Investment overheated overcapacity China's LED industry is coming in winter

In the first half of the year, the gross profit of the company generally declined.   Under the acceleration of capital power, the local LED industry on the fast-drying has entered the winter ahead of schedule. “Because the development speed of the LED industry is lower than expected, the price of products in the entire industrial chain in the first half of the year has dropped significantly.” Yesterday, Zhang Xiaofei, president of the High-tech Industrial Research Institute, said at the G20-LED summit in Shanghai that the staged investment was overheated. Already appeared. The half-year performance of 9 domestic LED upstream and mid-rise listed companies showed that although the revenue increased year-on-year, the gross profit performance was not satisfactory. In addition to Ganzhao Optoelectronics (300102.SZ) and Ruifeng Optoelectronics (300241.SZ), the gross profit margins of other listed companies such as LED chips or packaged devices have been significantly reduced. Among them, Guoxing Optoelectronics (002449.SZ) and Silan Micro (600460.SH) net profit fell in the first half of the year. The winter of LED is coming. Zhang Xiaofei is not intentionally rendered. A few days ago, Ruifeng Optoelectronics had confessed in its earnings report. In the past two years, LED companies have expanded significantly, and the entire industry will enter a new stage where opportunities and challenges coexist. Gong Weibin, general manager of Ruifeng Optoelectronics, told the “First Financial Daily” yesterday that the driving power of LED TVs has weakened rapidly. The overcapacity brought by the expansion of MOCVD (LED chip production equipment) will cause the price of chips to drop this year and next, with a drop of 30. % to 50%. The fact that the price cuts are drastically is happening. In the first half of this year, Sanan Optoelectronics chip revenue increased by 101.6%, gross profit margin decreased by 10.76%; Dehao Runda LED packaged device revenue increased by 385%, gross profit margin decreased by 8.47%; LED packaging leader Guoxing Optoelectronics revenue increased by 34% %, the overall gross profit margin fell by 9.82%; the gross profit margin of Silan micro LED devices and Lehman Optoelectronics decreased by 13.31% and 8.29% respectively. Gross profit margin has dropped sharply. In Gong Weibin's view, it is only a sign of industrial winter. "If the current MOCVD layout reaches 50%, the real killing will begin," he said. According to figures from the Institute of Industrial Engineering, from January to July this year, China's MOCVD equipment increased by more than 200 units. It is expected that in 2012, China's LED chip production capacity will be 10 times that of 2010. At present, there are 543 MOCVD equipments in China, counting 96 projects under construction, with a total of 1,642 units. As reported by the newspaper, the increase in the number of equipment is mainly due to equipment subsidies and municipal lighting orders from local governments. Zhan Yiren, secretary general of the Optoelectronics Semiconductor Industry Association of Taiwan, said that many Taiwanese companies have moved to the mainland and are also attracted by this. Equipment is only one of the signs of overcapacity risk, and the material link is especially sapphire. According to the data of the High-tech Industrial Research Institute, the annual production capacity of domestic LED sapphire substrates has reached 6.85 million, and there are 41 projects under construction, with an investment of 12.08 billion yuan. The expansion will be completed and the annual production capacity will increase to 101 million pieces. In 2011, the global LED sapphire substrate demand was less than 50 million pieces, and the domestic number was less than 10 million pieces. The risk level is already high. Zhang Xiaofei said that the amount of domestic packaging investment has dropped by 20% year-on-year. More than 90% of packaging companies made profits last year, and many of them will face losses this year. He expects that the number of packaging companies that will close down during the year will reach 10%. Gong Weibin revealed that overcapacity has alerted Korean manufacturers to stop the MOCVD project. The Chinese market capital is still influx, and LED companies that are listed, are going public, or are preparing to go public are financing and expanding production through additional issuance and issuance of corporate debt. According to public information, there are 9 companies listed in the LED industry, and there are hundreds of LED companies that have completed the shareholding system transformation. There are 40 LED companies in the domestic listed companies, and the income scale is only 200 million yuan to 300 million yuan. . Three months ago, Peeler, CEO of Veeco, the world's second-largest LED equipment giant, told this newspaper that China's growth was mainly due to industrial transfer, and government subsidies were "a fierce drug." He frankly said that by 2015, the LED industry will definitely adjust greatly. "When it happens, I don't know, but it won't grow." Enterprises are busy saving themselves In order to survive, LED is trying to make every effort. It is necessary to grab the market at a low price. Zhang Xiaofei introduced that as of July 31, the LED 2-inch sapphire substrate dropped from the highest of 35 US dollars / piece to 13 to 15 US dollars / piece, the average drop of more than 50%; packaged devices fell 23%, the largest drop of 37%; The price of LED application products dropped by 21%. In addition to price, they also began to use local protectionism to raise the threshold of competition. Li Zhijun, technical director of Shanghai Yaming Bulb Factory, revealed that the LED lighting price system is chaotic, the market is full of inferior products, and the entire industry faces a serious credit crisis. "The price of LED spotlights is outrageous, from 10 yuan to 200 yuan." Shi Weili, general manager of Dalian Jiujiu Optoelectronics Co., said that some local municipal lighting projects are obviously biased, and even a street lamp sells for 6,000 yuan. Sanan Optoelectronics and Dehao Runda’s financial report may explain some problems. In the first half of the year, the gross profit margins of LED applications of the two companies were as high as 40.68% and 42.72% respectively. The reason is that Sanan Optoelectronics received sales revenue from municipal lighting construction committee of Huainan Urban and Rural Construction Committee and Wuhu City Housing and Urban and Rural Construction Committee, which amounted to 96.15 million yuan and 85.49 million yuan respectively, accounting for 97% of the total revenue of LED application products; Dehao Runda's financial report shows that its Wuhu and Dalian LED industrial bases have gradually entered the capacity release period in the second half of the year. The company's response is to take municipal lighting as a breakthrough point, commercial lighting as a breakthrough, waiting for the general household lighting market to break out. According to informed sources, one of the conditions for the Dehao Runda LED industry project to land in Wuhu and Yangzhou is that the local municipal lighting orders have been conservatively estimated to have exceeded 600 million yuan for such intention orders, and Yangzhou may have reached 450 million yuan. A person from the Wuhu High-tech Industrial Development Zone admitted that the price of municipal lighting orders was too high. But he said that without such support, LED companies are unlikely to invest several billion yuan in Wuhu. “However, there are so many local fiscal revenues every year, and it is impossible to subsidize all LED companies. The subsidy will be weakened year by year,” he said. Some LED application companies believe that the state subsidy policy should be revised. Government subsidies should not be limited to the middle and upper reaches of the LED industry, but should be subsidized to downstream LED application manufacturers and even final consumers to stimulate the real growth of the industry. Zhang Xiaofei said that there must be a market-based access mechanism, otherwise the market is too chaotic. But they also have some optimism. Gong Weibin believes that capacity release and competition are intensifying. For enterprises, “it is a very suitable period for performance differentiation.” There is still a long way for China LED to enter the lighting market. The price war is only the first level. It can make LEDs. The lighting market is magnified. Zhang Xiaofei emphasized that overcapacity has the characteristics of “phased” and “relative”: First, the self-satisfaction rate of LED upstream is insufficient, sapphire substrate has overcapacity in the world, and China imports a large amount; second, LED chips are concentrated in low-end products. The production efficiency is low, and the high-end materials are mainly imported. Previously, SEMI China's semiconductor lighting and panel industry analyst Yan Faxin also said that China's LED industry upstream, should beware of "structural overcapacity." Since the largest market for LEDs is in the field of general lighting, China in this field still relies on imports. If local manufacturers still compete for low-end products in the next 1-2 years, overcapacity will be obvious.

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