In our daily life, the liquid crystal display (LCD) has always been the display panel of choice for Consumer electronics such as televisions, computers, tablets, mobile phones, etc. However, currently, a new display technology is quietly emerging and being welcomed by major smartphone brands and new models. Samsung's flagship S/Note series, iPhone X, Xiaomi 10, Huawei P40, and other smartphone models all use OLED displays.
The OLED display panel can self emit when powered on, and is lightweight, high brightness, low energy consumption, and can also be bent, making it widely sought after. In contrast, LCD screens themselves cannot emit light and require an important component called the "backlight display module" to present images. So, will liquid crystal displays soon be phased out by OLED technology?
Nanjingguang is a domestic company mainly engaged in small and medium-sized backlight display modules. Its products are the core components of LCD display panels and have applications in smartphones from brands such as Huawei, OPPO, VIVO, Xiaomi, Samsung, LG, etc.
Can Antarctic Light continue to grow in the face of the "fierce" OLED new technology? How can Antarctic Light maintain its competitive advantage in a market where new and old technologies coexist?

LCD still has Absolute advantage
From a global perspective, the demand for LCD panels is still growing. According to IHS Markit data, the global shipment area of LCD panels reached 199 million square meters in 2018, an increase of 9.94% compared to the previous year, especially in the field of large-size growth. Before 2010, all large-sized LCD panels in China relied on imports, and now they account for nearly 50% of global production capacity.
At present, China has become a major producer and consumer of Consumer electronics such as LCD TVs, computers and smart phones, and the LCD panel display industry, as its key supporting industry, is also accelerating its transfer to China. From 2013 to 2018, China's LCD panel capacity gradually leveled off after a three-year period of rapid growth of about 30%. It is estimated that by 2023, Chinese Mainland's total LCD panel capacity will account for 55% of the global total.
The demand for LCD panels directly affects the demand for backlight display modules in the market.
There is still room for development in the downstream market of Antarctic Light. Although OLED panels have superior performance, there is a serious foreign monopoly in the upstream production process, which poses challenges for their promotion in the Chinese market.
Firstly, the high-end evaporation and plating machine essential for producing OLED panels is monopolized by the Japanese company Cannon Tokki. Due to the limited capacity of Cannon Tokki, however, it has absolute advantage in technology. The yield of OLED panels using other evaporation machine production lines needs to be improved. In addition, domestic OLED panel manufacturers heavily rely on overseas procurement for organic luminescent materials required upstream.
The upstream of the industrial chain has been "stuck", resulting in investment costs for OLED production lines being more than twice that of LCD production lines, resulting in high depreciation and amortization, which limits the company's ability to increase production capacity.
The main area where OLED replaces LCD is in smartphone displays. However, from a cost perspective, LCD displays still have significant advantages. Due to production cost differences, the average price of a 25.5-inch LCD smartphone panel is $15, while the average price of an OLED smartphone panel of the same size is as high as $25, indicating a significant price advantage for LCD products.

In addition, according to IDC statistics, the proportion of global mid to low end mobile phone shipments exceeds 80%. Due to price restrictions, the proportion of LCD screens used reaches 80.56%; OLED screens have a low penetration rate and are mainly used in flagship models of major brands, with limited impact on the overall mobile phone market.
At present, unless the cost of OLED screens rapidly decreases, liquid crystal displays will still keep pace with OLED technology in the long term, and have more advantages in cost and production scale. Among them, in the mobile phone market, LCD and OLED technologies coexist; In the professional display market, LCD technology is dominant.
As a LCD backlight manufacturer, Antarctic Light still has a relatively broad market space.
Actively layout alternative products
Although the market advantage of LCD displays will continue, the impact of new technologies cannot be ignored. How can Antarctic Light prepare for potential technological obsolescence threats?
Firstly, Antarctic Light fully utilizes its technological and market advantages to consolidate its leading position in the LCD backlight field.
In terms of technology, Antarctic Light has achieved independent research and development of the key part of the backlight module, the light guide plate. Its vacuum compression mold technology is at the leading level in the industry, which can improve the surface precision and dimensional stability of the product, thereby improving production efficiency and yield.
In terms of market competition, the operating revenue of Beineng Optoelectronics in 2016 was 30.1125 million yuan, forming a competitive relationship with Antarctic Light. In 2017, Antarctic Light acquired Beineng Optoelectronics, effectively avoiding industry competition and improving economies of scale, expanding its overall market share.

More importantly, Antarctic Light is actively developing alternative products for OLED technology to address the risk of market space being compressed. As a liquid crystal display industry chain enterprise, the cost of OLED layout by Antarctic Light is quite high. However, due to the good foundation of LCD technology, Antarctic Light has turned its attention to MiniLED integrated structure technology. This technology can match the performance of OLED, including high brightness, ultra-low latency, and large viewing angle, while also having the advantage of long lifespan.
In 2017, Antarctic Light invested over 2.64 million yuan in the research and development of new MiniLED integrated structure technology projects. With the emergence of the trend of curved screens, in 2019, Antarctic Light invested approximately 2.29 million yuan in the curved backlight module project of the new MiniLED structure to replace OLED flexible screen technology.
Currently, OLED technology is mainly applied to small and medium-sized screens, with smartphones accounting for up to 71% of the total; Next is wearable devices, accounting for 10%. In professional display fields such as car mounted displays, medical displays, industrial control equipment displays, and home appliance displays, LCD technology is still dominant, and OLED panels are difficult to penetrate.
Therefore, Antarctic Light has started to focus on professional display backlight products, continuously increasing its efforts to explore customers in the professional display field. Antarctic Light has deep cooperation with midstream LCD manufacturers such as Juncheng Electronics, Tianshan Electronics, and Akita Micro, and their products are ultimately applied to multiple well-known brand products downstream, such as Haier, Midea, Honeywell, and Panasonic. The revenue brought by professional display backlight products to Aurora Australis has also been increasing for three consecutive years.
Thanks to these measures, Antarctic Light has maintained sustained and rapid growth in performance under the potential impact of OLED new technology. From 2017 to 2019, the main business revenue of Antarctic Light increased from 562 million yuan to 994 million yuan, with a growth rate of
76.83%. In 2019, the comprehensive Gross margin of Nanjingguang was 20.46%, which also exceeded the average value of comparable companies in the same industry by 18.51%.
Seize the New Opportunity of "5G Switching Tide"

In addition to maintaining the existing advantage position of LCD backlight products, in the face of the upcoming wave of 5G mobile phone replacement, Antarctic Light has not "only defended but not attacked". It will also seize the opportunity to proactively attack and create new growth points through 5G mobile phone back cover products.
Although the penetration rate of OLED screens in the entire smartphone market is not yet high, the usage rate of OLED display panels has greatly increased in 5G smartphones. During the period from 2019 to 2020, all major 5G phone manufacturers chose OLED displays for their new models. Once the period of 5G mobile phone production explosion arrives, the original market share of Antarctic Light may be greatly impacted.
At the same time, in the process of popularizing 5G mobile phones, new demand for supporting products is emerging.
In the 5G era, with the increasing number of smart phone antennas, enhanced functionality, and weakened electromagnetic wave penetration ability, metal body with electromagnetic wave shielding characteristics is no longer suitable. Plastic back cover with excellent strength, good impact resistance, heat resistance, high hardness, and aging resistance will become one of the ideal materials for 5G smart phone back cover. This provides a great entry point for new products for Aurora Australis.
Technically, both the 5G mobile phone back cover and the backlight source light guide plate are injection molded parts, and their production processes are similar, with the same core technology and main production equipment. Therefore, the strengths of Antarctic Light in manufacturing processes - mold manufacturing technology and compression mold technology - are applicable to 5G mobile phone back covers, which can provide strong support for the development and production of new products.
In order to achieve the landing of new products as soon as possible, Antarctic Light has collaborated with financially strong Huashi Optoelectronics in research and development, and has started small-scale production of 5G mobile phone back cover products.
In addition, Antarctic Light will use the raised funds of 72.7265 million yuan to invest in the construction of a 5G mobile phone back cover production base. After completion, the annual output can reach 40KK, which is expected to bring a net present value of 78.8246 million yuan to Antarctic Light. A significant increase in production capacity will help Antarctic Light quickly seize market opportunities.

For these new production capacity, Antarctic Light also has good digestion channels. Antarctic Light's existing deep cooperation with downstream manufacturers has applied its products to major mobile phone brands such as Huawei, OPPO, VIVO, Xiaomi, Samsung, etc. Its 5G mobile phone back cover promotion has a good customer base. Antarctic Light can utilize the resources and marketing system of existing end customers in the backlight field to track market trends in a timely manner and produce phone back covers that meet customer needs.
From the three dimensions of technology, capital, and new production capacity consumption, in the upgrade of 4G to 5G mobile phones, the South Pole Light has taken the 5G mobile phone back cover as a new business growth point, and the conditions are mature.
The display panel industry has remained a coexistence of LCD and OLED screens for a considerable period of time. Antarctic Light actively develops MiniLED integrated structure technology with price advantages, replacing OLEDs and investing in specialized display fields where OLEDs are difficult to penetrate, achieving rapid growth in revenue and net profit for three consecutive years.
In the future, in response to the potential market impact brought by OLED screens in the context of the 5G mobile phone replacement trend, Antarctic Light will use the 5G mobile phone back cover as a new business growth point, relying on years of technology and customer accumulation to lay a solid foundation for its continuous growth.