Once upon a time, “chip shortages and display panel dependence” were unavoidable pain points for China’s manufacturing sector. A chip smaller than a fingernail, a large-sized LCD panel, both long relied on overseas suppliers, meant not only higher costs and constrained supply, but also exposed a structural weakness: China’s manufacturing was large but not strong in high-end segments. Despite having the world’s most complete industrial system and largest manufacturing capacity, China repeatedly faced chokepoints in critical technologies, with display panels and integrated circuits being the most typical examples.
The turning point came over the past decade and more. With the advancement of the Made in China 2025 strategy, science, technology, and manufacturing began to deeply integrate, and innovation was placed at the core of the industrial system. Taking display panels as an example, China is the world’s largest TV market, yet for a long time it relied heavily on Japanese and Korean suppliers. At one point, imports of display panels ranked just behind integrated circuits, crude oil, and iron ore. Since then, companies represented by BOE and TCL CSOT have rapidly caught up. Through continuous capacity expansion and technological iteration, they gradually achieved breakthroughs in LCD technology. Today, China accounts for about 70% of global LCD production capacity, while also driving domestic substitution across upstream segments such as liquid crystal materials, polarizers, and photomasks. In some areas, domestic substitution rates exceed 60%, forming a relatively complete industrial chain.
This leap has been underpinned by sustained and intensive capital investment. Over the past decade, total investment in LCD expansion by domestic enterprises through capital markets and financing channels has exceeded 300 billion RMB. Taking TCL CSOT as an example, since entering the display industry in 2009, it has built multiple generations of production lines. Its T1 line alone required an investment of about 24.5 billion RMB, far exceeding the company’s net assets at the time, making it a highly risky move. Yet this counter-cyclical, asset-heavy investment allowed the company to achieve profitability soon after its 2011 launch. Through cash flow recycling, it continued reinvestment and upgraded from 6th-generation to 11th-generation production lines, with total investment exceeding 300 billion RMB. Capital markets played a crucial role throughout this process. State capital, industrial funds, and market-based financing together provided funding, enabling the industry to expand across cycles and ultimately establish global competitiveness in LCDs.
The next wave of competition has shifted toward OLED, quantum dot, and Micro LED technologies. Among them, OLED, thanks to its self-emissive nature, thin form factor, and high contrast ratio, is rapidly expanding from smartphones into tablets, monitors, and automotive displays, becoming the dominant technological direction. Samsung and LG, leveraging the FMM evaporation process, hold a first-mover advantage in high-end OLED and continue advancing higher-generation production lines. However, this route faces limitations in large-size applications, including high costs and low material utilization.
In contrast, TCL CSOT has chosen the printed OLED route, which deposits materials via inkjet printing without requiring expensive fine metal masks, significantly reducing equipment complexity and increasing material utilization to over 90%. This approach offers potential advantages in cost and scalability, particularly for mid-sized applications such as monitors, laptops, and automotive displays. In 2025, TCL CSOT launched construction of the world’s first 8.6-generation printed OLED production line, with a total investment of approximately 29.5 billion RMB. Expected to begin mass production in 2027, the project is funded through a combination of corporate capital, local industrial funds, and bank loans, reflecting a diversified capital collaboration model supporting heavy-asset innovation.
Yet at the global level, disparities in capital capability remain clear. Korean display companies, supported by mature financial systems and long-term industrial policies, still enjoy advantages in asset scale and financing flexibility. Their balance sheet structures and funding costs allow sustained large-scale investment in technology development. In contrast, although Chinese firms are growing rapidly, their financing still relies heavily on short-term debt and project-based funding, while long-term capital supply remains insufficient.
This structural issue is even more pronounced in the integrated circuit industry. Although China’s National Integrated Circuit Industry Investment Fund has cumulatively invested over 640 billion RMB, and companies such as SMIC have raised hundreds of billions through capital markets, capital expenditure still falls short in the face of continuous process upgrades and global competition. Compared with TSMC’s annual capital expenditure of roughly 200–300 billion RMB, Chinese firms still lag in sustained investment capacity. At the same time, Chinese tech manufacturing companies generally have high proportions of current liabilities and heavy reliance on short-term financing. Compared with mature industrial systems in Europe, the US, and Japan, the share of long-term capital remains relatively low, placing significant financial pressure on long-cycle, capital-intensive projects.
Against this backdrop, the importance of “patient capital” has become increasingly evident. Competition in technology manufacturing is fundamentally a competition of overlapping technological cycles and capital cycles. Whether in display panels or semiconductors, no single breakthrough determines the final outcome. The real determinant is who can sustain stable investment over more than a decade, while achieving coordinated industrial-chain development and large-scale commercialization. This implies that the capital system must gradually shift from short-term return orientation toward structural reform that supports long-term technological accumulation.
From LCD to OLED, from integrated circuits to industrial software, China’s manufacturing sector is transitioning from “from zero to one” to a stage of “from scale to quality.” On one hand, some sectors have already achieved global leadership or even overtaken incumbents; on the other hand, in more frontier “no-man’s land” technologies, competition is intensifying. The future industrial landscape will depend not only on the speed of technological breakthroughs, but also on whether capital can continuously, stably, and systematically flow into long-term innovation processes.
Source: 36kr, xinhua, finance people, paper
