Investment bank Orient Securities has released a research report stating that the depreciation turning point in the panel industry has opened up financial space for profit release. Chinese production capacity dominates global pricing power, and glass substrates provide a second growth curve across the cycle. With these three factors combined, the profitability center of panel leaders is expected to systematically rise, potentially shifting from a pure "LCD cyclical stock" to a "display + materials" dual-drive model.

1) The profitability center of the panel industry is expected to rise, and new applications in advanced packaging could lead to a valuation re-rating. 2) Chinese production capacity dominates global pricing power, and the acceleration of black-power TV brands going overseas is driving the industry's center of gravity shift.

Key Points from Orient Securities:

Over the past decade, global capital expenditure on panels has exceeded one trillion yuan, leading to long-term instability in the industry. However, the panel industry is now undergoing a critical transition from scale expansion to profit release. The depreciation turning point is gradually being realized, and profit elasticity is beginning to show. In terms of industry structure, the rising global market share of Chinese panels is forming a positive synergy with the accelerated overseas expansion of brands. At the same time, panel manufacturing capabilities are extending into the semiconductor advanced packaging field. The commercialization of glass substrate TGV (Through Glass Via) technology is progressing faster than expected, which could drive a restructuring of the industry's valuation system.

Depreciation Turning Point Has Arrived, Profit Elasticity Enters a Realization Window

The panel industry has historically suffered from huge capital expenditures, 5-10 year depreciation cycles, and overcapacity after capacity expansion, which severely eroded profits after project launches. This dilemma is now reversing, and the depreciation turning point has emerged. BOE (京东方) depreciation scale reached its peak in 2025. TCL Huaxing (TCL华星) also saw its depreciation peak in 2025, with depreciation expected to gradually decline from 2026 onwards and drop significantly after 2027. As the depreciation burden on panel companies continues to ease, net profits will increase at the same revenue scale. In the first quarter of 2026, BOE reported a quarterly net profit of 1.709 billion yuan, a year-on-year decrease of 11.77%, but a quarter-on-quarter increase of 174.47%. TCL Technology (TCL科技) reported a quarterly net profit of 608 million yuan, a year-on-year increase of 192.94% and a quarter-on-quarter increase of 326.26%. These figures indicate the industry's entry into a profit growth cycle.

Q2 Market Share Maintains High Levels, Brand Overseas Expansion Fully Accelerates

The advantages of Chinese companies in the global panel industry structure continue to accumulate. According to data from Runto Technology (洛图科技), global shipments of large-size LCD TV panels in May 2026 reached 19.8 million units, up 2.2% year-on-year and down 0.3% month-on-month. The global market shipment share of mainland Chinese panel makers was 72.8%, an increase of 0.8% from the previous month. Companies like BOE, CSOT (华星光电), and HKC (惠科) rank among the top globally in shipments. Currently, there are five 10th-generation and above high-generation panel production lines worldwide, with TCL and BOE each operating two. The cost advantages from the scale effect and cost control capabilities of these high-generation lines translate into price competitiveness for downstream terminals, driving a positive industrial synergy between the panel industry's dominant position and the overseas expansion of TV brands. According to Counterpoint data, from January to May this year, TCL TV held a 13% global market share, ranking second, while Hisense ranked third, solidifying China's leading position in the global TV industry.

Glass Substrate Commercialization Progress Exceeds Expectations, Clear Signal for Valuation Re-rating

2026, as the first year of commercial verification for semiconductor glass substrates, has seen progress exceed expectations. Domestically, BOE has made rapid progress in glass substrates. It started pre-research on glass-based carrier technology in 2020, invested 390 million yuan in 2022 to build a glass/silicon-compatible wafer-level innovation platform, invested 993 million yuan in 2024 to build a panel-level glass-based packaging carrier test line, completed main equipment move-in and commissioning in 2025, and achieved full automation of equipment line connectivity in the first half of 2026. Currently, BOE has achieved full-process flow for glass-based packaging carrier boards, including high aspect ratio TGV drilling, deep hole copper filling, low-stress metal wiring, high-layer lamination, high-density wiring, and low-stress cutting. It possesses complete glass carrier board manufacturing process capabilities and has passed multiple reliability standard tests. On July 17, at the 2026 World Artificial Intelligence Conference, BOE disclosed that it has begun batch sample delivery to packaging and testing companies like JCET (长电科技) and Tongfu Microelectronics (通富微电), with plans to enter the mass production supply stage in 2027. TCL Huaxing is still in the preliminary research and technology pre-research stage for glass substrates. The accelerated commercialization of glass substrate TGV technology is expected to reshape the semiconductor valuation and competitive landscape under new technologies.

Risk Warning

Risks include fluctuations in global panel market demand, slower-than-expected technology implementation, and intensified industry competition.