In 2019, end customers experienced steady growth, mainly driven by demand for small-pitch, irregularly shaped, and functional displays. These display types saw a significant leap in both quality and quantity. Display companies must rely on product model upgrades or application innovations to achieve a new mode of competition and ensure profit growth. The era of major reshuffling in China's LED display industry is about to begin. This new model will also bring new advantages.

Market Segmentation and Precise Positioning

The LED display industry's segmented market structure had begun to take shape in 2018, mainly divided into: small-pitch market, transparent screen market, irregularly shaped screen market, flexible screen market, creative screen market, LED rental screen market, etc. Many new companies appeared in the LED industry. After market segmentation, companies saw increased profit margins and reduced raw material costs, leading to healthy development. They have established solid brand foundations in their main segments, indicating the formation of brand structures in various industry segments, with strong brands showing robust growth.

In 2018, several representative companies emerged in various segments, forming the initial scale of industry brands. They leveraged their strengths to upgrade and transform their products; through product segmentation, they built their brands and captured market share, with rapid year-on-year growth. After segmenting the market and positioning their products, some companies engaged in mergers and acquisitions, using large brands to expand their market influence. Using capital mergers to create joint brands, they combined intensive technology and capital, with mergers and acquisitions often involving companies with established reputations in specific segments, creating even larger brands through collaboration.

In 2019, small and medium-sized screen companies must accelerate their reforms in segmented areas, striving to secure favorable brand positioning and product excellence. Otherwise, they will lack product advantages, fail to establish market positioning, and lose competitiveness.

Future Intensified Competition

In the future market, multiple strong brands will emerge within each segment, with continuous emergence of new brands. This is because similar products within the industry use standardized peripheral equipment and software, suitable for multiple product categories. In the small-pitch field, product upgrades and intensified brand competition are becoming an unstoppable future trend.

On the one hand, as industry awareness increases, end customers become more familiar with products and markets and gain some understanding of the raw materials used in LED displays. Prices are no longer determined by manufacturers but are customized according to customer needs, resulting in high price transparency and shrinking manufacturer profit margins. For small-pitch products to develop, they need to target the high-end market, not only improving quality and performance but also catering to personalized needs. Such changes in downstream market demand are constantly stimulating upstream manufacturers to upgrade and optimize small-pitch products, further segmenting them into products such as small-pitch advertising machines, small-pitch televisions, COB small-pitch, outdoor small-pitch, and small-pitch rental, among others.

With continuous improvements in small-pitch technology, the definition of small-pitch has been constantly updated in recent years. P2.5 is already a conventional product in indoor displays; in 2019, the industry will develop small-pitch displays between P1.5 and P2. Therefore, small-pitch products will develop in two directions. Since small-pitch displays between P1.5 and P2 require higher equipment demands from manufacturers, it presents significant challenges for many small and medium-sized manufacturers with tight capital chains and insufficient R&D capabilities. This is because it requires not only significant R&D design capabilities and personnel but also the updating of production equipment, thus forming a distinction between conventional and high-end small-pitch manufacturers.

Many low-end manufacturers in the small-pitch industry face elimination or transformation. Even manufacturers who have upgraded their production equipment face capacity pressures; without sufficient capacity, how can they reduce costs? The phenomenon of segmented product upgrades and intensified competition is not limited to the small-pitch field; it also applies to the transparent screen field. Further segmentation of differentiated markets and fierce competition are accelerating product upgrades, prompting display companies to strive for excellence in products and applications. This will become a major development trend in the industry.

Stable and Diversified Channels Coexist

The competition for channels in the LED display industry has always existed, especially as companies expand their dealer networks across China, even reaching village markets. The channel market is becoming increasingly popular. Recently, major domestic and international LCD manufacturers have also entered the LED industry, leveraging their existing channel resources and capital advantages to make a strong foray. Possessing significant strength and brand influence, they have a stronger competitive edge in the market.

Looking at previous channel models, although many display companies have established stable channels, the diversification of channels in the LED display industry is accelerating. Display companies are now turning their attention to the wider overseas market. In recent years, more and more display companies have gone abroad to develop new overseas channels and markets. Strong alliances are a new way for display companies to fully capture regional channel markets. Overall, channel diversification is both an opportunity and a challenge for large, powerful companies. Display companies can accelerate their layout in all channels. Of course, brands pursuing differentiated operations can also choose to explore channels.

Currently, Hisense is entering the small-pitch market, striving for high-quality, innovative products to build a new brand and foster healthy development in the LED industry.