Facing the Tariff Status: The Projection Industry Should Learn from the Automotive HUD Sector

I. The projection industry relies on a single upstream core supply chain.

The core light valve technologies in China's projection market primarily consist of LCD and DLP.

1/ LCD technology relies mainly on domestic suppliers like BOE, utilizing FAST LCD technology. Its advantage lies in low cost, but its performance ceiling is limited. It primarily serves entry-level market segments.

2/ DLP technology hinges on two key components: the DMD (Digital Micromirror Device) microelectromechanical array light valve and its driver IC, both exclusively supplied by U.S.-based Texas Instruments (TI). While costly, DLP delivers superior display performance, making it the preferred choice for high-end applications such as high-brightness engineering projects, digital cinema projection, and 4K displays. It dominates mid-range and premium markets.

This dichotomy means LCD and DLP are hardly interchangeable in projection applications. Consequently, LCD and DLP projection brands operate in distinct camps, with few companies achieving significant market share in both technologies. As a result, DLP-centric brands remain heavily dependent on TI.

The Trump administration’s tariff policies threatens to substantially raise the cost of importing U.S.-made DLP core components for Chinese manufacturers. Given that most projectors are low-margin consumer goods, brands may struggle to absorb the price hikes of these critical parts. This could severely undermine the competitiveness of Chinese companies specializing in DLP-based products. Industry insiders note that while domestic firms currently maintain sufficient inventory to sustain operations, the prolonged tariff conflict poses a looming risk:

Even if export markets bypass heavy tariffs through bonded policies, or if domestic demand secures specific exemptions, this round of tariff shocks has exposed the peril of "putting all eggs in one basket." More critically, the reliability of U.S. supply chains has been significantly eroded by this trade war. By weaponizing trade policies, the U.S. has compromised long-term trust and supply chain stability. The frequent use of tariffs and ever-shifting rules is transforming opportunistic risks into a gathering systemic threat—a trend demanding urgent attention. Domestic projection companies must act preemptively to mitigate these risks.

II. The HUD industry is characterized by diversified development and strong autonomy.

According to statistical data, the installation volume of HUDs as standard equipment in China's passenger vehicles surpassed 1 million units in 2021, exceeded 2 million units in 2023, and reached 3.5 million units in 2024 (data from ZhuoSi Intelligence), demonstrating rapid growth.

In terms of core technology selection, the domestic HUD market has achieved a balanced layout across three major technologies: LCD, LCOS, and DLP. Among them, LCD technology is characterized by lower costs, catering to budget-friendly demand, while DLP and LCOS offer superior performance, meeting the needs of mid-to-high-end and AR HUD applications. From an application perspective, LCOS and DLP exhibit highly overlapping market applicability, placing them in a substitutive competitive relationship. China's upstream supply chain has full control over the core technologies and production capacity for both LCD and LCOS.

For example, Crystal Optech, a top-three player in AR HUD market share over the past three years, has demonstrated the feasibility of LCOS technology as a "high-end projection solution" through its AR HUD system solutions based on foundational technologies like Huawei's LCOS PGU imaging module. On November 2, 2024, Jingfan Optoelectronics held the production launch ceremony of its first wafer at its Chongqing manufacturing base, located in the Tuanjiehu Digital Economy Industrial Park. This marked the official operation of the world's eighth, China's fourth, and Chongqing's first LCOS chip packaging and testing mass-production line.

The diversity in core technology deployment within China's HUD market has inherently ensured its "low sensitivity" to U.S.-dominated DLP supply. Relying on domestically controlled LCD and LCOS supply chains, the industry can fully meet the demands of automotive HUD applications across various autonomous driving levels—a stark contrast to the consumer projection market. With leading domestic players like Huawei HiSilicon, Jingfan Optoelectronics, OmniVision, Changjiang Liwei, and Chiponeic continuously introducing competitive LCOS light valve chips and solutions, the upstream supply dynamics of the projection optics industry are poised for further transformation. This trend will become even more pronounced under the pressure of U.S. tariff barriers.

III. Under the tariff status, internal competition within the projection industry may intensify.

The projection optics industry is highly cost-sensitive, a trend amplified by years of declining prices. For instance, 4K consumer projectors in 2024 now retail below 4,000 RMB (down from over 10,000 RMB), while AR-HUD prices have dropped from 4,000+ RMB to under 1,000 RMB. This makes tariff-induced cost increases critically disruptive.

Global Market Contraction
According to RUNTO, U.S. projection market growth may stagnate or even decline in 2025 due to tariff uncertainties, inflationary pressures, and new parcel tax policies. The U.S., once the world’s second-largest market, could fall behind Western Europe. Tariffs may halve global projection industry growth potential, dragging annual growth below 5%.

Domestic Ripple Effects
As the world’s largest projection manufacturing hub, China’s domestic market will face intensified competition in 2025. With slim profit margins (often <5%), absorbing quadrupled DLP tariff costs (e.g., 1,000+ RMB hikes per 4K projector) is untenable. Export challenges will force firms to pivot toward domestic markets, accelerating demand for low-cost, tariff-proof supply chains.

Localized Tech Breakthroughs
Industry analysts note that while U.S. supply chains face turbulence, China’s LCD and LCOS technologies now cover the full spectrum—from entry-level to premium projectors—ushering in a "risk-balanced" supply era. Key milestones:

1/ 2024: Huawei HiSilicon launched pilot projects for fully localized LCOS projector supply chains.

2/ 2025 Q1: Companies like Crystal-Optech achieved end-to-end LCOS ecosystem integration, from core chips to final assemblies.

LCOS: The 4K Game-Changer
LCOS outperforms DLP in native 4K resolution, 10,000:1 contrast ratios, and ultra-high refresh rates. Its smaller pixel size enables compact, lightweight designs—critical for consumer and automotive HUD markets. For example:

Crystal-Optech and HiSilicon’s triple-LCOS optical engine (industry’s smallest native 4K module) supports multi-color light systems, with prototypes already demoed.

Strategic Imperative
The tariff war, while disruptive, is accelerating China’s projection industry toward autonomy and high-end innovation. With mature LCD/LCOS supply chains and breakthroughs like localized 4K LCOS, the sector is poised to redefine global competitiveness—turning geopolitical risks into catalysts for upgrading.

Name: Janice

Email: sales11@ihomebox.com.cn

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