Summary of Key Points
In 2025, Shentianma ranked third in the global shipment of flexible AMOLED phone screens, but it incurred a loss of 728 million yuan in the first half of 2026 (compared to a profit of 206 million yuan in the same period last year). The root of the problem lies in the fact that while its production scale has increased, profits have not kept up. In the past, Chinese panel manufacturers caught up with Samsung by focusing on volume. Now, the competition has shifted to focusing on the “value per screen,” “cost control,” and “customer portfolio.” High-end screens command higher prices but are more difficult to secure orders for, while low-end screens, despite high volumes, generate less profit. Additionally, the substantial fixed costs associated with production lines have led to a shift from profitability to loss for Shentianma.
Detailed Analysis
1. Third-highest shipment volume, but the value per screen is low
Shipment volume is measured in units, but the prices of different screens vary greatly. For example, ordinary flexible screens and foldable/high-end flagship screens are both counted as one unit, yet their prices can differ by several times. In the second quarter of 2026, Samsung accounted for 40% of small-size OLED shipments but 50% of revenue, mainly due to its sales of high-value screens such as foldable and Apple flagship models. Shentianma’s third-place ranking refers to its shipments of flexible AMOLED phone screens, which are likely to be lower-priced, mid-range Android screens with lower profits. In short, “winning in volume” has not translated into higher profits, which is one of the main reasons for the decline in profitability.
2. Huge production line investments are weighing on profits
The investment in OLED production lines is extremely high; for instance, Shentianma’s TM18 production line cost 48 billion yuan. Once these facilities are built, depreciation (the cost of equipment wear and tear) must be accounted for regardless of orders. Fixed assets account for half of Shentianma’s total assets (41.3 billion yuan), and when orders are scarce, the depreciation cost per screen increases. In the first half of 2026, revenue only decreased by 4.49%, but profits plummeted from 200 million yuan to a loss of 700 million yuan—this is due to the amplification of performance fluctuations caused by fixed costs. It’s similar to owning a truck: you have to pay for maintenance regardless of whether you are using it or not, and if you are carrying fewer loads, the cost per trip increases, resulting in losses if the earnings are not enough to cover the expenses.
3. Customer and product focus determine profitability
While both companies are panel manufacturers, BOE saw a 17.7% increase in AMOLED shipments in the first quarter of 2026, while Shentianma’s shipments decreased by 5.9%. The difference lies in their customer base and product portfolio. BOE has orders from Apple and offers high-specification products like foldable screens and LTPO displays, which command higher prices and provide stable revenue. Shentianma, on the other hand, relies on mid-range Android phones. In 2026, rising storage costs squeezed the screen budgets of smartphone manufacturers, leading to a decline in mid-range demand and lower, cheaper orders. Even with new technologies like LTPO, customers may not be willing to pay extra for them; some manufacturers opt to replace high-end LTPO screens with cheaper alternatives to save costs. High-end orders are the key to profitability, while mid-range orders help only in expanding scale but not in generating substantial profits.
4. Is OLED heading for the same fate as LCD?
During the LCD era, Chinese panel manufacturers competed by expanding production capacity, leading to a price war and extremely thin profits. Similar trends are emerging in the OLED industry:
- Global AMOLED phone screen shipments are expected to decline by 7% in 2026, and flexible screen shipments may see their first decline in seven years.
- Manufacturers are forced to cut prices to maintain production line utilization, making it increasingly difficult to maintain profit margins.
- Although OLED has new markets such as automotive and wearable devices, these markets require time to grow (e.g., automotive screens require certification, and wearable devices have limited demand).
While the OLED industry has not yet reached the level of widespread losses seen in the LCD era, simply expanding capacity is no longer sufficient. Profitability now depends on high-end products and stable orders.
Conclusion
Shentianma has demonstrated its ability to scale up production, but the next challenge is to increase the value per screen. This is much more challenging than simply increasing volume. With billions of yuan invested, it must ensure that each screen generates enough profit to cover the costs.