Reduced price and elimination of inventory as the main tone of the LED industry market

As one of the strategic emerging industries, the LED industry has triggered an investment boom in the country in recent years and has once become the darling of the capital market. However, since 2012, the industry has generally encountered an embarrassing situation of “say good or bad”, and recently the 2012 financial report data released by various companies is not satisfactory.

Compared with 2011, a number of LED companies showed a significant decline in revenue or net profit in 2012. For example, BDO Runda, a well-known LED chip company, reported revenue of 2.824 billion yuan in 2012, a year-on-year drop of 8%; net profit was 168 million yuan, a year-on-year drop of 57%. Silan Micro's revenue in 2012 decreased by 12.74% year-on-year, and net profit decreased by 88.07% year-on-year. In 2012, the revenue of China Star Optoelectronics decreased by 11.87% year-on-year, and net profit decreased by 66.45% year-on-year.

For the reasons for the declining performance, the explanations given by various companies are generally as follows: due to the intensified competition in the LED industry, the company’s product prices have dropped significantly, and thus squeezed profit margins.

In 2012, the performance of the domestic A-share market “changing face king” also led to the phenomenon of LED concept share. After the 2012 CSRC penalized the LED concept stock Wei Wei, the China Securities Regulatory Commission issued the “first penalty” in 2013 and imposed penalties on the LED company Nanda Optoelectronics and its sponsor Pacific Securities and sponsor representatives.

Under the unfavorable situation of the downturn in the market, the number of LED companies that successfully passed IPO in 2012 also decreased significantly. In 2011, there were as many as 13 LED related companies in the country, and only 4 in 2012.

At the same time, some LED listed companies have also been forced to die out of their fund-raising plans. Recently, Sanan Optoelectronics, a leading domestic LED company, issued an announcement saying that due to changes in the market environment, the company decided to terminate the plan for publicly issuing additional A shares for two years.

Structural overcapacity triggers price decline In the view of the industry, the growth rate of China's LED industry in 2012 reached 34%, indicating that the market growth rate remains at a relatively high level. However, the speed of expansion of the entire LED industry is much faster than the speed of scale growth, and intense price competition has led to a burst of chill in the entire LED industry.

Affected by the global economic downturn, the growth rate of LED markets in Europe, America, Japan, etc. was not as good as that of the domestic market in 2012, resulting in a general decline in orders for export-oriented LED companies; and as a result of the sharp drop in the prices of domestic entire industrial chain products, it directly led to corporate gross The interest rate dropped rapidly.

According to statistics from the China National Engineering Research Institute of China National LED Industry, the average price of LED chips in China fell by 32% year-on-year in 2012. For example, the average price of low-power LED blue-green chips for display screens has dropped by more than 50%. In 2012, China's LED chip industry showed a breakeven or even a loss, which ultimately caused most of the companies to lose money.

In the packaging industry in the middle reaches of the LED industry chain, the average price of China's LED lighting white-packaged components decreased by more than 30% in 2012, and the LED packaging industry has already gone through the high-margin era.

In the downstream application industry, the average price of indoor lighting products such as Chinese LED fluorescent tubes, LED bulbs, LED panel lights, and LED downlights decreased by 23% in 2012.

SEMI China senior analyst and LED project manager Qi Faxin told reporters that as the sunrise industry, the LED market demand did not decline in 2012, but the capacity expansion far exceeds demand. Moreover, in the field of high-end lighting, domestic manufacturers do not have too much market share, and they can only fight price wars in the low-end market, causing structural overcapacity.

The prospect is bright, and oversupply will continue to support the development of the domestic LED industry in the short term. Following the recent introduction of LED into the government procurement list, the National Development and Reform Commission and the Ministry of Science and Technology recently released the “Semiconductor Lighting Energy-Saving Industry Plan”, indicating that it will gradually increase Financial subsidies to promote LED lighting products, promote the demonstration of LED products. This move is believed to be conducive to the penetration of LED lighting applications in various fields, LED lighting market prospects can be described as bright.

"2013 will be a year for the domestic LED industry to grow slowly." Tang Guoqing, secretary general of the Semiconductor Lighting Technology and Applications Committee of the China Lighting Institute, said that the possibility of a decline in the LED market in 2013 is almost non-existent. However, for individual companies, the possibility of decline will exist.

Industry research firm China LED Online believes that the survival competition in the LED industry will become increasingly fierce in 2013, and in order to gain market share, the price reduction will still be a powerful means. At present, LED companies are planning to cut product prices in 2013 to seize the market.

"From the perspective of supply and demand structure, the overall oversupply status of the LED industry will not change in the short term." Liu Liang, an analyst at Industrial Securities, said that the domestic LED industry recently through the alliance and merger control of production capacity is a trend; In addition, the various LED manufacturers will Seek new applications and strategic alliances to ensure order and profitability.