Chongqing LED face where to go

After a few years of investment in the swarms and fermentation, excess, shuffle has become a hot word for the domestic LED industry.

LED industry professional industry research institutions have released an analysis report recently that in 2012 the domestic LED industry output value is expected to increase from 154 billion yuan in 2011 to 205.9 billion yuan. However, due to overcapacity, some aspects of the industrial chain are out of balance, and product prices have fallen sharply. For example, if package prices have fallen by 40%, chip prices have fallen by 30%, and LED supporting industries have actually entered a period of low profit or even no profit. With the intensified market competition, a group of small and medium-sized supporting enterprises with weak technical and market capabilities will be eliminated and reorganized.

The question of external LED excess capacity is still continuing. In this context, LED-related companies in the city have not been able to remain alone. It is understood that as most companies fail to master the core technology, competition for homogenization is fierce, costs remain high, and profit margins are compressed.

Where is the Chongqing LED industry at the fork crossing?

The "Matthew Effect" with the remaining production capacity

At the "LED Summit" held in Shenzhen in mid-December last year, Liu Xiaobiao complained: "In the second half of the year, due to too many 'triangular debts,' the company's liquidity is very tight."

Liu Xiao is the general manager of Intel Photoelectric (Shenzhen) Co., Ltd. The company he runs is one of the major phosphor suppliers in the domestic LED industry. Liu Xiao said that “triangular debt” is like the money owed by customers of LED application products to drums and flowers, and the money owed by the product companies to the supporting enterprises, and the supporting enterprises can only owe money from upstream material suppliers.

Behind the surge in accounts receivable is the overcapacity and competition in all sectors of the LED industry.

In recent years, there have been a large number of domestic LED projects, but when the civilian market is still to be activated and the commercial market is just starting up, LED product market orders mostly rely on government engineering orders and policy support. Large enterprises can obtain more government orders based on their advantages such as technology and resources, while SMEs lacking technology and brands are relatively difficult to get government orders. Under this circumstance, the "Matthew Effect" of polarization in the LED industry became even more obvious.

Local LED companies are also "ice and two heavy days"

This "Matthew effect" has already appeared in the LED industry in our city.

During the New Year's Day this year, the LED Industrial Park of the Silian Group in Beijiao is busy. Silian Optoelectronics Technology Co., Ltd. has to produce 66 million high-quality lamp beads for the production of stage LED displays for Spring Festival Gala.

Most of the domestic counterparts are in the "winter" occasion, Quad Optoelectronics is "good scenery". Silian Optoelectronics said that this is because "technology has come to the forefront of the world and companies have a core competence."

Since the acquisition of Honeywell's sapphire factory in Canada in 2008, Silian has not immediately set foot in the LED lighting business, but focused on product development and independent innovation. With its excellent technology, Silian Optoelectronics has made remarkable achievements in the three key areas of sapphire substrates, lighting applications and packaging in recent years. The responsible person revealed that last year the company’s LED output value was close to 600 million yuan, and the increase in output value this year is expected to exceed 30%.

Compared with Silian Optoelectronics, the situation of other LED companies in the city is not great.

"More than 8 years ago when the factory was built in the high-tech zone, LED products were in short supply, but this situation did not last long." Jiang Pingcheng, manager of Chongqing Ruiao Technology Co., Ltd., due to homogenous competition and other reasons, the current LED industry profits Compared to early years, it has been greatly reduced.

According to a person from Chongqing LED Lighting R&D and Industry Alliance, the LED industry involves many aspects such as raw materials, production, and packaging. Due to the low technical barriers in the middle and lower reaches of the industry, a large number of companies have been involved in recent years. At present, more than 80% of LED-related companies in the city are concentrated in the downstream and downstream sectors such as packaging and applications. The homogeneity of products is quite serious.

Lack of product core technology is another major reason for the difficulty of these companies. It is understood that at present, the entire upstream of the LED industry chain is basically in the hands of foreign companies, and the chips of midstream and downstream enterprises are mainly imported. This part of the company has no say in the purchase price of chips, and the cost remains high. Under the condition that the homogenous competition causes the oversupply of products, in order to digest the inventory, they can only use the “price war” method to kill out the blood, and profit shrinking is unavoidable.

Overcapacity? In fact, the development of the industry chain is out of balance!

LED industry overcapacity?

Gao Xiaoxia, professor of LED lighting research and development and industry alliance in Chongqing, believes that the current problems in the LED industry in our city are not excessive production capacity, but rather the number of companies in the middle and lower reaches of the industry chain, too few upstream companies including chips, and all links in the industry chain. Unbalanced development.

Huang Bingliu, general manager of Chongqing Guanghe Lighting Equipment Co., Ltd., also admitted that few companies are involved in the upstream and downstream sectors such as substrates, epitaxial wafers, and chips, which are the biggest weaknesses in the development of the local LED industry.

For the future of the industry, several industry insiders interviewed generally believe that government policy support will remain the key to promoting the development of the LED industry. In fact, good policies for LED companies are constantly being introduced.

In 2011, our country announced an incandescent lamp exit plan. Since October of last year, China has banned the import and sale of incandescent lamps with general lighting of 100 watts or more. The State Council also arranges special financial subsidies to promote the sales of energy-saving home appliances and other products, focusing on the promotion of energy-saving lamps and LED lights to enter the home.

Gao Xiaoxia believes that the current domestic LED product terminal applications are still dominated by large-screen backlights and displays, and there is a huge market in civilian lighting and public lighting. When LED companies expand these areas, in addition to the need for the government to continue to provide financial subsidies, it also needs more convenience and guidance in policy support.