The story of TCL illustrates that the transformation of "Made in China" from big to strong is the result of a systematic enhancement of corporate capabilities, where lean manufacturing and technological advancement are equally important, and the decisive factor is the spirit of entrepreneurship.

On the afternoon of April 11, 2024, in the TCL China Star Semiconductor Display Industrial Park located in Guangming District, Shenzhen, two massive factories are connected by a sky corridor, with factory buildings that appear to be ten stories high and 300 meters long.

Inside the factory, there are hardly any people, and it is so quiet that it is silent; all the equipment can be remotely controlled and operate automatically.

The flickering red, yellow, and green lights indicate the operating status of the equipment.

To meet the photosensitivity requirements of the exposure materials, the exposure workshop is constantly in a pale yellow environmental light, with the temperature and humidity maintained at 23.8 degrees Celsius and 56%.

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The ten exposure machines laid out side by side, each worth hundreds of millions of yuan, are the size of a 10 square meter room.

The cleanliness level inside the machine is level 10, and the dust-free level outside the machine is level 100, equivalent to the highest level of clean operating rooms.

The processing accuracy of the exposure machine is at the micron level, one-thousandth of a hair strand; the color film glass after exposure must be aligned and bonded with the array-like thin-film transistor glass in a vacuum, with an error not exceeding 6 microns.

These production lines, invested in 53.8 billion yuan and 42.7 billion yuan respectively, are named t6 and t7 by TCL, for the production of the 11th generation of liquid crystal displays (LCD).

In panel manufacturing, the higher the generation line, the larger the size of the cut glass substrate.

These two factories are the world's highest generation of LCD production lines, with a yield rate of 97% and 98%, producing a total of 240,000 large-sized panels per month, and currently capable of making the largest 115-inch TV screens.

In terms of process level, product specifications, and yield rate, these two factories are leading globally.

From the decision to enter the panel industry in 2009 to now TCL China Star has become the world's second-largest panel enterprise, TCL has used 15 years.

Fifteen years ago, "short of core and screen" was a summary of the lack of core technology in Chinese manufacturing.

China is the world's largest TV market, with many TV enterprises, but the cost of display panels (panels) once accounted for more than 80% of the total cost of TVs.

Mainland Chinese enterprises lacking core components became "working horses" for panel enterprises in South Korea, Japan, and Taiwan.

From 2005 to 2014, liquid crystal panels were always the fourth largest import product in China, second only to chips, crude oil, and iron ore, costing 30 billion to 50 billion US dollars every year.

Now, high-process chips are still a headache for Chinese manufacturing, but the pain of a lack of screens has been completely reversed.

Through the unremitting efforts of Chinese panel enterprises represented by TCL China Star and BOE, Chinese enterprises have now occupied nearly 70% of the global market for large-sized panels, not only completely solving the panel supply of TVs with products with better cost-effectiveness, but also providing sufficient security for the screen supply of small and medium-sized electronic products such as computers, mobile phones, and watches.

TCL was established in 1981 in Huizhou, Guangdong, starting with the production of magnetic tapes from "three to one" (processing on behalf of others, processing materials on behalf of others, assembling parts on behalf of others, and compensatory trade), and gradually expanded its business to audio, television, and mobile phone fields.

In 2002 and 2003, TCL's televisions and mobile phones were the leaders in the domestic market share for two consecutive years.

In 2004, TCL simultaneously acquired the color TV business of France's Thomson and the mobile phone business of France's Alcatel, and thus became the world's best-selling color TV in that year.

But at that time, it was also a critical moment for the TV industry to shift from CRT (cathode ray tube) technology to LCD technology, and the mobile phone industry from feature phones to smartphones.

The two French enterprises had basically the previous generation of technology.

TCL greatly underestimated the speed of the new and old technology transformation, thinking that it would take five to ten years to complete the replacement, but in fact, it only took three years, and by 2007, the sales volume of LCDs exceeded CRTs.

In 2005 and 2006, TCL suffered huge losses in two consecutive years, and its life was hanging by a thread.

After the cycle of life and death, Li Dongsheng, the founder and chairman of TCL, felt that the technological gap was a problem that the enterprise must solve.

In 2009, he made the most important decision since he took over TCL - to establish Huaxing Photoelectric (now TCL China Star), to enter the core upstream semiconductor display industry of televisions, and to start with the most advanced 8.5-generation LCD production line at that time.

This production line (t1) invested 24.5 billion yuan, exceeding the net assets of TCL at that time.

If it failed, it would mean the bankruptcy of TCL.

After careful calculation, Li Dongsheng, regardless of external doubts and reminders from old friends, decided to take a gamble.

This gamble brought the future of TCL.

The development of TCL China Star over the past 15 years is a microcosm of the technological advancement of Chinese manufacturing - learning, improving, leaping, and surpassing.

The original technology of advanced industries often comes from Europe and America.

The source of LCD technology is the American Radio Corporation (RCA), and the source of OLED (organic light-emitting diode display) technology is the American Kodak Company.

LCD was industrialized in Japan in the early 1990s and industrialized on a larger scale in South Korea and Taiwan after the late 1990s.

When TCL China Star entered the market, the LCD industry had developed to the 8.5-generation line, and the technology was increasingly mature.

The panel industry is a typical capital-intensive industry, but the rise of the mainland Chinese panel industry cannot be simply attributed to high-intensity investment.

The panel is also a technology-intensive manufacturing industry.

The technology-intensive is not only reflected in the high difficulty of product production but also in the lean degree of the process flow.

Enterprises such as TCL China Star and BOE have been persistently improving technology and processes, accumulating valuable industrial knowledge and process skills, that is, the "know-how" often said by manufacturing people.

This ability to control costs and operational efficiency in the manufacturing process to the extreme is not a joke of "involution", it is itself the core competitiveness of Chinese manufacturing.

As Elon Musk said: "The essence of manufacturing competition is the competition of manufacturing capabilities, that is, the competition of factories."

Through extreme efficiency improvement and cost control, in this mature industry of LCD, the same large-sized panels, mainland Chinese enterprises can produce products with a yield rate of 15%-30% lower cost, which redefines the cost structure of the entire industry.

Japanese and Korean enterprises that cannot adapt to the new benchmark are forced to exit the LCD industry.

In this process of catching up, TCL has completed the transformation from relatively low-end consumer electronics assembly manufacturing to higher difficulty, more complex supply chain, and higher value-added high-end manufacturing.

After breaking through the core upstream, TCL's downstream business also complements each other.

Omdia, a leading consulting institution in the field of television and display, shows that in 2023, TCL's brand TV sales volume was 25.26 million units, ranking second in the world's TV sales volume, with a global market share of 12.5%, second only to Samsung.

In 2010, the combined sales volume of CRT and LCD was 13 million units, ranking seventh in the world.

At that time, the panels of Chinese TV enterprises still completely depended on imports.

The doubts and worries about TCL's investment in building LCD factories also came from the constantly emerging next-generation display technology.

At present, the industry generally recognizes OLED as the future direction of the display industry.

In August 2011, TCL China Star's t1 factory, which produces 8.5-generation LCD panels, was put into operation.

Three months earlier, Samsung announced its 5.5-generation AMOLED mass production.

Will TCL repeat the mistake of acquiring Thomson color TV?

The answer is no after 13 years.

One of the reasons is that TCL has developed Mini LED technology (sub-millimeter light-emitting diode display) and industrialized it, greatly extending the life of LCD.

This technology is a miracle.

It is an improved LCD technology, but it has changed the competitive situation between OLED and LCD and changed the direction of the display industry.

It is usually only a brand-new technology that can change the direction of the industry.

The second reason is that the difficulty of OLED is far beyond expectation.

Although it has been explored for more than ten years, LCD technology is also constantly evolving.

There are still countless technical and engineering problems to be solved before OLED can completely replace LCD, and there are still a large number of no-man's lands in the sub-technical direction.

The third reason is different from the rush to fight when CRT and LCD were converted.

Although Korean enterprises took the lead in OLED, Chinese enterprises followed closely, and both sides are in a competitive situation.

The more advanced Micro LED (micro light-emitting diode display) technology requires more problems to be solved, and it is a broader no-man's land.

The situation is also that Korean enterprises took the lead, and Chinese enterprises followed closely.

Looking back at the history of TCL and the history of the semiconductor display industry, we can find some commonalities of manufacturing industry and the commonalities of technological advancement of Chinese manufacturing.

The breakthrough of the technical principles from 0 to 1 of new industries often comes from American companies, Japanese companies complete the productization from 1 to 10 and the first stage of industrialization from 10 to 30, Korean companies complete the second stage of industrialization from 30 to 60, and Chinese companies do from 60 to 100, and industrialize to the highest level.

When Chinese companies do "learning - improving - surpassing" in one mature industry after another, these companies will also have the ability to explore no-man's lands.

When more and more Chinese companies have this ability, Chinese manufacturing has the potential to develop new industries.

In addition to the semiconductor display industry, high-speed rail, nuclear power, 5G communication equipment, and the new three items of "photovoltaic components/battery power/electric vehicles", the original technology of these industries does not come from China, but they have all become the business cards of Chinese manufacturing, with leading global competitiveness.

Industrial policy, investment drive, and hardworking low-cost labor force, these three factors are far from enough to explain their rise.

In fact, Chinese manufacturing has honed its capabilities today, and the four factors of entrepreneurial spirit, engineer dividend, open international cooperation, and fierce market competition are more important.TCL and other representative Chinese manufacturing enterprises have never slackened in the long march of technological advancement.

However, from the perspective of nearly 300 years of modern industrial development history, Chinese enterprises' efforts to enter high-value-added segments have just begun.

For instance, in the semiconductor display industry where "Made in China" has achieved remarkable success, Japanese enterprises still hold an unshakable position in more upstream and higher threshold technologies such as exposure machines and new display materials.

As pioneers of the LCD industry and once the dominant force in the entire semiconductor industry, Japanese companies, despite losing most of the C-end market, still possess formidable strength in the B-end fields of equipment and materials that are hard for Chinese and Korean companies to match.

In May 2024, Sharp Corporation announced that it would cease operations at its LCD panel factory in Sakai City, Osaka, before September.

This factory, which houses the world's first 10th generation LCD production line, is finally heading towards suspension after years of losses.

At the same time, LG plans to sell its 8.5th generation LCD factory in Guangzhou.

In August 2020, Samsung sold its 8.5th generation LCD factory in Suzhou to TCL.

The Japanese and Korean companies that once dominated the LCD industry have now been marginalized.

The reversal of the situation and the change of the times have occurred in just over a decade.

The current market mainstream TFT-LCD (Thin Film Transistor Liquid Crystal Display) technology originated from the American company RCA in the 1960s and was industrialized by Japanese companies in the 1970s.

Initially, they could only produce small screens of 2 inches, used for calculators and electronic watches.

Sharp's introduction of a 14-inch display screen in 1988 was a revolutionary achievement, and since then, LCD screens could be used for mainstream products such as computers and televisions.

After that, Japanese companies monopolized the LCD industry.

However, the advantage of Japanese companies did not last long.

Korean companies such as Samsung and LG, through measures such as introducing American patents, hiring Japanese "Sunday engineers" at high salaries, and heavily investing counter-cyclically during the 1997-1998 Asian financial crisis, surpassed their Japanese counterparts at the turn of the century.

Japanese companies, with no hope of reversal, conveniently transferred technology to Chinese Taiwan companies eager to develop the display industry, thus giving birth to the "five tigers of the panel" in Chinese Taiwan - AU Optronics, Chi Mei Electronics, Innolux, Chunghwa Picture Tubes, and HannStar, whose output once exceeded that of Korean companies.

From 2008 to 2013, 92% of the sales of panel companies in Chinese Taiwan came from Mainland China.

In 2003, BOE Technology Group Co., Ltd. entered the LCD industry by acquiring the display business of Hyundai of South Korea.

After a difficult "light change," by 2013, BOE's shipments of smartphone screens and tablet screens had become the first in the world.

In 2018, BOE's share in the five major mainstream markets of mobile phones, tablets, notebooks, monitors, and televisions all ranked first in the world, becoming the leader of the global display industry.

TCL's entry into the LCD industry began in 2007.

Just recovering from the massive losses caused by a failed merger, TCL established an LCD module factory that year, preparing to enter panel production.

After several setbacks, in November 2009, TCL announced a partnership with Shenzhen's subordinate investment company, Shenzhen China Star Optoelectronics Technology Co., Ltd., to start the construction of the country's first 8.5th generation TFT-LCD production line, known as TCL China Star t1 production line.

At that time, the global financial crisis had just subsided, and overseas companies had slowed down their investment in new production lines, while mainland Chinese panel companies entered the market against the trend or increased their investment against the trend.

A few years later, they replayed the scene where Korean companies surpassed their Japanese counterparts during the Asian financial crisis.

However, at the end of 2009, when Li Dongsheng decided to establish TCL China Star, few people could foresee this outcome.

On the contrary, questioning and worry were the main tones.

The LCD industry is full of strong players, like a red ocean, with the two Korean giants like two mountains, and Sharp of Japan, as the industry's founder, is still awe-inspiring.

The five tigers of Chinese Taiwan are in full swing, and BOE of the mainland is also thriving.

Can TCL survive in the red ocean?

At that time, Li Dongsheng did not foresee the outcome of the LCD industry, but he believed that putting all his assets into the establishment of TCL China Star was not a gamble, but a fight.

Gambling is a matter of luck, and fighting is a prepared battle, he had a 70% chance of winning this battle of life and death.

If he didn't fight this battle, trapped in the TV assembly link, TCL's future would be even bleaker.

TCL has always had a large sales volume of TVs.

According to data from the research consulting company DisplaySearch, in 2008, TCL's LCD TV sales volume was 4.18 million units, ranking first in China and eighth in the world, which is Li Dongsheng's confidence.

He made the worst preparation that even if the Huaxing panel was not exported, he could digest it himself.

Fortunately, the panel market gradually picked up after the financial crisis, and the Huaxing t1 production line was put into operation in August 2011, and achieved full production in September 2012.

During this period, the panel price has been in an upward cycle, and the Huaxing t1 production line achieved profitability in the year it was put into operation, with a net profit of 2.26 billion yuan in 2013.

In contrast, the first ten years after BOE went public, the cumulative loss after deducting non-recurring gains and losses was 7.5 billion yuan.

The construction of the first Huaxing factory (t1) was a "multinational force", with an initial core technology team of more than 200 people, including about 150 engineers from Chinese Taiwan, led by Chen Liyi from Chi Mei Electronics, about 20 engineers from South Korea and Japan, and about 50 engineers from Mainland China.

The joining of Kim Woo-Jik, the retired vice president of LG Display, shocked the South Korean industry, and he later served as the third CEO of Huaxing.

Starting from the construction of the t3 factory in 2016, the mainland team has had the ability to lead technology, and the soul figure is Dr. Yan Xiaolin, the chief technology officer and senior vice president of TCL Technology, and the dean of the TCL Industrial Research Institute.

Over the past decade, the pattern of the LCD industry has been completely changed by the latecomers in Mainland China.

According to the statistics of Luotu Technology, in 2023, the global shipment of large-sized LCD TV panels was 226 million pieces, of which BOE shipped 55.2 million pieces, with a market share of 24.4%; TCL Huaxing shipped 47.2 million pieces, with a market share of 20.9%; the overall shipment of mainland Chinese panel companies increased to 68.7%, the Chinese Taiwan companies represented by AU and Innolux accounted for 20.5%, and the Japanese and Korean companies represented by Sharp and LG accounted for 10.8%.

After TCL entered the panel industry, the synergy between upstream and downstream became obvious.

TCL Industry focuses on terminal products and services, including home appliances, wearable devices, smart locks, and other businesses.

Sun Li, the CTO of TCL Industry, summarized to "Finance and Economics" that in addition to mutual supply and market synergy, there is also close technical synergy between TCL's TV and panel businesses.

A screen factory with complete machine capabilities must respond to the market much faster than a screen factory without complete machine capabilities.

At the product planning level, Huaxing will discuss various parameters with the industry when making screen product technology planning, and the industry will feedback consumer needs to Huaxing to help define product specifications; at the technical level, screen defects can be compensated by complete machine technology, and vice versa.

Screens that have been verified by TCL TVs are also more easily recognized by other customers.

However, the buyers of TCL Huaxing panels are no longer internal customers like TCL Industry.

Li Dongsheng set a rule for Huaxing early on - the proportion of domestic sales should not exceed 50%.

Over the years, the market share of TCL Huaxing has increased in tandem with the market share of TCL TVs, and they have become the runner-up in the industry one after another.

According to Omdia data, in 2020, the TCL brand became the third in global TV sales, the second in 2022, and in 2023, TCL continued to be the runner-up, with TV shipments of 25.26 million units, a global market share of 12.5%, second only to Samsung.

Entering the panel industry has allowed TCL to cross the threshold of tens of billions of yuan in revenue.

In 2019, TCL Group completed the reorganization and was split into two companies, TCL Technology and TCL Industry, with the former being the main body of TCL Huaxing's semiconductor display business.

In 2020, TCL Technology acquired Tianjin Zhonghuan Group, the leader in photovoltaic silicon wafers, and TCL's territory further expanded.

It quickly crossed the threshold of 200 billion yuan in the industry's rising cycle, with a total revenue of 297.3 billion yuan in 2023.

With the second growth curve of panels and the third growth curve of photovoltaics, TCL has significantly widened the gap with its former TV peers.

In 2004, TCL's revenue was 40.3 billion yuan, and the revenue of Hisense, Skyworth, Konka, and Changhong was all in the tens of billions of scale.

By 2023, TCL's revenue approached 300 billion yuan, Hisense's revenue exceeded 200 billion yuan for the first time, reaching 201.7 billion yuan, and other TV companies' revenue did not exceed 100 billion yuan.

Among all home appliance giants, only Midea Group's 373.7 billion yuan and Haier Group's 371.8 billion yuan exceeded TCL, but the home appliance business of these two companies is still the main source of revenue.

However, TCL's B-end revenue from panels and photovoltaics reached 174.5 billion yuan, accounting for nearly 60%.

For TCL, investing in the construction of Huaxing was the starting point of its qualitative change.

Over the past decade, it has not only achieved the original intention of ensuring the supply of TV screens, but also systematically improved its technical capabilities.

From a manufacturing company based on cost efficiency and market marketing, it has advanced to a technology-driven manufacturing company, which is an unexpected greater gain.

Li Dongsheng said to "Finance and Economics" that the initial consideration for establishing TCL Huaxing was the synergy of the upstream and downstream of the TV business, but in practice, he realized that only by deeply entering the high-tech, heavy asset, and long cycle industry can one cultivate its own core technical capabilities.

This ability cannot be obtained by investment, it must be gradually tempered in fierce market competition.

The success of TCL Huaxing has allowed TCL's terminal business to break away from the model of relying solely on cost efficiency competition, adding a new engine driven by technology.Li Dongsheng stated that the six years from 2018 to 2023 were the fastest-growing period for R&D investment in TCL's 43-year history, with a cumulative investment of over 60 billion yuan, including more than 14 billion yuan in 2023.

After surpassing LCD technology, TCL, along with leading domestic and international companies in the display industry, entered uncharted territory.

At this point, there were no experiences to draw upon, making originality more critical.

Moreover, the technology itself and its productization and engineering (mass production capabilities) were equally important.

In January 2019, TCL unveiled the world's first Mini LED TV at the Consumer Electronics Show (CES).

Mini LED is an improved LCD technology that has changed the technological evolution path of large-screen TVs in the following years.

It is expected in the industry that the life cycle of LCD products will be extended by 10 to 15 years.

Even Samsung, which initially bet on OLED and once abandoned LCD, has turned to vigorously develop Mini LED TVs, making the prospect of OLED large-screen TVs entering households even more distant.

While OLED technology is waning in the large-screen TV market, it is increasingly becoming the mainstream in the markets for smartphones, tablets, and computers with smaller and medium screens.

In this field, Samsung and LG are in the leading position, both using vapor deposition technology to manufacture OLED panels.

TCL China Star has taken a different path and decided to bet on the printed OLED technology route, which is another "gamble" for TCL's future.

Unlike China Star's rapid progress following the path of predecessors, there is no precedent for the printed OLED route worldwide, and it is time for TCL to demonstrate its capabilities in uncharted territory.

When China Star's t1 production line started production in 2011, the main players in the market were Samsung, LG, Sharp, AU Optronics, Innolux, and BOE.

Although TCL has its own TV business to underpin its panel business, to stand out in fierce competition, relying solely on internal guarantees is far from enough; China Star must truly form market competitiveness.

Following the path of predecessors can avoid many pitfalls, and the test is the speed of catching up.

Specifically, it is about manufacturing with higher efficiency and lower costs, faster production ramp-up, and further improvement in yield rates.

In a mature industry, latecomers can only gain a foothold and surpass others by achieving ultimate cost and efficiency in the manufacturing process, which is one of the core competencies of Chinese manufacturing.

In the manufacturing process, every link can affect yield rates and costs.

Zhang Cai Li, General Manager of TCL China Star's Shen Hui base, introduced to "Finance" that in the Shenzhen factory, a 1 percentage point increase in panel production yield can reduce costs by hundreds of millions of yuan per year.

Currently, the average yield rate of the TCL China Star Shen Hui base is 96%, which is at the leading level in the industry.

Once, when Zhang Cai Li communicated with international peers, the other party proudly revealed that their yield rate was 92%, and Zhang said that the China Star t7 production line was 98%, and the other party blurted out how could this be possible!

Such achievements are due to countless lean optimizations in the manufacturing process.

Some are on the equipment side.

During the transmission process of the vacuum equipment in the panel production line, there will be friction and dust, which requires brushes to remove the dust, and this brush is a consumable.

If it is not replaced regularly, it may affect the cleanliness and yield rate.

Engineers in the panel factory later found that there are similar devices in the high-speed rail field, but the preparation process is different, and the service life of the equipment is greatly extended.

This technology was later introduced into the panel factory, reducing the cost of spare parts.

Subtle optimizations in the process can also improve efficiency.

In the past, if operators found possible abnormal deformations, they would take photos, upload them, and prompt.

On-duty engineers need to find the abnormal photo in the photo library after receiving the prompt, and then determine whether there is a quality problem.

Making a judgment only takes a few seconds, but finding a photo can take three to five minutes, and there may be hundreds of similar feedbacks a day.

Later, an engineer proposed that when the abnormal prompt is pushed to the on-duty engineer, it automatically associates with the corresponding photo.

This small link optimization has saved a lot of time.

Zhang Cai Li summarized that IT (Information Technology) systems can easily achieve this function, just rewrite a few lines of code, and the key is that operators and engineers on the scene take the initiative to propose improvements.

In other words, without people's initiative, the integration of IT and OT (Operation Technology) often mentioned in industrial digitalization is difficult to achieve, because the programmers who write the code in the background cannot fully grasp the twists and turns of the manufacturing scene.

Zhao Jun, Senior Vice President of TCL Technology and CEO of TCL China Star, emphasized to "Finance" that people are still one of the core competencies, but this does not mean that labor is cheap, because labor costs account for a very small proportion of the total costs in the panel industry, but refers to the quality of the labor force, especially the quality of engineers and management teams.

Digital technology is also helping China Star factories improve efficiency and yield rates.

Ge Chuang Dongzhi is an industrial Internet company incubated by TCL, focusing on providing digital solutions for manufacturing enterprises.

He Jun, CEO of Ge Chuang Dongzhi, said to "Finance" that improving yield rate is an eternal theme for panel companies, and the services provided by Ge Chuang Dongzhi to TCL China Star have always revolved around improving yield rates.

The ADC (Automatic Defect Classification and Judgment) system was the earliest project launched by Ge Chuang Dongzhi and TCL China Star.

Starting from 2019, it has been launched in nine factories of China Star.

This system uses AI image recognition technology, and machine judgment has replaced human judgment, greatly improving detection efficiency and recognition speed, saving half of the manpower, and the accuracy rate has increased from 85% to more than 90%.

After the precision rate and speed of defect judgment are improved, the speed of solving corresponding problems is also improved, which means higher yield rates.

He Jun introduced that the CIM (Computer Integrated Manufacturing) system used for production management has been greatly shortened in the time to launch.

Ten years ago, it took more than two years after the completion of a new factory for the CIM system to be completed.

However, the China Star t9 production line, which was completed in June 2023, only took six months for the CIM system to go online.

The faster deployment of CIM, combined with more advanced factories, only took three months after the t9 production line started production, and the yield rate climbed to 91%.

In TCL Zhonghuan, which was acquired by TCL Technology, the flexible manufacturing capabilities supported by digital technology are also reshaping the competitiveness of photovoltaic silicon wafer companies.

Photovoltaic technology routes are rapidly transitioning from P-type PERC batteries to N-type Topcon batteries.

Qin Shilong, Secretary of the Board of Directors of TCL Zhonghuan, introduced to "Finance" that P-type photovoltaic components have relatively consistent requirements for silicon wafers, while N-type photovoltaic technology is centered on batteries, with different battery manufacturers having different requirements for silicon wafers, more product types, and more customized demands.

Silicon wafer companies must shift from large-scale standardized manufacturing to small-batch multi-batch manufacturing.

TCL Zhonghuan has upgraded its manufacturing methods in a timely manner.

By the end of 2023, it has been able to flexibly manufacture more than 1,200 types of customized products, which means reducing silicon consumption and saving costs.

The continuously expanding production lines also give TCL China Star the opportunity to feedback the experience of old factories to new factories and find optimization space among different factories.

This kind of cross-factory improvement in technology and manufacturing efficiency must be supported by a considerable production scale.

He Jun introduced that Ge Chuang Dongzhi was more focused on the efficiency of individual factories in the early stage.

As the number of factories in China Star increased, it also began to focus on how to improve efficiency across factories, and how to achieve overall capacity allocation and operational optimization.

In 2022, TCL China Star established a manufacturing platform, and the nine production lines in Shenzhen, Wuhan, Guangzhou, and Suzhou were able to learn and draw lessons from each other, and formed the summarized experience into systems and processes.

With the efforts of all parties, the yield rate of TCL China Star factories has been significantly improved.

The t6 production line started production in 2019, and the yield rate reached 92% in the same year, while the t2 production line, which started production in 2015, took two years for the yield rate to climb to 90%.

The ultimate cost efficiency also comes from the operation link.

In 2020, Zhang Cai Li proposed that the manufacturing cost per unit capacity of the Shenzhen factory should be reduced by 8% every year.

The team's first reaction was that this was impossible, but through brainstorming from top to bottom, and through the management team's extreme operation meeting every Saturday, the goal was miraculously achieved.

When the t6 production line just started production in 2020, the factory had 1,300 people.

At the end of 2021, the t6 and t7 production lines were merged into one factory management, and the capacity increased from the original 90,000 pieces per month to 260,000 pieces, but the personnel after the merger was only more than 1,400 people.

In March 2021, Samsung sold its Suzhou liquid crystal display company to TCL China Star, and this production line became China Star's t10 factory, which is the only 8.5-generation line invested and built by Samsung in mainland China, and was put into operation in 2013.

After TCL China Star took over the Suzhou factory, it was found that the manufacturing cost of the same specifications of products in the Shenzhen factory was about 15% lower than that of the Suzhou factory.

And in a foreign enterprise LCD factory, after the China Star team investigated, it was found that the MRO cost (maintenance, repair, and operation, usually referring to the spare parts of auxiliary materials and consumables in the factory) of China Star factories was 60% to 70% lower than that of the other party.

Lu Feng, a professor at the School of Government Management of Peking University, believes that after in-depth research on the panel industry, the same panel price, most international manufacturers are at a loss, while BOE and TCL China Star can make a profit, which means that the competitive conditions of the panel industry have been permanently changed.

If you cannot adapt to the new industrial cost structure, you can only be eliminated.

In an exclusive interview with "Finance," Li Dongsheng believes that TCL China Star has hardly taken detours because most of the journey was catching up, and the pits others have stepped on have been stepped on, and TCL only needs to go through the wind and rain.

However, in recent years, the industry has been exploring OLED technology and trying errors.

Except for Samsung, no one is making money.Zhao Jun stated that when there is a benchmark ahead, surpassing it by following the path he has taken at a faster pace is a test of speed.

However, once entering uncharted territory, the ability to innovate needs to advance.

It's not about having the newest technology, but whether the technology can be accepted by the market.

Mini LED technology is a prime example.

In any industry, the time of technological change is the most dangerous for established leading companies.

Digital cameras phased out Kodak, smartphones buried Nokia, and search engines along with mobile internet saw the end of Yahoo.

TCL nearly bowed out during the transition from CRT to LCD... LCD technology has been the mainstream in the display industry for nearly 20 years, and whether it will be replaced is a question all companies in the display industry must face.

OLED technology has been seen as the terminator of LCD technology since its inception.

Due to different light-emitting principles, OLED technology offers higher contrast, a wider viewing angle, faster response speed, and can create flexible and foldable screens; its downside is the shorter lifespan of organic light-emitting materials, which can cause "burn-in" or ghosting when displaying a fixed image for an extended period, and its more complex manufacturing process and higher costs, especially for large OLED screens.

High contrast is the core advantage of OLED, and for high-end TV users, contrast is a key indicator.

Therefore, despite being several times more expensive than LCD TVs, OLED has always had a place in the high-end TV market.

LG has always been a major proponent of OLED TVs.

However, if LCD technology can achieve a display effect comparable to OLED at a lower cost, the market will present a different situation.

In fact, this is the new change that has occurred in the high-end TV market in the past two years.

Mini LED technology is an improvement on LCD technology, and its display principle is still the control of liquid crystal materials to deflect the transmission rate of the backlight, which then displays different colors through the color filter.

But its backlight is no longer a solid block of white light, but individual Mini LED lamps ranging from 50 microns to 200 microns, densely arranged in the backlight unit, combined with more precise local dimming technology, to achieve finer local dimming.

On September 1, 2023, at the TCL exhibition area at the International Consumer Electronics Show in Berlin, Germany.

Photo/Visual China.

Simply put, the original LCD technology needs to control the liquid crystal materials to close the light transmission channels to display black, but it cannot completely block the light from the backlight.

On Mini LED screens, the Mini LED lamps corresponding to the picture can be directly turned off to achieve true black without affecting the display of other areas, thus solving the contrast problem of LCD.

Mini LED still uses LCD panels, which are much cheaper than OLED panels.

In January 2019, TCL launched the world's first Mini LED TV with more than 1,000 independently controllable light zones.

In January 2024, TCL released the latest 115-inch Mini LED with more than 20,000 independently controllable light zones.

The global TV giant Samsung also joined the Mini LED camp, and at the CES in January 2021, Samsung released its first Mini LED TV Neo QLED.

2021 was also the first year of commercialization of Mini LED.

After Samsung and several other TV companies joined, the sales of Mini LED TVs reached 2.1 million units that year, starting to challenge OLED in the mid-to-high-end market.

In 2023, global OLED TV shipments fell by 20.6% to 5.48 million units, while Mini LED TVs grew against the trend by 24.7%, reaching 4.25 million units.

Wang Yuhong, Chief Operating Officer of Luotu Technology, predicted that in 2024, the shipment of Mini LED TVs will reach 6.59 million units, surpassing OLED's 6.4 million units, and in 2025, Mini LED TVs will reach 10 million units.

Weng Zhenhua, President and General Manager of the Consumer Electronics Division of AVC, pointed out that since 2021, Mini LED has become one of the main technological directions to promote the upgrade of TV picture quality, with market share doubling for three consecutive years.

Data from AVC shows that as of April 2024, the retail volume share of Mini LED TVs was 4.4%, and the retail value share reached 13%.

While the market size is growing, it has also become a profit-type product for companies.

It is expected that the retail volume share of Mini LED TVs will reach 5% for the whole year of 2024.

How did TCL discover and industrialize this technology that is changing the trend of the high-end TV market?

Yan Xiaolin summarized to "Finance" that user demand is the driving force of technological development, problems are the starting point of technological innovation, and the intuitive feelings of consumer electronics users are picture quality, appearance, and cost-effectiveness.

After decades of development, LCD technology is mature, and its cost, yield, and production capacity are all leading in the industry.

The problem faced is how to surpass OLED in picture quality, appearance, and cost-effectiveness.

After in-depth research on backlighting, driving, structure, picture quality tuning, algorithms, and other series of content by TCL Industrial Research Institute, the answer was found to be Mini LED technology.

Yan Xiaolin said that from the beginning of research and development to mass production, Mini LED has gone through many twists and turns.

TCL started the basic research related to Mini LED in 2006, and the X1 that went on the market in 2016 was a phased achievement.

When semiconductor chips, AM driving technology, polymer material technology, high-precision process and equipment technology, and other fields gradually matured, Mini LED technology concentrated on the outbreak in 2019, achieving productization.

The ultimate use of Mini LED is terminal products such as TVs, and TCL Industry, which is responsible for smart terminal business, plays a key role in its productization.

Zhang Shaoyong, Senior Vice President of TCL Industry, analyzed to "Finance" that for TVs, size is the most important and irreplaceable demand.

If the picture quality problem is solved on the basis of size, it will be very competitive.

The advantages of OLED technology are high contrast, fast response time, wide viewing angle, and flexibility, while its disadvantages are low peak brightness, poor gray-scale transition, and high cost for large sizes.

The advantages of Mini LED are high peak brightness, low cost for large sizes, good gray-scale transition, long service life, and its disadvantages are non-flexibility and thicker thickness, but for TV products, these two disadvantages are not significant.

Specifically for Mini LED technology, Zhang Shaoyong said that it is essentially an optimization based on LCD whole machine technology.

The screen has not changed, but the backlight technology has undergone a qualitative change.

It used to be a solid light source, and now it has become a light source with thousands to tens of thousands of partitions, which are lit up by Mini LED lamps.

The local dimming technology used by Mini LED is not rare in the industry, but it was difficult to achieve thousands to tens of thousands of partitions before.

This change can be realized, which is the result of the joint progress of various technologies.

The key breakthrough in the supply chain is first the technology of Mini LED lamps.

The supply chain could not make such small lamps before, but later it was achieved; the second is the control technology.

Originally, each partition needed a control chip, and the cost of control chips could not come down after the number of partitions increased.

Now, one chip can control 32 partitions, which immediately reduces the cost of driving chips, and the control cost of a single partition has dropped from two or three yuan to a few jiao.

In order to make the light emitted by the Mini LED lamps evenly irradiate out in each partition, a lens needs to be added on the lamp, and the point light source of the lamp is transformed into a focused and uniform surface light source through the lens.

Zhang Shaoyong said that the design and parameters of the lens are one of the core technologies of TCL in Mini LED.

TCL designs its own indicators, has applied for multiple patents, and then hands them over to suppliers for manufacturing.

Zhang Shaoyong summarized that for TV manufacturers, what Mini LED TVs need to do is three things: the first is to mount the lamps on the PCB (printed circuit board); the second is to do the algorithm software of the main chip, and do a good job of controlling the local backlight; the third is to make the TV thinner.

In the era of Mini LED, the difference between screens is not big, but the backlight hardware design and partition control algorithm are the core competitiveness of the whole machine factory.

There is also collaboration with TCL Huaxing.

Zhao Jun, CEO of Huaxing, said that Huaxing's LCD panels are based on VA (vertical alignment) technology, which has the advantage of higher contrast compared to the other major technology route IPS (in-plane switching) technology, but its viewing angle is small.

The advantage of Mini LED is to improve the contrast shortboard of LCD technology, so VA screens can amplify the strengths of Mini LED technology.

Although Mini LED has made the application of OLED on large-screen TVs show a downward trend, the growth space for OLED in IT products such as mobile phones, tablets, laptops, and desktop computers from 5 inches to 30 inches is still bullish.

Apple's latest iPad released in 2024 uses an OLED screen.

On TVs, the disadvantages of LCD being thicker than OLED, difficult to be flexible, and slow response time have little impact on the product experience, but for mobile phones and other IT products, thinness and flexibility are key factors, and the picture quality advantage of OLED also makes it more suitable for application on small and medium-sized screens.

In 2024, personal computer manufacturers have successively launched personal computers with artificial intelligence functions (AIPC), which have higher requirements for computing power and higher energy consumption, making energy-saving screens more important.

OLED, which is self-luminous for display, has no backlight power supply and is more energy-saving than LCD, and AIPC will also carry more OLED screens.Considering the overall situation, LCD, with its mature technology, excellent cost-performance ratio, and continuous self-evolution, will not be replaced in the short term.

Numerous TCL executives and industry experts interviewed believe that LCD still has a lifespan of at least five to ten years, and will not repeat the rapid obsolescence history of CRT.

OLED is still recognized by the industry as the future mainstream, but its expansion speed depends on its manufacturing capabilities.

After ten years of development, OLED has already occupied more than 50% of the mobile phone market.

The next growth point for OLED will be in the consumer-level IT market.

Xie Qinyi, General Manager of Display Research at Omdia Group, which focuses on technology industry research and consulting, analyzed for "Finance" that all panel factories rely on TVs now and will rely on IT in the future; they rely on LCD now and will rely on OLED in the future.

About ten years later, the market size of OLED and LCD will be comparable.

Looking at the market from the perspective of technology application, although the unit price of OLED is higher than that of LCD, the proportion of screen cost in the total cost of consumer IT products is much smaller than that of TVs, so they can afford a higher screen price.

In the main battlefield of LCD, the TV market, global sales have stabilized at around 200 million units per year, and the overall growth potential is limited.

Compared with OLED, the production capacity of LCD is more concentrated.

As the production lines gradually depreciate, the practice of having to produce as much as possible to spread the depreciation costs in the past has been replaced by production based on sales in recent years, making the supply and demand and prices of LCD more stable.

Xie Qinyi predicts that in 2024, LCD will account for about 93% of the total shipment area of display screens; but in terms of market size calculated by amount, LCD will account for about 62%, and OLED will account for 37%.

Five years later, the market size proportion of LCD, OLED, and other display technologies (Micro LED, AR, etc.)

is expected to be 55%, 40%, and 5% respectively.

This means that the layout of OLED is crucial for the future of panel companies.

Unlike when Chinese companies entered the LCD industry, the manufacturing technology of high-generation OLED is still far from mature.

This time, Chinese companies no longer have a benchmark to follow.

LG and Samsung started their efforts in research and development and manufacturing earlier, but there is no generation gap between China and South Korea, and everyone has not yet gone deep into the uncharted territory.

The metal mask plate (FMM) vapor deposition technology is the mainstream technology route for manufacturing OLED at present, and the small-sized OLED production lines that Chinese and South Korean companies have put into production all adopt this technology.

The technical route for large-sized OLED is still unclear.

LG is the only company that has built a high-generation OLED production line and has been the first to launch OLED large-screen TV products to the market.

In November 2023, BOE announced that it would build an 8.6th generation OLED production line in Chengdu, with a total investment of 63 billion yuan.

In March 2024, Samsung started its first 8.6th generation OLED production line.

These two 8.6th generation production lines both use vapor deposition technology.

TCL CSOT chose a completely different printing (IJP) OLED manufacturing route.

Compared with LCD, OLED, due to the absence of a backlight layer, has a simpler structure, but the preparation process is much more complex.

The key step is to deposit OLED materials on the glass substrate.

How to achieve this process has two routes: vapor deposition and printing.

The principle of vapor deposition technology is to heat the OLED materials at high temperatures in a vacuum environment, sublimate them into gas, and then pass them through a metal mask plate screen to precipitate on the glass substrate behind the screen.

The screen has small holes with a diameter of a few microns to tens of microns engraved at specific positions, and the gas passes through them.

In order to precipitate red, green, and blue pixel points on the substrate, it is necessary to adjust the position of the mask plate according to the need each time, and vapor deposit three kinds of organic materials.

Small-sized OLED panels are made in this way.

The metal mask plate must be very thin to accurately position the deposition of pixel points, but when manufacturing large-sized panels, large and thin metal mask plates are prone to deformation.

Therefore, LG and Samsung have invented W-OLED and QD-OLED schemes respectively.

The former is to vapor deposit white materials and then photo-etch a layer of red, green, and blue filters, while the latter is to vapor deposit blue materials and then photo-etch quantum dot materials, thereby realizing the basic red, green, and blue pixel points respectively, and the core process is also vapor deposition.

Dr. Cao Weiran is the head of the printing OLED center of TCL CSOT, responsible for the development of OLED printing technology.

He introduced to "Finance" that the principle of printing OLED is similar to that of an inkjet printer, except that what is printed is not ink, but OLED materials dissolved in a solvent.

It is not printed on paper, but dropped on a glass substrate with countless fine grooves, then vacuumed and heated to evaporate and remove the solvent, and the OLED materials can be deposited on the glass substrate.

Why did TCL choose the printing route?

Cao Weiran explained that first, the vapor deposition process will leave a lot of OLED materials on the metal mask plate, and the material utilization rate is less than 30%, while the printing process has an OLED material utilization rate of more than 90%; second, the vapor deposition process requires heating in a vacuum, while the printing process itself does not need a vacuum environment, only vacuuming is required when evaporating the solvent, and the process requirements and equipment costs are much lower; third, the vapor deposition process is limited by the size of the metal mask plate, and the printing process is easier to adjust to different sizes and shapes, just like the difference between block printing and movable type printing.

Although the principle seems simple, almost every link of this route needs to be tackled from scratch.

Cao Weiran introduced that in order to ensure that the "ink" does not spread when it drops onto the substrate, the solution must have hydrophobicity; to ensure that the "ink" drops to the correct position, the equipment must have extremely high precision; the solvent must form a uniform film when it drops onto the substrate to avoid the "coffee ring effect" of thick edges and thin centers, and the development of solvent materials is also a difficulty.

There are a lot of material and process problems to be solved in each link.

Zhao Jun said that printing OLED is the first time China's display industry has led a brand-new technology route.

TCL CSOT, established for 15 years, has been exploring the uncharted territory of printing OLED for 11 years.

In the early stage, it focused on the technology itself, and after completing the technical verification, it turned to the applicable scenarios of the product.

Initially, it was positioned in televisions, but after repeated discussions, it was found that OLED TVs could not form competitiveness in the foreseeable future, so it turned to other display devices including medical displays, laptops, tablets, and other medium-sized products, while exploring the application of printing OLED on mobile phone screens.

Interestingly, the decline of OLED applications on televisions is largely influenced by the Mini LED technology discovered by TCL itself.

Faced with such a major adjustment, will researchers feel lost?

Cao Weiran frankly admitted that researchers will definitely have psychological fluctuations, but technology investment is for the realization of commercial value, and researchers must recognize market trends and respect market laws.

Zhao Jun said that when exploring in the uncharted territory, whether the mainstream market can accept new technologies is a point that needs to be considered in research and development.

In the following stage, there is no such problem.

The road has been taken by others, and one only needs to walk faster and have higher cost efficiency to achieve transcendence.

The uncharted territory is full of uncertainties, and the ability to transform these uncertainties into certainties is not at the same level as the following period.

It is not enough to just do well in technology, but it is necessary to consider the prospects for commercialization, mass production feasibility, and economic viability, whether it can be accepted by customers and consumers.

To some extent, the risks and challenges of TCL's bet on printing OLED in the uncharted territory are even greater than the establishment of TCL CSOT in 2009.

Some industry observers analyzed for "Finance" that the biggest advantage of printing OLED is that the investment cost is only about half of that of vapor deposition.

If CSOT can take the printing route, the investment return will be very good.

The biggest risk is that no one has taken this route.

The concept of printing is not new, and other companies have also studied it, but they all gave up.

Its supply chain, materials and other links are not as complete as vapor deposition.

Taking the printing route is a very big bet, but the competition in OLED technology routes is still in the early stage.

Vapor deposition is temporarily a bit faster, and the final outcome is unpredictable.

Dr. Yan Xiaolin said to "Finance" that choosing printing OLED as the next-generation display technology is a joint decision of the top management of TCL and is a long-term technical direction.

TCL CSOT has been planning and deploying OLED since its establishment.

In 2013, it preliminarily determined to use printing OLED as a large-sized product plan.

After continuous research and development, it has produced a large number of printing OLED prototypes, ranging from 14 inches to 65 inches, from rigid to various flexible ones, covering a wide range, and has also verified the advantages of printing OLED in terms of specifications and cost competitiveness, and has been recognized by upstream and downstream enterprises.

The predecessor of TCL, "TTK Home Appliance Co., Ltd.", was established in 1981 and was one of the first 13 joint ventures in the country.

It was jointly operated by a newly established company of the Huiyang District Machinery Bureau in Mainland China and the Hong Kong Yaohe Ocean Company, producing and selling audio tapes.

The company's name imitated the famous Japanese TDK company.

The name TCL was named by Li Dongsheng in 1985, taking the initials of the three English words in Telephone Communication Limited.

At that time, the company's main product had changed from tapes to telephones.

Whether it was introducing production lines to process and sell tapes or introducing production lines to process and sell telephones, the end of the industrial chain was the assembly link.

With the deepening of reform and opening up and the market economy, there were business opportunities everywhere, and TCL entered more fields, but it was still at the end of the manufacturing value chain.

By introducing production lines to produce consumer electronics, the enterprise competes in low-cost assembly and marketing capabilities.

However, with the huge domestic market, eager consumers, and a management team that works hard, TCL stood out among the first generation of market-oriented enterprises and once became the double champion of China's TV and mobile phone markets and the runner-up in the personal computer market.In 2004, TCL's acquisition of Thomson's TV business and Alcatel's mobile phone business encountered setbacks, followed by the "strangulation" of TV screens, which made Li Dongsheng painfully realize that the technological gap could not be compensated by the cost efficiency and marketing capabilities that were once taken pride in.

In May 2021, during an interview with financial writer Qin Shuo, Li Dongsheng summarized, "For a company to form a competitive advantage globally, it must have its own core technology.

The core technology of terminal products is relatively shallow; it is essential to enter the upstream key technology and component fields to build a deeper core capability."

The TCL of 2024 is completely different from that of 2009.

For a company that started with consumer electronics, the establishment of TCL China Star in 2009 to enter the semiconductor display industry and the acquisition of Tianjin Zhonghuan Group in 2020 to enter the new energy photovoltaic industry, Li Dongsheng's two major decisions completely changed the development trajectory of TCL.

By 2023, TCL's B-side business accounted for nearly 60% of the total revenue of nearly 300 billion yuan.

Among its former home appliance peers, no company has entered the B-side market with such strength.

Even Midea, which acquired Kuka, still has its home appliance business as the foundation of its revenue of over 370 billion yuan.

The 15 years in which TCL expanded upstream and initially achieved dual-wheel drive by cost efficiency and core technology is also a key stage for other outstanding representatives of Chinese manufacturing to break through upwards.

In 2014, Huawei surpassed Ericsson to become the world's largest telecommunications equipment manufacturer.

Five years later, Huawei's high-end mobile phones had the capability to challenge Apple; in 2015, the global market share of Chinese photovoltaic modules reached 70%, and Chinese companies established a competitive advantage in the entire photovoltaic industry chain; in 2017, CATL surpassed Panasonic to top the global power battery list, and has since continued to expand its leading advantage; in 2022, BYD became the world's new energy vehicle sales champion, and the only competitor that worries Musk...

The industries in which these companies are located have different technological characteristics, industrial structures, market entities, and government policies, but like TCL, the development of the above companies reflects the process of Chinese manufacturing from big to strong, and shows the trend of more and more Chinese manufacturing companies starting to climb to the high-value chain and high-tech segments.

Although there are all kinds of debates around industrial policies and economic models, grand narratives that are detached from the main body of economic activities are rootless.

After reviewing typical cases like TCL, it will be found that the issues hotly discussed on the table actually have not much impact.

The transformation of Chinese manufacturing from big to strong is ultimately the result of a systematic improvement in corporate capabilities, where lean manufacturing and technological advancement are equally important, and the decisive factor is the spirit of entrepreneurship.

Of course, China's huge and diligent team of engineers, an even larger and hardworking team of workers, a tightly woven supply chain network, complete infrastructure, and stable energy supply are all necessary conditions for industrial takeoff.

In addition, a huge domestic market, an open international market, and fierce market competition are also indispensable external conditions for Chinese manufacturing to go from nothing to big and strong.

In many manufacturing fields, we have seen that once Chinese companies master the technology, they can continuously improve manufacturing efficiency, reduce production costs, and make the cost-performance ratio to the extreme.

This ability to continuously improve mature technology in the manufacturing process is one of the core competencies of Chinese manufacturing that is often overlooked.

The more technology-intensive the high-end manufacturing industry is, the less the impact of labor costs on competitiveness.

The competitive advantage of Chinese manufacturing in these fields does not come from subsidies and low wages, but from the leading manufacturing efficiency.

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