Recently, Shenzhen Royole Display Technology Co., Ltd. (referred to as Royole Display) officially declared bankruptcy. This technology company was known as the “pioneer” of foldable screen smartphones in China, with a valuation exceeding 50 billion RMB at one point. According to sources, during the early days of Royole Technology, Huawei proposed to invest in the company, but the offer was rejected.
According to a ruling by the Shenzhen Intermediate People’s Court on November 18, based on the investigation results of Royole Display’s existing assets and liabilities by the administrator, it was determined that Royole Display is unable to repay its maturing debts, and its assets are insufficient to cover all debts.
With this, the long-running saga of Royole Technology’s bankruptcy, which began with rumors in March and was officially accepted by the court in May, has finally come to an end.
An employee of Royole Display told “First Finance” that it is expected the company’s assets will be auctioned off for liquidation. Most of Royole Display’s assets had already been mortgaged to banks, and apart from auctioning off these mortgaged assets, the company essentially has no other sources of funds.
In accordance with the law, after the auction of Royole Display’s mortgaged assets, priority will be given to settling bankruptcy costs, construction contractor claims, mortgage claims, and then finally employee claims.
The employee mentioned that since the value of Royole Display’s assets is highly likely insufficient to cover the mortgage creditors’ claims, there is a possibility that employee claims may not be fully paid after the auction of the company’s assets. Some staff at Royole have remained steadfast, ensuring the value of Royole Display’s production line.
Public records show that as a once highly sought-after unicorn, Royole Technology was valued at over 50 billion RMB and was touted as the pioneer of foldable screen smartphones in China. However, despite multiple rounds of funding, the company’s flexible screen products struggled to be widely adopted and over the years, the company became ensnared in issues such as unpaid wages and lack of orders, leading to its eventual downfall.
In March of this year, Royole Technology and its two subsidiaries filed for bankruptcy examinations, with three individuals listed as the applicants. This news sparked widespread attention and speculation.
According to “21st Century Economic Herald,” on April 1, Royole issued a statement on its WeChat official account denying claims of voluntary bankruptcy and stating that the company was still operational, attributing recent rumors to former employees who filed for bankruptcy examinations under the guise of option disputes.
However, a month later, the Shenzhen Intermediate People’s Court accepted the bankruptcy liquidation case of Royole Technology.
Tianyancha data shows that in May, Royole Technology and its subsidiary Royole Display Systems Technology Co., Ltd. appeared as the subject of an execution announcement with an execution amount of over 68.68 million RMB at the Longgang District Court in Shenzhen. In April, during a hearing at the Shenzhen Intermediate People’s Court for Royole Technology’s bankruptcy examination, it was revealed that the company had debts exceeding 4.7 billion RMB, with wage arrears exceeding 60 million RMB, in addition to promised options, totaling 160 million RMB in unpaid compensation.
After news broke of the Shenzhen Intermediate People’s Court handling the bankruptcy liquidation case of Royole Technology, Liu Shuwei, Director of the China Enterprise Research Center at Central University of Finance and Economics, voiced support for the company on June 9.
Liu Shuwei disclosed that during the early days of Royole Technology, Huawei had offered to invest in the company specifically to supply flexible screens, but Royole Technology declined the investment. In response, Huawei issued an urgent statement calling it a “misunderstanding.”
According to a report by “Securities Times,” back in April 2022, Liu Shuwei had previously revealed that the Shenzhen State-owned Assets Supervision and Administration Commission introduced an industrial capital, a listed company. However, the company made a demand that Liu Zihong must step down from the management. Liu Zihong disagreed with this requirement.
In August of this year, “First Finance” exclusively learned from former employees of Royole that founder Liu Zihong was no longer the Chairman and CEO but remained a major shareholder in the company.
According to Tianyancha, Liu Zihong, the largest shareholder of Royole Technology, held a 38.61% stake, and the second largest shareholder was CITIC Capital (Shenzhen) Asset Management Co., Ltd., holding 6.05%.
On the evening of August 30, Liu Zihong appeared in the audience at the 2024 U.S. Open women’s singles match, attracting attention. It is worth noting that as Royole Technology faced bankruptcy due to unpaid wages, among other issues, Liu Zihong had been restricted from high consumption and leaving the country.
Established in 2012, Royole Technology was founded by a team of American returnees, including a Ph.D., with prior experience at a renowned IT company in the Fortune 500 list. The founder, Liu Zihong, was praised as a technical genius.
The Royole Technology website highlights several industry milestones, such as launching the thinnest color flexible display screen globally, establishing the first large-scale flexible display screen production line, launching and mass-producing the world’s first foldable screen phone, FlexPai, and introducing the industry’s first Micro-LED flexible screen technology.
Royole Technology was once seen as a shining unicorn in the display sector of Shenzhen, completing 12 rounds of financing with a valuation reaching $6 billion and attempting to go public on the STAR Market.
However, in February 2021, Royole Technology voluntarily withdrew its IPO application, leading to a rapid decline of the company. The prospectus revealed accumulated net losses of 3.195 billion RMB from 2017 to the first half of 2020 over three and a half years. Starting from 2023, Royole Technology was repeatedly rumored to be withholding wages.
In May of this year, Royole Technology publicly responded to some online speculations, mainly refuting five claims circulating in the market, including foreign technology origins, low production line yields, the absence of major clients, fundraising through IPO, and extravagant marketing at Shenzhen Airport.
However, skepticism surrounding Royole Technology persisted. The company was once renowned for its ultra-thin flexible screen technology, the “Ultra-Low-Temperature Non-Silicon Process Integrated Technology (ULT-NSSP) flexible display screen.” Yet, multiple panel industry insiders informed “21st Century Economic Herald” that this technology was essentially IGZO (Indium Gallium Zinc Oxide) technology, which did not significantly differentiate it from other manufacturers using IGZO.
Regarding another critical indicator, the yield rate, Royole Technology’s yield rate remained a mystery since the company’s establishment. Not until 2022 was the yield rate disclosed, with an 81.6% yield rate for the full flexible screen production line. Though considered acceptable by industry standards, it was not perceived as high. Despite Royole Technology’s applications in airplanes, fashion shows, and self-produced flexible phones, mass production was never achieved, resulting in unsatisfactory consumer feedback on phone experience and performance.
According to TrendForce data, the global shipment volume of foldable phones in 2023 was merely 15.9 million units, accounting for a mere 1.4% of the overall market. In the Chinese market, foldable screen phones also had a low share, with IDC data indicating a share of only 2.4%.
As reported by the financial self-media “Chief Business Review” previously, despite significant investments by domestic Chinese phone manufacturers in foldable screen technology, foldable phones remained far from becoming essential products for the general public.
The article cited high hardware costs and maintenance fees contributing to the high prices of foldable phones, with no distinctive functional advantages demonstrated. As a result, foldable phones struggled to pique the desires of young consumers for upgrades. Moreover, complaints in the market regarding foldable phones such as screen creases and display malfunctions further affected consumer purchase decisions.
In September of this year, Chinese tech giant Huawei launched the Mate XT Extraordinary Master, a triple foldable screen phone, claiming it was “self-developed.”
However, according to a report by Sina Finance, OLED industry observation media “Wit OLED” cited industry sources, stating that the Huawei Mate XT featured LTPO OLED screens exclusively supplied by BOE.
Multiple media outlets revealed that stolen OLED soft screen technology from South Korean Samsung was allegedly sold to Chinese companies like BOE.
(Extended Reading:
Was the Huawei triple foldable screen phone self-developed? Supply chain exposed)