Affected by multiple factors, the prices of LED chips, packages, and applications have fallen continuously since the beginning of the year, with the average decline in the first seven months exceeding 20%. The hidden worry about overcapacity has become the topic that entrepreneurs are most concerned about, and the overheated investment in the LED industry chain has become apparent.
Sapphire substrate investment overheating is the most serious "Since the beginning of the year, the price of LED chips has dropped by more than 20%, the application market has grown less than expected, and many companies have been burdened with huge shipment pressures, and the chips are selling at a faster price." An LED chip Vendors frankly told reporters yesterday. Sadly, this is only the beginning.
According to the statistics of the Institute of LED Industry of Gaogong Industry, from January to July this year, the price of 2-inch sapphire substrate dropped from the highest of 35 US dollars per piece at the beginning of the year to 13-15 US dollars per piece at present, with an average decline rate of more than 50%; LED chips The average price reduction of 25%, the largest price reduction rate of 42%; LED packaging, an average price reduction of 23%, the maximum price reduction rate of 37%; LED applications, average price reductions also reached 21%.
“LED sapphire substrate is the most overheated investment, followed by epitaxial wafers, and the packaging capacity is relatively surplus. The overall performance of LED applications is good.†Zhang Xiaofei pointed out that under the competitive promotion of preferential subsidy policies of various local governments, from January to July 2011, China MOCVD increased the number of more than 200 units. It is estimated that by 2012 LED chip production capacity will reach 10 times in 2010.
According to statistics, the total planned investment for LED epitaxial wafers in mainland China is 183.5 billion yuan, including 73.5 billion yuan for projects under construction; the total planned MOCVD equipment is 4,519, and 1,642 are under construction. The current actual volume is 543. Since the beginning of last year, local governments such as Yangzhou and Wuhu have greatly subsidized MOCVD equipment and expanded the size of the LED chip industry. At the same time, however, the increase in the application market has been unsatisfactory.
In the application segment, backlighting has been regarded as the main driving force for the promotion of LED applications. In the past two quarters, panel makers have lowered their shipment plans. Some senior analysts believe that due to the high inventory and slow sales of LED backlight TVs in the fourth quarter of 2010, the first quarter of 2011, and the second period of 2011, the demand for LED backlighting has therefore decreased.
Taiwanese manufacturers in China also face the same problem. According to Zhan Yiren, Secretary-General of the Taiwan Opto-electronics Semiconductor Industry Association, the industrial boom driven by LED-backlit TVs last year did not continue this year; if the backlight does not support production capacity, hopefully lighting can lead; but from the current situation, it also needs LED lighting products The price is more competitive, or the government has introduced corresponding policy incentives to effectively wake up this market.
"With the release of production capacity in the second half of the year, companies will face tougher price challenges. The short-term excess capacity is certain," said Gong Weibin, chairman of Ruifeng Optoelectronics.
The advantages and disadvantages of the “price war†coexist in the industry. It is widely believed that the price war will accelerate the industry reshuffle, eliminate some small and medium-sized enterprises, and make the market share more concentrated to the leading enterprises. This is more obvious in the packaging process.
According to Zhang Xiaofei, the number of failures of LED packaging companies has been significantly higher this year than in previous years, and the number of new companies has decreased significantly. Most of the LED packaging companies' gross profit margins have dropped significantly, and the total investment has dropped by more than 20% from 2010. “LED packaging companies have the lowest risk resistance. Compared with the profits of more than 90% of LED packaging companies in 2010, the proportion of loss-making enterprises will be greatly increased this year; in addition, 10% of companies are expected to be forced to close down,†he said.
In LED investment, some companies have been more cautious. Wang Lianghai, vice president of Tongfang Group, told reporters that Tongfang’s current investments in the LED sector will not exceed 20% of assets. Follow-up will decide whether to increase capital or not depending on market conditions; at the same time, the company is also fully integrated in the industry chain. Considered on the layout.
However, Gong Weibin believes that price competition is a period that is very suitable for performance differentiation. "Price warfare favors two types of LED manufacturing companies with core capabilities that stand out, one is technology-leading; the other is cost-leading." He said that in this regard, Ruifeng Optoelectronics will pay more attention to reducing costs through technology. , strive to reduce the explicit cost of 30-50% without reducing product quality.
He also pointed out that, on the other hand, the drop in LED prices also promoted the expansion of the market, which will prompt LED to enter the application lighting market faster.
Baotuan heating, chaos and winning Industrial Securities analyst pointed out that in the LED chip oversupply background, more optimistic about the downstream industrial chain, especially the future of the general lighting market. According to the latest DisplaySearch data, LED backlight demand will peak in 2013, and then demand will turn to lighting, lighting LED usage in 2011 is expected to grow 20% over 2010.
Gaogong LED Industry Research Institute's data also pointed out that although the LED application company's gross profit margin has decreased, but the overall production scale has grown rapidly, especially landscape lighting and general lighting products. "Because of the increase in sales scale, the overall profitability is better than in 2010, and the proportion of loss-making enterprises will be significantly reduced." Zhang Xiaofei said.
Any LED development center in Xiamen City pointed out that in the current market situation, enterprises must quickly respond to the high growth of the market, and there is no way out to go it alone, and resources must be integrated to form a joint force. RuiFeng Optoelectronics, Zhejiang Sunshine and other companies attended the forum yesterday and said that they have reached an agreement on the establishment of a patent pool and talent cooperation.
“For chip companies, buying less MOCVD equipment, investing more in midstream and downstream companies, and forming a coalition that runs through the midstream and downstream may be the best option today.†Zhang Xiaofei said.
Sapphire substrate investment overheating is the most serious "Since the beginning of the year, the price of LED chips has dropped by more than 20%, the application market has grown less than expected, and many companies have been burdened with huge shipment pressures, and the chips are selling at a faster price." An LED chip Vendors frankly told reporters yesterday. Sadly, this is only the beginning.
According to the statistics of the Institute of LED Industry of Gaogong Industry, from January to July this year, the price of 2-inch sapphire substrate dropped from the highest of 35 US dollars per piece at the beginning of the year to 13-15 US dollars per piece at present, with an average decline rate of more than 50%; LED chips The average price reduction of 25%, the largest price reduction rate of 42%; LED packaging, an average price reduction of 23%, the maximum price reduction rate of 37%; LED applications, average price reductions also reached 21%.
“LED sapphire substrate is the most overheated investment, followed by epitaxial wafers, and the packaging capacity is relatively surplus. The overall performance of LED applications is good.†Zhang Xiaofei pointed out that under the competitive promotion of preferential subsidy policies of various local governments, from January to July 2011, China MOCVD increased the number of more than 200 units. It is estimated that by 2012 LED chip production capacity will reach 10 times in 2010.
According to statistics, the total planned investment for LED epitaxial wafers in mainland China is 183.5 billion yuan, including 73.5 billion yuan for projects under construction; the total planned MOCVD equipment is 4,519, and 1,642 are under construction. The current actual volume is 543. Since the beginning of last year, local governments such as Yangzhou and Wuhu have greatly subsidized MOCVD equipment and expanded the size of the LED chip industry. At the same time, however, the increase in the application market has been unsatisfactory.
In the application segment, backlighting has been regarded as the main driving force for the promotion of LED applications. In the past two quarters, panel makers have lowered their shipment plans. Some senior analysts believe that due to the high inventory and slow sales of LED backlight TVs in the fourth quarter of 2010, the first quarter of 2011, and the second period of 2011, the demand for LED backlighting has therefore decreased.
Taiwanese manufacturers in China also face the same problem. According to Zhan Yiren, Secretary-General of the Taiwan Opto-electronics Semiconductor Industry Association, the industrial boom driven by LED-backlit TVs last year did not continue this year; if the backlight does not support production capacity, hopefully lighting can lead; but from the current situation, it also needs LED lighting products The price is more competitive, or the government has introduced corresponding policy incentives to effectively wake up this market.
"With the release of production capacity in the second half of the year, companies will face tougher price challenges. The short-term excess capacity is certain," said Gong Weibin, chairman of Ruifeng Optoelectronics.
The advantages and disadvantages of the “price war†coexist in the industry. It is widely believed that the price war will accelerate the industry reshuffle, eliminate some small and medium-sized enterprises, and make the market share more concentrated to the leading enterprises. This is more obvious in the packaging process.
According to Zhang Xiaofei, the number of failures of LED packaging companies has been significantly higher this year than in previous years, and the number of new companies has decreased significantly. Most of the LED packaging companies' gross profit margins have dropped significantly, and the total investment has dropped by more than 20% from 2010. “LED packaging companies have the lowest risk resistance. Compared with the profits of more than 90% of LED packaging companies in 2010, the proportion of loss-making enterprises will be greatly increased this year; in addition, 10% of companies are expected to be forced to close down,†he said.
In LED investment, some companies have been more cautious. Wang Lianghai, vice president of Tongfang Group, told reporters that Tongfang’s current investments in the LED sector will not exceed 20% of assets. Follow-up will decide whether to increase capital or not depending on market conditions; at the same time, the company is also fully integrated in the industry chain. Considered on the layout.
However, Gong Weibin believes that price competition is a period that is very suitable for performance differentiation. "Price warfare favors two types of LED manufacturing companies with core capabilities that stand out, one is technology-leading; the other is cost-leading." He said that in this regard, Ruifeng Optoelectronics will pay more attention to reducing costs through technology. , strive to reduce the explicit cost of 30-50% without reducing product quality.
He also pointed out that, on the other hand, the drop in LED prices also promoted the expansion of the market, which will prompt LED to enter the application lighting market faster.
Baotuan heating, chaos and winning Industrial Securities analyst pointed out that in the LED chip oversupply background, more optimistic about the downstream industrial chain, especially the future of the general lighting market. According to the latest DisplaySearch data, LED backlight demand will peak in 2013, and then demand will turn to lighting, lighting LED usage in 2011 is expected to grow 20% over 2010.
Gaogong LED Industry Research Institute's data also pointed out that although the LED application company's gross profit margin has decreased, but the overall production scale has grown rapidly, especially landscape lighting and general lighting products. "Because of the increase in sales scale, the overall profitability is better than in 2010, and the proportion of loss-making enterprises will be significantly reduced." Zhang Xiaofei said.
Any LED development center in Xiamen City pointed out that in the current market situation, enterprises must quickly respond to the high growth of the market, and there is no way out to go it alone, and resources must be integrated to form a joint force. RuiFeng Optoelectronics, Zhejiang Sunshine and other companies attended the forum yesterday and said that they have reached an agreement on the establishment of a patent pool and talent cooperation.
“For chip companies, buying less MOCVD equipment, investing more in midstream and downstream companies, and forming a coalition that runs through the midstream and downstream may be the best option today.†Zhang Xiaofei said.
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