Supply-side reform optimizes LED electronic screen market structure

LED chips are the core upstream industry of all LED electronic screens. Last year, several consecutive price increases of LED chips had a great impact on the LED electronic screen industry and the lighting market. Today, there is another price adjustment of LED chips at the beginning of today, which has a great impact on LED electronic screens. Downstream industries have created tremendous pressure. With the steady growth of demand, the relationship between supply and demand in the LED electronic screen industry has gradually improved, and there have been incidents of intensive product price increases recently. Industry insiders told reporters from China Securities Journal that not only LED chips are rising in price, but LED electronic screens are also rising.

Previously, manufacturers were too conservative in demand forecasts, resulting in insufficient production capacity preparations; at the same time, the rapid expansion of intelligent products has greatly increased the demand for products such as chip LED electronic screens. The superposition of these factors has exacerbated the contradiction between supply and demand. Before 2016, LED chip manufacturers expanded their business one after another, resulting in obvious overcapacity, and the price continued to decline rapidly, causing drastic changes in the LED industry.

Due to technological backwardness and other reasons, many small enterprises with poor management have reduced production or transformed, and a large number of LED electronic screen enterprises have withdrawn from the market; at the same time, the state has reduced subsidies for MOCVD equipment, and small enterprises lacking funds are unable to expand production. The profits of overseas LED chip manufacturers have also dropped sharply, and the gross profit margin of their products is low. Sanan Optoelectronics issued a price increase notice a few days ago, raising the price of S-30MB/S-32BB series products by 8%, which started the first shot of LED chip price increase in 2017.

According to industry insiders, due to the decline in supply-side production capacity and the steady increase in demand, LED chips will be in short supply in 2017. GF Securities believes that the price increase of Sanan Optoelectronics is due to cost reasons on the one hand; on the other hand, with the withdrawal of small and medium-sized manufacturers, the LED chip industry is mainly concentrated in the hands of several large manufacturers, and the seller's position is stronger. Concentration improvement experts said that after the deep reshuffle of the LED electronic screen industry, the supply-side reform is relatively sufficient.

From the perspective of LED upstream, the concentration is accelerating, forming high industry barriers and curbing disorderly expansion of production capacity; at the same time, downstream application innovation drives the development of the industrial chain. Judging from the current situation, the penetration of LED electronic screens is accelerating, and the intelligentization and networking of LED electronic screens have promoted Sanan Optoelectronics as the leader in the chip sector. It is the only domestic enterprise engaged in the production of full-color LED chips. The company is actively expanding its production capacity and is expected to have 400 MOCVD equipment by the end of 2017.

Overseas LED giants such as Philips, Seoul Semiconductor, LG, Samsung, and CREE have basically stopped production, and the new demand is outsourced to Sanan. The company's overseas customer orders are expected to further increase. Nanda Optoelectronics' main product is high-purity metal-organic sources, which are mainly used for the growth of LED epitaxial wafers. In 2012, the company accounted for about 20% of the global market share, and the domestic market share was as high as 60%.

Sanan Optoelectronics Co., Ltd. is the largest full-color ultra-high brightness LED chip manufacturer in China. At present, the company has formed an annual production capacity of 5.8 million LED epitaxial wafers and 128 billion chips, and its total production capacity ranks first in the country. In 2013, the company will form a comprehensive production scale with an annual output of 10 million LED epitaxial wafers and 300 billion chips.

HC Semitek has been engaged in the R&D, production and sales of LED epitaxial wafers and chips since its establishment. During the reporting period, the sales volume of chips used in LED electronic screens increased by 22.65% over the previous year. A major breakthrough has been made in the sales scale, accounting for more than 10% of sales volume, an increase of 1262% ​​year-on-year It has formed an annual production capacity of nearly 15.8 billion chips. In June 2013, Aoyang Shunchang planned to invest in LED epitaxial wafer and chip industrialization projects with a fixed increase of no less than 5.12 yuan per share and no more than 100 million shares. In December 2012, Silan Micro's wholly-owned subsidiary Silan Mingxin's LED epitaxial wafer production capacity has increased to 60,000 pieces/month, and the production capacity of LED dies has increased to 1.4 billion pieces/month.

The small-pitch LED electronic screen market has accelerated and has become the main driving force for a new round of LED industry growth. According to Guosen Securities, by the end of 2017, the effective production capacity of LED chips will be about 83.28 million pieces, and the demand will be about 92.35 million pieces. Among them, the demand for LED electronic screen chips was 47.04 million pieces, a year-on-year increase of 20%; the demand for outdoor full-color LED electronic screens was 26.02 million pieces, a year-on-year increase of 5%; the demand for indoor small-pitch LED electronic screens was 1.02 million pieces, a year-on-year increase of 50%; The demand for backlight is 1.39 million pieces, the demand for tablet PC backlight is 440,000 pieces, the demand for computer and TV backlight is 6.99 million pieces, and the demand for automotive lamps is 1.06 million pieces.

Industry insiders believe that LED chip production capacity is still lower than demand. Considering the steady growth of demand in 2017, LED chips will be in short supply. .