Chip/package frequency expansion + price increase + mergers and acquisitions, LED industry oligopoly situation appears
In 2016, after the impact of the expansion of the LED industry, price increases, and mergers and acquisitions, the LED industry is undergoing drastic changes. From the LED industry's 2016 and 2017 first quarter reports, the core financial indicators of listed companies all showed a significant improvement trend. The core indicators include ROE, revenue scale and growth rate, net profit and growth rate, gross profit margin, net profit and Operating cash flow, etc.
The LED industry trend is positive and has solid financial data as a verification, which is more determined by the industry's confidence in the upward trend of the LED industry. 2017 will be the starting point for the LED industry to enter a new cycle.
In 2017, the industry has entered a mature stage, and the market growth rate has slowed down. The fields of lighting, small pitch, and vehicle use are still the main driving force for market growth. The big factory will continue to expand production and seize market share. The trend of the larger Evergrande will become more obvious.
LED chip industry welcomes market opportunities
From the upstream point of view, the top five chip manufacturers have occupied about 75% of the market. The scale advantage of the epitaxial chip enterprises has further appeared, and it has also entered the multi-oligarch monopoly situation.
After experiencing investment heat and overcapacity, in early 2016, Jingdian shut down 25% of production capacity, small factory supply reduction and downstream demand drive. The LED chip supply and demand structure gradually adjusted to make the LED chip industry gradually return to rationality.
The price of the cliff-type decline has been alleviated. In the second half of 2016, due to the rise in raw material prices and the change in supply and demand, chip makers such as Jingyuan Optoelectronics, Sanan Optoelectronics and Huacan Optoelectronics have increased their prices.
According to the GGII, the LED chip research institute has stabilized and rebounded in 2016, and the market demand is in good condition. However, the LED chip manufacturers Sanan Optoelectronics, Huacan Optoelectronics, and Aoyang Shunchang have a huge expansion scale. The small and medium-sized chip factories are not willing to act blindly, and they are in a wait-and-see attitude. On the other hand, the narrowing of MOCVD subsidies has further aggravated this trend.
China's LED packaging market will grow significantly in 2017
From the midstream perspective, domestic packaging companies have successfully dominated the domestic market. The upstream chips, packaging materials and equipment are highly localized, but there are still core patent barriers in overseas markets. Finding and cutting into more application market segments has become the foothold for the company's next round of growth.
According to the statistics of the Institute of Advanced Industrial Research LED Research (GGII), the scale of China's LED packaging market in 2016 increased from RMB 64.4 billion in 2015 to RMB 73.7 billion, a year-on-year increase of 14%.
In 2017, driven by the LED application market, especially the LED lighting market recovery and strong demand in the niche market, it is expected that China's LED packaging market will reach 87 billion yuan in 2017, an increase of 16%.
In the next few years, the output value of China's LED packaging industry will maintain a growth rate of 13%-15%. It is expected that the scale of China's LED packaging will further increase to RMB 128.8 billion in 2020.
In 2016, most LED packaging companies have focused on the LED lighting field. According to GGII data, the scale of China's LED lighting market in 2016 exceeded 245.4 billion, an increase of more than 16.6% compared with 2015.
As the lighting market continues to grow at a high speed, LED packaging companies have listed LED lighting as a key development goal. According to GGII data, more than 90% of China's LED packaging companies in 2016 involved LED white light devices for lighting.
After experiencing the major reshuffle in 2016, the domestic LED industry has rebounded, and the packaging giants have expanded their production. With the withdrawal of these small and medium-sized enterprises and the expansion of packaging and large-scale factories, China's LED packaging industry will present the situation of the larger Evergrande.
LED lighting industry bid farewell to replace the new cycle
From the downstream point of view, the LED business of some large lighting companies has accounted for more than 80%. The LED lighting industry has already bid farewell to the replacement stage of traditional lighting in the past and entered a new growth cycle.
Thanks to the ban on the complete shutdown of incandescent lamps, LED has become the mainstream light source for general lighting. According to the "China Roadmap for Phased Elimination of Incandescent Lamps", on October 1, 2016, China will completely stop production and disable incandescent lamps. The market penetration rate of LED lighting products will further increase and maintain a stable growth rate.
By the end of 2016, the global LED penetration rate of lighting is only about 30%, and there is still a large market space. The transformation of LED lighting companies from traditional light source products to lighting products and intelligent products will be the general trend.
From the application point of view, outdoor functional lighting and landscape lighting will enjoy more policy dividends as China's urbanization and smart city construction accelerate in the next few years.
According to the survey data of the High-tech Research Institute LED Research Institute (GGII), the penetration rate of the landscape lighting market has been continuously improved thanks to the policy promotion support of various countries or regions around the world. The global landscape lighting market reached 245 billion yuan in 2016, and is expected to be global in 2017. The landscape lighting market will reach 274.4 billion yuan.
In addition, the automotive LED lighting market is heating up and becoming a new growth point. The gross profit of automotive LED lighting products is 3-5 times that of ordinary LED products. Due to the large market scale and high product added value, the automotive LED lighting market is heating up.
The LED industry is still in a relatively optimistic rising cycle. Due to the lack of sustained market competitiveness, small enterprises have been shrinking and withdrawing in the past year, thus giving more market space for medium and large enterprises. Then, in 2017, standing at the starting point of the new industry cycle, where will the company go?
On June 10, 2017, the “2017 (15th) High-tech LED Industry Summit Forum†organized by Gaogong LED and High-tech Industrial Research Institute will be held in Guangzhou Shangri-La Hotel. At that time, Dr. Zhang Xiaofei, Chairman of the High-Technology Research Institute, will deeply interpret the "new changes, new trends and new opportunities in the LED industry".
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