its life cycle.
Today, BOE has successfully entered Apple’s supply chain with OLED panels. Mini-LED remains limited to a handful of TVs and laptops. Micro-LED is still in its infancy—an open frontier filled with uncertainty.
Put another way, mainland China has spent more than a decade and poured hundreds of billions of yuan in fiscal support into winning dominance in a technology that is already becoming obsolete.
Was the cost worth the return?
Epilogue
Japanese memory, Korean chips, and mainland China’s panels—none of these are victories in the traditional sense.
The cruelty of the electronics industry lies in the fact that every triumph is merely a brief ceasefire. Winners must constantly guard against latecomers catching up, while simultaneously betting—at enormous risk—on shifting technological paths. Exiting is rarely an option: sunk costs are too large to walk away from, leaving companies no choice but to endure. Even a powerhouse like TSMC faces ever-rising capital expenditures just to maintain its lead.
In his book, renowned analyst Zhao Xiaoguang offers this assessment of mainland China’s support for the panel industry:
Supporting panels—and even the upstream optical ecosystem—has helped cultivate a group of capable materials and equipment companies. Industrial development is never a simple matter of having the right equipment, lower costs, or better service. Everything is interconnected: when one prospers, all prosper; when one falters, all suffer.
Driving export-oriented growth through labor-intensive industries, then upgrading them through government-led industrial policy—this approach is often referred to as the “East Asian model.” Across the rise and fall of countless industries in Japan, South Korea, and China, its imprint is unmistakable.
“Technological innovation” and “industrial upgrading” are phrases that sound irreproachably virtuous. To officials, they are strategic tools to strengthen national power. To scholars, they promise efficiency and leverage. To the media, they are the inevitable road to public prosperity.
But during the decade-long grind of catching up—staring down terrifying technological gaps—the despair faced by industry insiders is often beyond the imagination of ordinary people. There is neither the grandeur of historic conquest nor the tragic nobility of heroic defeat. What many experience instead is unwavering commitment followed by emptiness.
BOE invested more than RMB 500 billion to become the global LCD champion—yet has returned about RMB 100 billion in dividends.
Was it worth it?
The judgment, ultimately, belongs to the readers.