Following the release of a first-quarter report showing a significant profit increase, TCL Technology has disclosed the operational realities behind the profit growth. On May 7, TCL Technology released its latest investor relations activity record, providing a detailed explanation of its Q1 2026 performance. It explicitly mentioned that although LCD business profits grew significantly year-over-year, TCL CSOT's net profit saw a slight decline compared to the same period last year due to increased losses in its OLED business.
TCL Technology stated that in Q1 2026, tight supply and rising prices of memory chips suppressed the release of end-market demand, leading to an overall decline in the utilization rate for the OLED industry. Given that fixed costs and depreciation account for a high proportion of OLED production line expenses, the drop in utilization further amplified the pressure from losses. This indicates that OLED remains a typical business in the display industry characterized by "heavy investment and slow returns."
According to TCL Technology's previously released Q1 2026 financial report, TCL CSOT's revenue and net profit decreased by 8.4% and 20.6% year-over-year, respectively, during the reporting period. For Q1 2026 overall, TCL Technology achieved total operating revenue of 43.45 billion yuan, an increase of 8.4% year-over-year. Net profit attributable to shareholders was 1.56 billion yuan, surging 53.7% year-over-year and hitting a 17-quarter high. The primary driver behind TCL Technology's profit growth was the narrowing losses from TCL Zhonghuan.
Regarding the development plan for TCL Zhonghuan, TCL Technology stated it will respond to policy guidance, avoid large capital expenditure plans, focus on improving its module and cell business layout during the industry's cyclical trough, and undertake certain technical upgrades to existing production lines to supply high-efficiency modules and cell products.
Market attention remains more heavily focused on TCL CSOT. TCL Technology pointed out that, thanks to the company's continued acquisition of minority stakes in display business production lines over the past two years, the proportion of TCL CSOT's net profit attributable to TCL Technology shareholders has increased significantly. This proportion rose from about 60% in the first half of 2025 to over 80% in the first quarter of 2026.
In contrast to the pressure on OLED, the LCD business is clearly in an upward cycle. TCL Technology mentioned during the investor meeting that since 2022, the global TV panel industry has seen almost no new capacity additions on the supply side, while the trend towards larger screen sizes continues to drive growth in demand area. The industry's average utilization rate has been rising year by year. Simultaneously, leading manufacturers have begun more proactively implementing "production on demand" strategies, controlling the pace of supply through methods like maintenance during the Spring Festival and May Day holidays.
With the improvement in supply-demand dynamics, the LCD business has once again become TCL Technology's most stable profit source. According to TCL Technology's disclosure, although TV panel demand volume may decrease by 1%-2% year-over-year in 2026, demand area is still expected to grow by 3.5%-4% for the full year, as consumers accelerate the shift from smaller to larger TVs. This growth rate is better than that of 2025.
Amid this industry recovery, TCL CSOT's medium-size business is beginning to yield results. TCL Technology noted that in the small and medium-sized LCD segment, overseas manufacturers still hold a relatively high market share, but an accelerated exit trend is emerging this year. In the first quarter, TCL CSOT's shipment volumes and market share for mainstream medium-size products like monitors, notebooks, and automotive displays increased against the trend, and profitability for these related businesses also improved.
In contrast, the OLED business is still awaiting an industry inflection point. TCL Technology anticipates that starting from the second quarter of 2026, as inventory is gradually digested and the peak season for new product releases arrives, downstream stocking demand has already begun to recover, and the operational performance of the OLED business is expected to improve gradually. However, in the short term, OLED will continue to consume profits. This is a challenge currently faced by the global display industry as a whole.
Over the past few years, after continuous consolidation, the LCD industry has seen increased concentration and more stable supply-demand relations, allowing leading panel manufacturers to regain profitability. However, OLED, particularly medium and large-size OLED, remains in a phase of heavy capital investment, where high depreciation, high R&D costs, and the costs associated with yield rate ramp-up continue to suppress the industry's overall profitability.
Despite this, TCL Technology has not slowed its investment in OLED. The largest capital expenditure project for its display business remains the t8 Gen 8.6 printed OLED production line in Guangzhou, with a total investment of 29.5 billion yuan. However, as the peak investment period for the display business gradually passes, TCL Technology's future capital expenditures are expected to show a declining trend.
For TCL Technology, the LCD business is currently providing stable cash flow and profit support, while OLED remains a long-term battle requiring continuous investment as the industry waits for the technology to mature.