TCL Huaxing's Tale of Two Extremes: LCD Holds the Line, OLED Continues to Bleed and Struggle
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Author | Huang Yu
After delivering a quarterly report with a sharp increase in profits, TCL Technology disclosed the true operating conditions behind the profit growth.
On May 7, TCL Technology released its latest investor relations activity record sheet, providing a detailed explanation of its operating conditions for the first quarter of 2026 and clearly stating: Due to the year-on-year increase in losses in the OLED business, TCL CSOT's net profit in the first quarter saw a slight decline compared to the same period last year, but profits from the LCD business grew significantly compared to last year.
TCL Technology said that in the first quarter of 2026, tight supply and rising prices of memory chips suppressed terminal demand, leading to an overall decrease in the operating rate of the OLED industry. As the fixed costs and depreciation of OLED production lines occupy a high proportion, the decline in operating rates further amplified the pressure of losses.
This means that OLED is still a typical business in the display industry that requires heavy investment and returns slowly.
According to TCL Technology's previously released financial report for the first quarter of 2026, TCL CSOT's revenue and net profit for the reporting period decreased by 8.4% and 20.6% year-on-year respectively.
In the first quarter of 2026, TCL Technology as a whole achieved operating income of 43.45 billion yuan, up 8.4% year-on-year; net profit attributable to the parent company was 1.56 billion yuan, up 53.7% year-on-year, hitting a single-quarter high for the past 17 quarters. What truly supported TCL Technology's profit growth was the narrowing of losses at TCL Zhonghuan.
Regarding the development plan of TCL Zhonghuan, TCL Technology stated that it will respond to policy guidance and will not have any major capital expenditure plans, focusing on improving the layout of the module and battery business at the bottom of the industry cycle and making certain technical upgrades to existing production lines to provide efficient module and battery products.
The market’s main focus on TCL Technology is still more centered on TCL CSOT.
TCL Technology pointed out that, benefiting from the company's continued acquisition of minority shares in display business production lines over the past two years, the proportion of TCL CSOT's net profit attributable to TCL Technology shareholders has increased significantly, rising from about 60% in the first half of 2025 to over 80% in the first quarter.
Compared to the pressure facing OLED, the LCD business is clearly in a boom cycle.
At the investor exchange meeting, TCL Technology mentioned that since 2022, there have been almost no new TV panel production capacities added globally on the supply side, but the trend towards larger sizes continues to drive growth in demand area, and the industry’s operating rate center has increased year by year. Meanwhile, leading manufacturers have begun to proactively implement "on-demand production" strategies, controlling supply rhythm through production maintenance during holidays such as Spring Festival and May Day.
After supply and demand relationships improved, the LCD business has once again become TCL Technology's most stable source of profit.
According to disclosures by TCL Technology, although demand for TV panels in 2026 may decrease by 1%-2% year-on-year, consumers are rapidly shifting from small-sized TVs to large-sized TVs, so the overall demand area for TV panels is expected to increase by 3.5%-4% year-on-year, with growth better than 2025.
In this round of industry recovery, TCL CSOT's medium-sized business has begun to enter a harvest stage.
TCL Technology noted that now in the field of small and medium-sized LCDs, overseas manufacturers still occupy a high share, but this year they are showing an accelerated exit trend. In the first quarter, TCL CSOT's mainstream medium-sized products such as monitors, laptops, automotive displays saw counter-trend growth in production and sales scale and market share, and related business profits also increased.
By comparison, the OLED business is still waiting for an industry turning point.
TCL Technology expects that starting from the second quarter of 2026, as inventory is gradually digested and the peak season for new product launches arrives, downstream stocking demand has already begun to recover, so OLED business operations are expected to gradually improve.
But in the short term, OLED will continue to consume profits.
This is also a problem currently faced by the global display industry.
Over the past few years, after continuous clearance in the LCD industry, industry concentration has increased, supply and demand relationships have stabilized, and major panel manufacturers have regained space for profit; however, OLED, especially medium and large-sized OLED, is still in a stage of heavy capital investment, with high depreciation, high R&D costs, and high yield ramping costs still restraining overall industry profitability.
Even so, TCL Technology has not slowed down its investment in OLED.
Currently, the largest capital expenditure project in the display business is still the Guangzhou 8.6-generation printing OLED production line (t8) with a total investment of 29.5 billion yuan. However, as the overall investment peak period in the display business gradually passes, TCL Technology's future capital expenditure will show a downward trend.
For TCL Technology, the LCD business is providing the company with stable cash flow and profit support, while OLED remains a long-term battle requiring continued investment and waiting for industry maturity.
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