For just 19,999, Put a Computer in Your Pocket and Take It Home! Huawei's Tri-Foldable Phone Launches, Stirring Up the Foldable Screen Market, Yet the Warning Bells of Royole's Bankruptcy Continue to Ring!

For just 19,999, Put a Computer in Your Pocket and Take It Home! Huawei's Tri-Foldable Phone Launches, Stirring Up the Foldable Screen Market, Yet the Warning Bells of Royole's Bankruptcy Continue to Ring!"For just 19,999, put a computer in your pocket and take it home!" These days, Huawei's first tri-foldable phone has dominated social media feeds. Its globally largest foldable screen and sleek design, when unfolded, convey a sense of aristocratic elegance, like reading official documents

For just 19,999, Put a Computer in Your Pocket and Take It Home! Huawei's Tri-Foldable Phone Launches, Stirring Up the Foldable Screen Market, Yet the Warning Bells of Royole's Bankruptcy Continue to Ring!

"For just 19,999, put a computer in your pocket and take it home!" These days, Huawei's first tri-foldable phone has dominated social media feeds. Its globally largest foldable screen and sleek design, when unfolded, convey a sense of aristocratic elegance, like reading official documents. Users who have experienced it have all exclaimed that it's unbelievably cool. The launch of Huawei's tri-foldable phone signifies another pinnacle of Huawei's excellence in foldable screen technology. It also inevitably brings to mind the "pioneer" of foldable screen phones Royole Corporation. This once promising company entered bankruptcy liquidation proceedings at the end of March this year, becoming one of the most regrettable technological failures of 2024.

Royole Corporation was once a unique figure in the flexible display field. Its founder, Liu Zihong, was a "gaokao top scorer," a "Tsinghua genius," adorned with countless accolades, and demonstrating impressive technical innovation capabilities. Many believe he was more a scientist than a typical entrepreneur. In 2012, Liu Zihong resigned from his position as an executive at IBM to start his own business, co-founding Royole with several friends. The company focused on two core businesses: flexible display and full-flexible sensors.

Unlike many startups that remain in the research and development phase for long periods, Royole successfully introduced a flexible display with a thickness of just 0.01 millimeters just two years after its foundation. This innovative achievement not only set a world record but also propelled Royole's products into the market spotlight. Notably, after being featured on CCTV News, Royole quickly became a star in the industry, attracting the attention of numerous investors.

From 2012 to 2021, Royole completed nine rounds of financing, totaling 6.197 billion in investment and 3.653 billion in debt financing. The company's valuation reached over 50 billion at one point. Behind it stood the support of numerous renowned institutions, including IDG Capital, CITIC Bank, Bank of China, Shenzhen Venture Capital, and Ping An Venture Capital Fund.

In 2020, Royole's development reached its peak. With a valuation of $6 billion, the company successfully ranked 12th on the "2020 China New Economy Unicorn 200 Strong List" and topped the "China's Top 100 Science and Technology Enterprises List." As the company's performance continued to climb, Liu Zihong's personal wealth also soared. In 2020, he made his first appearance on the Hurun Rich List with a fortune of 14.6 billion.

However, even as Royole seemed to bask in boundless glory, the company's prospects took a sharp turn downward. In January 2020, news spread that Royole planned to list on the US stock market, aiming to raise approximately $1 billion. But by June of the same year, the company's market entity type had changed from "Limited Liability Company (Sino-foreign Joint Venture)" to "Joint-stock Company," suggesting that Royole had abandoned its plans to list in the US. Later that year, the company submitted a listing application to the Shanghai Stock Exchange's STAR Market.

However, the company's financial situation was not optimistic. From 2017 to 2020, Royole's revenue reached 516 million, but its losses amounted to 3.195 billion. It was constantly investing, constantly burning cash. This financial performance made Royole's path to listing exceptionally challenging. The failed listing also planted the seeds for the company's future financial crisis.

On January 30, 2021, the China Securities Industry Association disclosed a list of 20 companies that were subject to random checks, including Royole. On February 10, Royole unexpectedly withdrew its listing application, sparking widespread speculation in the market about the company's operating condition. Regarding the reason for withdrawing the listing application, Royole explained that due to issues with the company's shareholder structure, the board of directors decided to postpone the listing.

Although Royole boasts the world's first fully flexible screen production line, its capacity utilization has always been low, and product sales have been unsatisfactory. From 2018 to 2020, the company planned to produce 11,670, 46,670, and 23,330 flexible screens, respectively, but actual production only amounted to 1,760, 14,560, and 1,230, respectively.

Furthermore, the quality of Royole's products has also been questioned by the market. Media reports indicated that at the end of 2021, several professional institutions conducted a month-long on-site evaluation of Royole's fully flexible screen production line. The results revealed that the yield rate was only 81.6%.

Beyond the issue of yield rate, Royole faces significant challenges in terms of product sales. The company's FlexPai foldable phone, RoWrite smart notebook, and other products have not gained widespread market recognition, resulting in meager sales. Royole's products are priced high, and the brand's reputation cannot compete with major brands in the mobile phone industry, significantly undermining the competitiveness of its products in the market.

More seriously, as a technology R&D company, Royole seeks to directly enter the C-end product market. Before establishing a solid foothold in the market, the company had to confront fierce competition from major mobile phone brands.

According to data in the prospectus, as of June 30, 2020, Royole's cash and cash equivalents totaled only 819 million, indicating a tight financial situation. Royole claimed that its self-developed technology could address cost and yield issues. However, in reality, the company failed to enter the production chains of major manufacturers, nor did it receive mass orders from these manufacturers. This demonstrates that relying solely on technical advantages without achieving mass production would make the company's survival and development unsustainable.

Take 2019 as an example. Royole's production of fully flexible displays reached 314,000 units, but sales were only 52,700 units. A vast amount of products produced had to be piled up in inventory, hindering cash flow, and worsening the company's financial condition. Subsequently, negative news such as salary arrears, equity freezes, and forced execution began to emerge, and company founder Liu Zihong was also subject to consumption restrictions several times.

During the 2023 Spring Festival, a group of employees demanding payment gathered downstairs at Royole's building, holding banners in the cold wind, attempting to reclaim their livelihoods, but no one responded.

At the end of March 2024, Royole filed for bankruptcy. The once unicorn company valued at over 50 billion, the "pioneer" of foldable screen phones, ultimately vanished into thin air. Just last month, someone spotted Liu Zihong at the US Open tennis tournament, chatting and laughing with a beautiful woman in the stands, suggesting that the company's bankruptcy had little impact on him personally.

Some say Royole's predicament is also linked to the current state of the foldable screen market. Although manufacturers such as Huawei, Honor, and Xiaomi have invested heavily in R&D in this field, foldable screen phones still account for a small share of the overall smartphone market.

According to a report from IDC, in 2023, the domestic market for foldable screen phones shipped approximately 7.007 million units, with a year-on-year growth rate of 114.5%, achieving a year-on-year growth rate exceeding 100% for four consecutive years. However, based on data and information, despite the numerous entrants in the foldable screen field and rapid growth in shipments, foldable screen phones still account for a small share of the overall smartphone market. In 2023, global shipments of foldable screen phones reached 15.9 million units, representing only 1.4% of the overall phone market. In the Chinese market, the share of foldable screens is also just 2.4%.

While the foldable screen market has potential, it still requires continuous exploration and innovation. Royole, an early entrant in the flexible screen field, although possessing self-developed products and over 300 patents, still failed to find a clear direction in its development. Heavy assets, low output, lack of substantial orders, and delayed cash flow ultimately pushed this once "star company" to the brink of bankruptcy.

Recently, the launch of Huawei's tri-foldable phone signals the start of a new round of competition in the mobile phone market. This not only reflects Huawei's own technological innovation but also marks a significant intensification of competition in the foldable screen phone market.

As technology continues to advance and the market expands, foldable screen phones are poised to become a significant growth point in the smartphone market. What are your thoughts on Huawei's tri-foldable phone

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