(Yicai) March 26 -- Profits of upstream on-board display suppliers declined because of the price war in the Chinese new energy vehicle industry, Chen Ziwei, senior on-board display analyst at Sigmaintell Consulting, told Yicai.

Global shipments of on-board displays reached a record high of 210 million units last year, but net profits of manufacturers did not increase accordingly because the decrease in prices led to a decline in profit margins, according to data from Sigmaintell Consulting.

Moreover, with more panel makers becoming on-board display suppliers to meet the surging demand in recent years, established on-board display manufacturers were also forced to adjust prices to maintain their market share, Chen noted.

"To meet the challenges brought about by the price war, display suppliers need to lower costs and improve efficiency by enhancing production efficiency and optimizing supply chain management," Chen said. “Moreover, they need to promote product innovation by offering high-resolution, large-size products and integrating better functionalities to enhance products' added value, thus standing out in the fierce market competition.”

For example, Chinese on-board display giant Tianma Microelectronics reported a net loss of CNY2.1 billion (USD290.9 million) last year, compared to a net profit of CNY112 million (USD15.5 million) the previous year, mainly because of a drop in product prices. The Shenzhen-based company’s revenue rose 2 percent in the period.

BOE Varitronix, the on-board display subsidiary of Chinese display equipment giant BOE Technology Group, announced in its latest earnings report on March 22 that its net profit shrank 18 percent to HKD475.3 million (USD60.8 million) last year from the year before because of price adjustments and additional operating costs from the construction of a new plant.

BOE Varitronix's revenue rose 0.4 percent to HKD10.8 billion (USD1.4 billion) in the period, with the on-board display business accounting for about 90 percent of the total, the firm said. The remaining 10 percent came from the industrial display business.

To boost sales, NEV manufacturers not only competed in terms of product prices but also functionality and quality, which led to an increasing demand for larger and more advanced on-board displays, BOE Varitronix noted.

The company will focus on promoting new product development, with the long-term goal of becoming a comprehensive provider of intelligent automotive cockpit display solutions, it added.

On-board displays are transitioning from traditional liquid crystal displays to products with more advanced technologies, Wu Youxiang, chief analyst for display research at Omdia, told Yicai. Increasing the shipment volume of new display products, such as low-temperature polysilicon displays, mini light emitting diode-backlit LCDs, and organic LED displays, is another way to improve performance, Wu noted.

The global compound annual growth of on-board display module shipments will reach 4.4 percent in the next three years, Omdia predicted. The figures for shipments of medium-to-large-sized displays of eight inches and above and LTPS displays are expected to be 8.4 percent and 18 percent, respectively.

Editor: Tang Shihua, Futura Costaglione