High-Tech, Heavy Assets, Long Cycles: The Capital Challenge of China's Advanced Manufacturing

China’s most needed advanced manufacturing is not just technological breakthroughs.

Text by Jiang Siyuan

Since 2023, China’s display industry has undergone a fundamental change in its global position.

Previously, Chinese panel companies mainly competed by expanding capacity and improving efficiency; but in the past three years, a crucial turning point has emerged—Chinese panel giants have not only taken full control of the traditional LCD market’s global dominance but have also launched a strong offensive into high-end OLED and next-generation cutting-edge display technologies.

Breaking through is not an overnight reversal but a long series of battles. Amid external technological blockades and intense industry cycle fluctuations, Chinese companies must evolve under high uncertainty. Leading firms like TCL CSOT and BOE have completed this difficult counterattack.

TCL CSOT T11 production line

This evolution is not solely driven by external infusion of resources. Take TCL CSOT as an example: during its development, it insisted on bearing the main investment itself. This choice means the company must shoulder heavy asset pressures and debt risks, with lower decision-making tolerance. Good results often depend on the founding team’s judgment of industry trends and persistent entrepreneurial spirit.

Behind this is a compliance with industry laws: all core barriers in advanced manufacturing require continuous massive investments of real capital. Whether for ultra-long-term investments to navigate industry downturns or for frontier exploration in “technological no-man’s land” like OLED and Micro LED, stable and ongoing funding is essential.

Practitioners see that although Chinese panel companies have already dominated the global LCD industry, to consolidate technological advantages and maintain long-term leadership—especially in next-generation display fields and face-to-face competition with international firms—they urgently need more accessible and powerful financing channels to support sustained development.

Li Dongsheng, a National People’s Congress deputy, TCL founder and chairman, called during this year’s two sessions: “To cultivate world-class enterprises, capital support must be strengthened. Relevant policies should be introduced to support high-tech, heavy-asset, long-cycle industries, better supporting the development of advanced manufacturing and participating in global competition.”

Those working on the front lines of industry know that as Chinese industries move toward high-end, competition becomes fiercer. Any lag in technology or sluggish capacity deployment can be quickly amplified, reshaping the entire industry’s competitive landscape.

In this battlefield tightly bound by capital and technology, today’s victories are merely tickets to the next battle. No company can rely on a single win to rest on its laurels.

Unstoppable Investment

The development of the semiconductor display industry is not only a history of technological evolution but also a history of capital competition.

Since the LCD era, panel companies have had to walk on two legs—technology and capital. LCD technology originated in the US, but Japanese firms, relying on long-term capital investment and continuous process iteration, crossed the production threshold first, achieving global dominance and monopolizing the market for a time.

In the late 1990s, after Japan’s bubble burst and the Asian financial crisis, demand shrank sharply. Leading Japanese companies like Sharp, NEC, and Toshiba cut investments to maintain short-term profits. They generally kept panel investments around 10% of annual sales; meanwhile, Korean giants Samsung and LG, backed by chaebols, invested over 30% of sales during the worst of the 1997 Asian financial crisis, pouring huge sums into more advanced 5th-generation lines despite the industry downturn.

As markets recovered around 2003, Korea’s large new capacities and generational advantages quickly seized significant market share from Japanese firms.

This strategy—“expand against the downturn, crush low-generation lines with high-generation lines”—later drove China’s display industry’s turning point. After two decades and hundreds of billions of yuan invested, Chinese companies now hold over 70% of the global LCD market share. Among them, TCL CSOT, with its long-term sustained investments, exemplifies this strategy.

Internal view of TCL CSOT production line

Starting in 2009, TCL CSOT launched a 24.5 billion yuan 8.5th-generation line (T1) in Shenzhen under huge financial pressure. It then endured industry cycle lows, investing over 80 billion yuan to build two of the world’s highest-generation 11th lines (T6, T7), gaining significant cost and efficiency advantages over Korean firms in large-size displays.

This gap was a key factor in pushing giants like Samsung and LG to gradually withdraw from LCD manufacturing. In 2010, Samsung Display dominated the global LCD market with about 35% share. By 2025, this landscape has completely changed: BOE and TCL CSOT together will account for over half of global capacity, with Chinese mainland manufacturers holding over 70% of the total.

When producing similar large-size panels, Chinese mainland companies can lower costs by 15-30% compared to Japanese and Korean rivals, with higher yield rates. This redefines industry cost structures, forcing Japanese and Korean firms that cannot meet new standards to exit. Through continuous high-intensity investment and market-driven operations, Chinese panel companies are gradually establishing scale and efficiency advantages. Currently, TCL CSOT ranks second globally in LCD, and leads in segments like e-sports displays and LTPS.

In this process of catching up, direct financing plays an irreplaceable role.

In 2019, TCL completed a major asset restructuring. TCL Technology focused on the semiconductor display track, continuing to invest in the business.

Meanwhile, massive capital expenditure has not only expanded TCL’s capacity but also benefited local economies—panel giants’ presence has driven upstream and downstream industry prosperity and created numerous jobs, greatly leveraging engineer talent. This heavy-asset investment, over long cycles, has gradually formed an ecological loop from “capital infusion” to “industry self-sustaining.”

In this high-level technological battle, TCL CSOT’s layout in OLED also reflects clear technological route choices and ongoing capital investment.

Faced with Korea’s long-standing advantages and patent barriers in traditional vapor-deposited OLED processes, TCL CSOT chose a differentiated path. It targeted inherent cost issues in vapor deposition—such as mask sagging and low utilization of organic light-emitting materials—and shifted focus to printing OLED technology.

Traditional vapor-deposited OLEDs typically have a material utilization rate just over 30%, with much material wasted on masks. Printing OLEDs can reach utilization rates above 90%, with unit capacity investment about 60% of vapor deposition routes.

By November 2024, printed OLEDs finally achieved mass production. From establishing Guangdong Juhua in 2014 and founding the “National Center for Printing and Flexible Display Innovation,” to investing in Japan’s JOLED and acquiring its equipment and core patents, and then completing the technical validation of Wuhan’s 5.5th-generation printing OLED line (T12), TCL CSOT spent over a decade pushing printed OLED from technical validation to stable mass production, increasing yield from single digits to over 70%.

TCL CSOT printed OLED foldable screen

In October 2025, the world’s first high-generation printed OLED production line, TCL CSOT T8, officially broke ground. While Korean giants have yet to achieve large-scale mass production in this technology, TCL CSOT has taken the lead in initiating substantial construction of a new generation line, attempting to establish a new competitive foothold during this technological transition.

The characteristic of the display industry is “if you don’t advance, you fall behind”: no matter how large the market share of the leader, they cannot be locked into outdated capacity. Maintaining technological leadership requires continuous investment.

The Significance of the Ceiling

Every reshaping of the display industry’s landscape directly reflects technological gaps; deeper down, it’s a contest of capital strength. At critical industry nodes, capital often becomes the decisive factor.

To understand the decisive role of capital, one must return to the fundamental attributes of the display industry: it is one of the most tightly integrated advanced manufacturing sectors combining “heavy asset investment” with “high-tech iteration.”

First, the extremely high capital threshold.

Building a new high-generation LCD or OLED line typically costs hundreds of billions of yuan. For example, TCL CSOT’s 8.6th-generation printing OLED line (T8 project) in Guangzhou has a disclosed investment of 29.5 billion yuan. Similarly, traditional vapor deposition OLED lines of the same generation usually cost over 40 billion yuan, with some exceeding 60 billion.

Although printing OLED manufacturing costs seem lower, this is mainly because the technology reduces the need for vapor deposition equipment and vacuum environments, thus lowering obvious capital expenditure during construction. Beyond the 29.5 billion figure, there are also huge pre-investment costs in R&D—including equipment and material redevelopment—roughly totaling 20 billion yuan.

After that, panel manufacturers face extremely challenging yield ramp-ups.

The more disruptive the frontier display technology, the longer its underlying process matures. The initial “yield ramp-up” phase in mass production is often long and arduous. Samsung’s early success in small OLED mass production was crucially due to this—thanks to continuous support from its memory and mobile business units, it endured a 7-year loss period.

Facing line investments of hundreds of billions and long yield ramp-up periods, without strong, strategic long-term capital support, many technological blueprints risk failure. This is a long-distance race lasting five, ten years, or even longer, with no “easy overtaking” opportunities. Patience capital is thus a key foundation for industry technological advancement and eventual leadership.

TCL CSOT’s breakthroughs in printed OLED are not short-term sprint results. Since 2014, after long-term R&D, multiple process iterations, and line debugging, its printed OLED line only achieved mass production in 2024. This over-ten-year technological challenge tests not only R&D persistence but also the scale and patience of capital backing.

However, as companies move from followers to leaders, their capital questions also evolve. They must carefully manage the exit of supporting capital, maintain a healthy investment ecosystem, and reserve sufficient, controllable “ammunition” for the next frontier.

Recently, TCL Technology has been “paying off old debts and thanking benefactors” while “using private funds for big projects”—a reflection of this complexity.

Between 2021 and 2025, TCL raised about 18.3 billion yuan through three rounds of refinancing, mainly to support early-stage industry funds’ timely exits. During the same period, the company repurchased related equity worth 32.3 billion yuan. Meanwhile, it is advancing four new production lines with a total investment of 60.7 billion yuan, mainly financed by its own cash flow. This is self-funding for “future capital.”

Such high demands on comprehensive capital operation mean the company’s cash flow and balance sheet face enormous pressure. Especially as the industry enters a stage of global competition, external direct financing support is not only crucial for long-term R&D but also acts as a “pressure release valve” and “stabilizer,” even saving companies in critical moments.

In 2011, when Japanese panel companies were retreating under Korea’s “counter-cyclical investment” strategy, the Japanese government established the “Industrial Innovation Organization (INCJ),” investing 200 billion yen to forcibly merge Sony, Toshiba, and Hitachi’s panel businesses into JDI, and continued funding. According to INCJ’s final announcement in 2025, its total investment (including loans) in JDI reached 4,620 billion yen—enough to support 2-4 years of R&D.

This direct equity injection avoided the fixed repayment pressures of bank loans. Such long-term, “magical” investments helped Japan retain high-end display technology.

In fact, during the early commercialization phase when paths are unclear, equity financing is the only market-based funding with scale potential and willingness to bear risks for “low success probability, high potential returns.”

Traditional indirect financing (like bank loans), which emphasizes principal safety and fixed interest, inherently dislikes risk and struggles to sustain ten-year R&D investments. Equity financing shares the long-term growth benefits with investors, making it suitable for high-risk, long-cycle, high-precision advanced manufacturing industries—especially heavy-asset investments that build long-term barriers.

Today, as we focus on Chinese panel giants capturing global market share and leading new technological routes, we must also recognize that domestic capital markets and direct equity financing tools currently provide relatively limited support for advanced manufacturing’s differentiated needs, with significant room for improvement.

In the face of continuous technological iterations, the ease of financing not only constrains the semiconductor display industry but also determines the future global competitiveness of China’s advanced manufacturing.

A Broader Horizon

Calling for greater capital market support for advanced manufacturing is not just about panels but about China’s future in high-tech industries.

For sectors like chips and high-end equipment manufacturing, China’s display industry’s breakthrough journey is a pioneering and instructive prelude, likely to be repeated in broader “hardcore” fields.

The development laws of these advanced manufacturing industries are very similar: they require capital infusion during the initial catch-up phase; when climbing to the top of the global value chain and competing in “no-man’s land” of technology with industry giants, highly accessible, mature market-based direct financing becomes the fundamental source of sustainable competitiveness.

Today, China’s advanced manufacturing has entered a new stage of global layout and technological route definition. At this critical juncture of expanding into the global supply chain, the “strong manufacturing, weak capital” structural contradiction is increasingly evident.

China boasts the world’s most unique manufacturing capacity, but the supporting Chinese private enterprises—building these massive capacities—are still in early stages of capital accumulation and growth. Korean and Japanese giants, supported by chaebols or key banks, often obtain near-zero or around 1% long-term low-interest loans for their growth.

In contrast, industry insiders estimate that the “normal range” for market-based financing for Chinese high-end manufacturing private firms is about 3.5%–4.5%. Under the same 10 billion yuan debt, domestic companies’ annual interest expenses are 200–400 million yuan higher than their Korean and Japanese counterparts. In an industry with profit margins often heavily affected by “liquid crystal cycle” volatility, these interest costs can be the critical point between profit and loss.

Compared to overseas giants with decades or even a century of capital reserves and abundant financing options, the relatively insufficient support from capital markets is a key bottleneck restricting the leap to higher-value industrial chains for China’s private manufacturing.

This deep “funding gap” translates into two major obstacles on the global industrial front:

First, hesitation in line iteration. Without smooth equity channels, companies under financial pressure may slow down investments in next-generation high-generation lines or cross-era R&D, reducing overall iteration speed.

Second, limited endurance for “no-man’s land” trial-and-error. Breakthroughs in fundamental frontier technologies (like materials science or advanced semiconductor processes) require repeated, relentless attempts. The lack of direct financing support diminishes the long-term perseverance needed for these high-risk, long-term technological breakthroughs.

In the face of these issues, fully market-oriented direct financing demonstrates its irreplaceable strategic value.

In mature international capital markets, a company with a reasonable valuation and liquidity can issue stocks that serve as “currency” resources. Companies can not only raise long-term, non-debt development funds through direct financing but also acquire overseas assets, core patents, or even competitors via “private placements + share swaps.”

Expanding global influence and industry footprint without depleting precious cash flow is a classic approach of mature multinationals and a crucial need for China’s private advanced manufacturing to go further.

China’s economic giant ship has already entered a new phase of global layout and technological route shaping. If capital markets can further deepen reforms, provide more suitable direct financing tools for high-tech, long-cycle, heavy-asset industries, and create more inclusive and convenient financing channels, this will not only solve immediate liquidity issues for a few companies but fundamentally empower China’s top enterprises with capital leverage to reshape the global market.

The most outstanding Chinese private advanced manufacturing companies have long since looked beyond the domestic market. Whether in display, chip manufacturing, or new energy, they possess enough industrial foundation and technological strength to lead global industry trends.

In this grand journey of turning visions into reality, capital markets are an indispensable driving force. If reforms can make them more accessible and better aligned with the needs of high-tech, long-term, heavy-asset industries, it will not only help a few companies but also fundamentally reshape the global landscape with Chinese strength.

Header image source: TCL CSOT