Chinese display panel maker Visionox has begun operations of its flexible OLED factory at Guangzhou, according to local media Ijiwei.
The company held a ceremony to mark the start of operations on Sunday. It previously said it will build two lines at the factory using China-made equipment and materials.
Visionox’s 6th-generation flexible OLED line, V3, at Hefei, Anhui Province began operations earlier this month.
The company began construction of this factory in December 2018 with an investment of 44 billion yuan. It is Visionox’s second flexible OLED factory after V2, also a 6th-generation flexible OLED line, in Guan, Hebei Province.
V2 and V3 combined can handle 30,000 substrates per month.
The Hefei line will for high-end panels. V3 can produce on-cell and low-temperature polycrystalline silicon (LTPS) panels. Visionox also has a 5.5-generation rigid OLED line, called V1, at Kunshan, Jiangsu Province. The line has a capacity of 15,000 substrates per month.
Profitability from these expansion remains questionable, people familiar with the matter said. Like its competitors, the company will look for government subsidies, but it falls behind in scale, they said.
According to market research firm Stone Partners, Visionox had a market share of 1.9% in flexible OLED in the second quarter. This is far behind BOE’s 24.4% but ahead of CSOT’s 1.5%.
In rigid OLEDs, Visionox is ranked second with 5.6% as of the third quarter, behind leader Samsung Display’s 89.5% and ahead of third place Ever Display’s 4.8%. Tianma is exiting the rigid OLED market.
But in earnings, Visionox lacks behind competitors. The company posted 32 million yuan in operating income in 2017; in 2018 this was 1.77 billion yuan and in 2019 2.6 billion yuan. This year, as of the third quarter, the company has marked an accumulated operating income of 2.09 billion yuan. In net income, the company marked only 15 million yuan in 2017; in 2018 35 million yuan and in 2019 64 million yuan. As of the third quarter in 2020, it has marked a net loss of 27 million yuan. These figures are dwarfed by sales and profits marked by BOE and TCL, which earns tens of billion yuans in net income.
Visionox also relies heavily on government subsidies. In 2017, the company received 523 million yuan in subsidies; in 2018 it received 2.03 billion yuan and in 2019 1.05 billion yuan. Visionox’s net income all turns to the red when these subsidies are unaccounted for.
Visionox’s factories had low utilization rate, people familiar with the matter said, and when they place an order to equipment makers, it is unclear when they will make additional orders, they said.
China is now home to over 20 OLED production lines. These are run by, besides Visionox, BOE, Tianma and TCL.