Huawei Technologies has grabbed global attention after it unveiled its first foldable smartphone, the Mate X, ahead of the Mobile World Congress in Barcelona this week. The device reinforces the company’s reputation as a leader in telecommunications technology.
But while there is no question that Huawei has the technological know-how to develop the entire product, the core technology behind the foldable screen did not result from the company’s own R&D division but was the outcome of research by another Chinese company, BOE Technology Group (000725.CN).
Shares of BOE Technology have surged by more than 16 percent since Friday before Huawei unveiled its latest flagship model, or over 67 percent in the past four weeks, as investors focused on the launch of the foldable phone by Samsung and Huawei.
BOE is China’s biggest display supplier, but it is known more for its bigger screen products such as television, laptop and tablet displays. The state-owned company is a newcomer in making mobile phone screens.
In 2018, BOE surpassed South Korea’s LG Electronics to become the world’s largest supplier of liquid crystal display (LCD) TVs and monitor panels, according to market research company Sigmaintell Consulting. It shipped 54.3 million TV panels last year, compared with LG’s 48.6 million.
The Chinese company is also aggressively expanding its manufacturing plants to boost its supply of mobile displays in a bid to challenge market leader Samsung Electronics.
Huawei, in fact, is the first mobile phone brand to establish close ties with BOE in the supply of mobile phone displays. BOE supplies the display for its Mate 20 Pro.
In May last year, BOE unveiled its foldable screen solution at the SID Display Week in Las Vegas. The product is similar to what Huawei Mate X is using, with a screen that is outside the device and a 7.56-inch display. BOE said the foldable screen had a small bending radius and could be folded more than 100,000 times. As such, its durability was not a problem.
BOE is riding on Huawei’s strength to further invest in mobile display manufacturing plants for faster revenue growth. BOE recently inked an investment framework agreement with Fuzhou’s provincial government to build a new sixth-generation AMOLED production plant for flexible screens. The investment could reach 46.5 billion yuan (US$6.95 billion).
Together with the Fuzhou plant, BOE will own four flexible AMOLED production plants in China, including those in Chengdu, Chongqing, and Minyang.
BOE’s aggressive moves in flexible display production means the company intends to directly compete with Samsung in the new flexible screen device market.
According to IHS Markit, the global flexible AMOLED panel market expanded by about 250 percent from US$3.5 billion in 2016 to US$12 billion in 2017, benefiting from increased demand. By 2020, the market size will reach US$47.7 billion.
As to be expected, BOE does not plan to offer its flexible display solution to Huawei alone, and it is ramping up production to taken advantage of the growing demand from Chinese and overseas smartphone brands.
The company’s Chengdu flexible AMOLED production line was in mass-production stage ahead of schedule at the end of October, and the first batch of products were delivered to Huawei, OPPO, Vivo, Xiaomi, ZTE and other phone manufacturers.
That’s why other smartphone makers such as Vivo and Xiaomi are losing no time in launching their own foldable models as they are assured of display supplies from BOE.
The rivalry between BOE and Samsung took a drama tic twist in November last year, when South Korean prosecutors charged executives at a Samsung supplier with leaking the company’s latest display technology to Chinese rivals, which reportedly include BOE.
In particular, the executives were accused of passing Samsung technologies related to curved-edge smartphone panels that use organic light-emitting diodes, or OLED, to four companies.
This is a serious charge, coming in the wake of US allegations that China has been stealing technology and intellectual property from the West.
For Samsung, the alleged leak would represent a significant threat to the company, which uses technology to defend and expand its global market share. Samsung currently ships more than 90 percent of its OLED display production to smartphone makers.
According to a Nikkei report, Samsung has invested 150 billion won (US$134 million) over six years to develop the technology that accurately attaches an OLED panel to a curved smartphone glass cover. The curved OLED edge panel is one of the company’s latest display technologies.
BOE needs to invest more in research and development to enhance its reputation in the industry.