As the listed companies in the LED industry successively announced the 2013 annual report, the entire LED industry chain was clearly presented in the business situation last year. According to statistics, in 2013, the entire LED industry produced and sold large quantities, but the performance diverged: upstream and downstream enterprises were caught in the dilemma of increasing revenues, while mid-stream packaging companies increased their profits while improving their profits. "In 2013, the performance of LED midstream companies did exceed expectations," said Zheng Liyao, vice president of the High-tech LED Industry Research Institute.
Upstream - LED chip capacity increased by 10 times in 3 years, demand improvement does not change the price decline
In the short period of 3 years from 2010 to 2012, the LED chip capacity expanded more than 10 times. The direct impact of the big explosion was the sharp decline in the price of LED chips. The cumulative decline of LED chips in the same period exceeded 50%, which made the company miserable. .
However, driven by the demand in the downstream lighting application market, the MOCVD capacity utilization rate rose to 52% in 2013, and the operating rate rose to around 70%, and some companies even achieved full production. Despite this, the information reported by the company is still conservative, and the chip price may be slowly falling.
Chip manufacturers crazy price war
In the upstream of LED, there are many LED chip manufacturers such as Sanan Optoelectronics, Dehao Runda, Huacan Optoelectronics and Ganzhao Optoelectronics. In addition to Sanan Optoelectronics, the other three companies have announced their 2013 annual report or performance report.
Huacan Optoelectronics Express reported that the company's total operating revenue in 2013 was 316 million yuan, down 4.19% year-on-year. The net profit attributable to shareholders of listed companies was 18.064 million yuan, down 79.32% year-on-year; 4.87 billion yuan, an increase of 29.38%, but the net profit fell by 1.17%; Dehao Runda performance report shows that in 2013 the company's total operating income was 3.17 billion yuan, an increase of 13.04%, net profit of 936.36 million yuan, a decline 94.22%.
“2013 is an exciting year. Due to the rapid development of the lighting industry, the production capacity of the upper, middle and lower reaches has been fully utilized, and the overcapacity has slowed down. 2013 is also a year of anxiety for the industry, although orders A lot, the revenue has increased, but due to the price war, the gross profit margin of the company is getting lower and lower." At the beginning of this year, at an industry forum, Zhang Xiaofei, dean of the High-tech LED Industry Research Institute, said.
The price war in the LED industry begins with the upstream chip. According to statistics from the High-tech LED Industry Research Institute, the price of LED chips in China dropped by more than 30% in 2012 compared with the beginning of the year, and continued to drop by about 20% in 2013.
"In 2012, the price of chips will be very large. For example, (individual type chips) will be a dollar at the beginning of the year, and by the end of the year, there will be only one to five or two cents." Dehao Runda said.
LED chip price war is the inevitable outcome of overcapacity
According to statistics from the High-tech LED Industry Research Institute, the number of MOCVD in China's LED industry increased from 803 in 2011 to 917 in 2012, nearly three times that of 2010, and the total production capacity was more than 10 times that of 2010. In 2013, the total number of MOCVDs continued to increase to 1,017 units, eliminating the active exit factor of the old machines. In 2013, the number of newly added MOCVDs exceeded 130.
The concentrated release of a large amount of production capacity has brought tremendous pressure on LED chip companies. According to the data provided by the High-tech LED Industry Research Institute, the utilization rate of China's MOCVD capacity in 2012 was only about 30%, and the operating rate was only about 50%.
Under-employment, huge machine depreciation losses have brought heavy business pressure to enterprises. For example, Huacan Optoelectronics' 2013 semi-annual report showed that the gross profit margin of the company's chips during the reporting period was -5.27%, and the company's chip gross margin did not turn positive until the third quarter of 2013.
Capacity expansion continues
However, driven by the demand in the downstream lighting application market, the MOCVD capacity utilization rate rose to 52% in 2013, and the operating rate rose to around 70%. At the end of March this year, it was learned from Sanan Optoelectronics and Dehao Runda that the former MOCVD equipment was already full; the latter 54 MOCVD equipments have been mass-produced, and the MOCVD equipments of the two bases in Wuhu and Yangzhou were 92 units.
A related person of Sanan Optoelectronics said that the price of the chip may have to fall slowly, and the decline is determined according to the advancement of the company's technology.
It is worth noting that the upstream expansion impulse did not diminish as prices fell. Sanan Optoelectronics announced on April 3 that the company decided to set up a wholly-owned subsidiary in Xiamen to invest in the construction of LED epitaxial and chip R&D and manufacturing industrialization projects. The total investment of the project is 10 billion yuan, and the total scale is 200 MOCVD.
In January this year, Huacan Optoelectronics announced that the company plans to start the construction of “Huaguang Optoelectronics (Suzhou) Co., Ltd. LED Epitaxial Chip Phase II Project†with its own funds of 305 million yuan. The project plans to form an annual output of 480,000 pieces. Production capacity of 2-inch red-yellow LED epitaxial wafers (for own use) and 15.4 billion red-yellow chips.
Then, in the context of upstream capacity not fully digested, will the company expand again and trigger a new round of excess crisis?
Zheng Liyao believes that these new projects will not be completed until a few years later, so there will be no new pressure on the chip market in the short term. He said that after learning the lessons of the past few years, companies began to become more stable.
Zheng Liyao judged that since most of the chip companies were in a state of loss or breakeven last year, the profitability of this year is expected to gradually improve due to the downstream pull. As for the substantial improvement, it is still difficult to judge.
Midstream - LED package monopoly triple advantage income profit double growth
The upstream and downstream LEDs are either suffering from overcapacity or facing the market competition. In sharp contrast, the mid-stream of the LED industry, especially the sub-sectors represented by packaging, has been quite moist. Many companies have achieved simultaneous growth in revenue and net profit. The LED packaging industry has been able to grow against the trend, in addition to the growth of demand in the downstream lighting market, but also related to the company's own competitiveness. And these favorable factors are expected to continue.
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