Zhang Xiaofei: In 2014, the LED industry will be shuffled.
[Author: Dr. Engineering Industry Research Institute Xiaofei] 2013 was an exciting year, due to the rapid development of the lighting industry, driven by the middle and lower reaches capacity into full play, let the excess capacity has slowed. 2013 is also a year of great anxiety for the industry. Although there are many orders and revenues have increased, due to price wars, the gross profit margin of enterprises has become lower and lower.
With the maturity of domestic LED technology, the cost performance of LED lighting products is gradually approaching or even higher than traditional lighting, and the acceptance of consumers is gradually increasing. In 2013, it was considered by many people in the LED industry to be the best year. The sales of products have been going all the way, but the problems of product homogenization, price war, low gross profit and so on have also plagued the development of the whole industry.
The High-tech LED Industry Research Institute (GLII) predicts that the output value of China's LED industry will reach 263.8 billion yuan in 2013, a year-on-year increase of 28%. In the next five years, in addition to indoor and outdoor, automotive lighting, special lighting, other areas will enter a period of slow growth.
Comprehensive development of the industrial chain
Since the launch of the “Ten Cities and Ten Thousand Cities†by the Ministry of Science and Technology in 2009, the domestic LED industry has ushered in a boom in investment, and various capitals have swarmed in, especially in the upstream areas of sapphire and epitaxial chips.
Upstream, the domestic sapphire production value ranks first in the world, and the future output value will be the first in the world. The number of MOCVDs is the highest in the world, and the future output value will remain the first in the world. In 2013, the total number of domestic MOCVD reached 972 units, but the profit of a single unit still has a large gap compared with multinational companies such as Philips and Osram.
The quality and cost-effectiveness of domestic chips have increased rapidly. This has also drastically lowered the price of imported chips, which has led to the inability of many chip factories in Taiwan to exist independently. It must rely on production in China and sales in the Mainland. The fact that Taiwan’s Kellett and Crystal’s collapse last year also confirmed this.
In the middle of the package field, China's LED packaging industry has already achieved considerable economic scale and become one of the world's major LED packaging production bases. Domestic packaging devices occupy the vast majority of the domestic market, and the proportion of imported packaging devices in the Chinese market is rapidly decreasing.
There will be no more than eight imported device brands in the future, and domestic devices will occupy a major domestic market share, because domestic prices are much lower. Some of the domestically packaged devices are exported to foreign countries, and domestic packaging manufacturers have begun to OEM (OEM) to foreign manufacturers. This also shows that domestic devices have reached a high cost performance, China's LED packaging is going global.
Lighting demand is the biggest cake in the LED application market. Since last year, many upstream and midstream companies have begun to enter the lighting market. Sanan and Ganzhao have set up lighting subsidiaries.
Downstream, China's export lighting will account for most of the global market, with an estimated proportion of around 70%. Most of the foreign LED lighting will be OEM by Chinese companies. In China, only multinational lighting companies can compete with Chinese companies in China, such as Philips and Osram.
Great reshuffle in the next five years
After the development of the previous years, the domestic LED industry has made great progress in technology, scale, products, etc., but it also faces many problems. LED overcapacity, numerous companies, uneven product performance, and price wars are getting worse. Many companies do not have a clear and clear enterprise and product positioning.
In the next five years, the LED industry will be reshuffled. Whether it is a listed company, a state-owned enterprise or a private enterprise, it will face a very serious situation in the next five years. Especially in the next three years, the LED industry big fish to eat small fish, fast fish to eat slow fish, will be the normal state of the industry, because the market space is so large, this is the inevitable result of market rules. Non-listed companies may be largely eliminated or integrated.
GLII believes that Chinese local chip manufacturers will eventually survive no more than 12, and domestic MOCVD will not survive more than two. Most upstream companies die and the survival rate is around 30%.
According to GLII survey data, the number of companies involved in LED packaging in China reached 1,750 in 2012. These 1750 homes can survive about 40%. Some of these enterprises will become large-scale manufacturers, especially those companies that have already listed, such as Ruifeng Optoelectronics (300241, shares), Hongli Optoelectronics (300219, shares), will continue to grow, and SMEs will be freed after they are eliminated. The space will be given to large and medium enterprises.
After several years of development of LED lighting, the penetration rate is constantly improving. In 2015, the penetration rate of LED lighting will exceed 60%. At the end of 2018, LED lighting production accounted for 80% of total lighting output.
Traditional lighting companies are slow to transform into LEDs, and forming strategic alliances with packaging companies is the way out. The death rate of the entire LED lighting company exceeds 50%, and the proportion of LED lighting companies will exceed the proportion of traditional lighting. For outdoor lighting, LED lighting companies have advantages in outdoor lighting. Listed companies and state-owned enterprises will account for most of the market; lighting, traditional lighting companies will still have a larger market share. LED lighting and packaging companies that have already listed will have the advantages of capital and talents.
In the pattern of the industry in the next five years, I believe that 2014 is a year of real hands-on shuffling. The companies that have been shuffled have a low probability of surviving in the future with a turnover of less than 10 million. In 2015, the industry integration was very intense. In 2016, a large number of middle and lower reaches enterprises will withdraw, and the differentiation between the middle and lower reaches will be particularly obvious. 2017 is the year of decisive victory. Who is the leader and leads the industry development at a glance. By 2018, the entire LED industry has reached the market's basic supply and demand balance, that is, the dynamic supply and demand balance, the market is in a fine-tuned state, but the market size of the lighting industry has begun to shrink, a new round of reshuffle is about to begin.
With the maturity of domestic LED technology, the cost performance of LED lighting products is gradually approaching or even higher than traditional lighting, and the acceptance of consumers is gradually increasing. In 2013, it was considered by many people in the LED industry to be the best year. The sales of products have been going all the way, but the problems of product homogenization, price war, low gross profit and so on have also plagued the development of the whole industry.
The High-tech LED Industry Research Institute (GLII) predicts that the output value of China's LED industry will reach 263.8 billion yuan in 2013, a year-on-year increase of 28%. In the next five years, in addition to indoor and outdoor, automotive lighting, special lighting, other areas will enter a period of slow growth.
Comprehensive development of the industrial chain
Since the launch of the “Ten Cities and Ten Thousand Cities†by the Ministry of Science and Technology in 2009, the domestic LED industry has ushered in a boom in investment, and various capitals have swarmed in, especially in the upstream areas of sapphire and epitaxial chips.
Upstream, the domestic sapphire production value ranks first in the world, and the future output value will be the first in the world. The number of MOCVDs is the highest in the world, and the future output value will remain the first in the world. In 2013, the total number of domestic MOCVD reached 972 units, but the profit of a single unit still has a large gap compared with multinational companies such as Philips and Osram.
The quality and cost-effectiveness of domestic chips have increased rapidly. This has also drastically lowered the price of imported chips, which has led to the inability of many chip factories in Taiwan to exist independently. It must rely on production in China and sales in the Mainland. The fact that Taiwan’s Kellett and Crystal’s collapse last year also confirmed this.
In the middle of the package field, China's LED packaging industry has already achieved considerable economic scale and become one of the world's major LED packaging production bases. Domestic packaging devices occupy the vast majority of the domestic market, and the proportion of imported packaging devices in the Chinese market is rapidly decreasing.
There will be no more than eight imported device brands in the future, and domestic devices will occupy a major domestic market share, because domestic prices are much lower. Some of the domestically packaged devices are exported to foreign countries, and domestic packaging manufacturers have begun to OEM (OEM) to foreign manufacturers. This also shows that domestic devices have reached a high cost performance, China's LED packaging is going global.
Lighting demand is the biggest cake in the LED application market. Since last year, many upstream and midstream companies have begun to enter the lighting market. Sanan and Ganzhao have set up lighting subsidiaries.
Downstream, China's export lighting will account for most of the global market, with an estimated proportion of around 70%. Most of the foreign LED lighting will be OEM by Chinese companies. In China, only multinational lighting companies can compete with Chinese companies in China, such as Philips and Osram.
Great reshuffle in the next five years
After the development of the previous years, the domestic LED industry has made great progress in technology, scale, products, etc., but it also faces many problems. LED overcapacity, numerous companies, uneven product performance, and price wars are getting worse. Many companies do not have a clear and clear enterprise and product positioning.
In the next five years, the LED industry will be reshuffled. Whether it is a listed company, a state-owned enterprise or a private enterprise, it will face a very serious situation in the next five years. Especially in the next three years, the LED industry big fish to eat small fish, fast fish to eat slow fish, will be the normal state of the industry, because the market space is so large, this is the inevitable result of market rules. Non-listed companies may be largely eliminated or integrated.
GLII believes that Chinese local chip manufacturers will eventually survive no more than 12, and domestic MOCVD will not survive more than two. Most upstream companies die and the survival rate is around 30%.
According to GLII survey data, the number of companies involved in LED packaging in China reached 1,750 in 2012. These 1750 homes can survive about 40%. Some of these enterprises will become large-scale manufacturers, especially those companies that have already listed, such as Ruifeng Optoelectronics (300241, shares), Hongli Optoelectronics (300219, shares), will continue to grow, and SMEs will be freed after they are eliminated. The space will be given to large and medium enterprises.
After several years of development of LED lighting, the penetration rate is constantly improving. In 2015, the penetration rate of LED lighting will exceed 60%. At the end of 2018, LED lighting production accounted for 80% of total lighting output.
Traditional lighting companies are slow to transform into LEDs, and forming strategic alliances with packaging companies is the way out. The death rate of the entire LED lighting company exceeds 50%, and the proportion of LED lighting companies will exceed the proportion of traditional lighting. For outdoor lighting, LED lighting companies have advantages in outdoor lighting. Listed companies and state-owned enterprises will account for most of the market; lighting, traditional lighting companies will still have a larger market share. LED lighting and packaging companies that have already listed will have the advantages of capital and talents.
In the pattern of the industry in the next five years, I believe that 2014 is a year of real hands-on shuffling. The companies that have been shuffled have a low probability of surviving in the future with a turnover of less than 10 million. In 2015, the industry integration was very intense. In 2016, a large number of middle and lower reaches enterprises will withdraw, and the differentiation between the middle and lower reaches will be particularly obvious. 2017 is the year of decisive victory. Who is the leader and leads the industry development at a glance. By 2018, the entire LED industry has reached the market's basic supply and demand balance, that is, the dynamic supply and demand balance, the market is in a fine-tuned state, but the market size of the lighting industry has begun to shrink, a new round of reshuffle is about to begin.
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