2014 review: supply and demand on the seesaw chip and packaging

To talk about the industry in 2014, first of all to see the impact of the LED industry in 2014 the biggest variables, personal view is actually the release of packaging capacity.

Where does this capacity come from, mainly from the beginning of the two quarter of 2013 to expand the packaging and production. Since 2012, the price war, excess capacity closures, causing the entire industry filled with negative emotions, but the lighting market depressed for a long time to the two quarter of 2013 broke out, the whole package market shortage situation is very serious, a lot of packaging factory all positive for the market economy, rapid expansion, a sudden expansion of capacity two a few times.

As it is from the beginning Rawlinson, Sturm und Drang, packaging capacity expansion 3000KK every year, what is the concept of 3000KK, which is roughly equivalent to the listed companies in 2013 honglitronic (SZ300219) production capacity of 4-5 times, far more than REFOND (SZ300241), Jufei (SZ300303).

Source: LEDinside Packaging Market Research Report

However, the expansion of production capacity and not immediately put into use, the whole package in 2013, production capacity is still quite scarce, so the package prices throughout the 2013 decline is very small, and because of this lack of strong demand by packaging capacity, there is no effective conduction to the upstream end chip.

Even compared to 2012, the demand for chips has been greatly improved, but the chip factory, it is only the release of the stock capacity only, the chip is still far less than the extent of the shortage. So the whole 2013 is probably the best time of packaging factory in recent years, the market is very tight, and the chip supply are endless.

This is very different from the past, in the past, the shortage is often due to the shortage of chips, packaging plants do not ship not because of lack of capacity, but can not get chips. This time, it is completely different, the chip enough, order enough, if there is any bottleneck, then it is mainly insufficient capacity. While production ready, Ruifeng Linsen, Siu Chi 2013 package business growth is very obvious. The most critical thing is that there is no price increases, but the packaging side is tight, very effective in the industry to remain in the packaging sector.

This goes back to the beginning of the topic - the release of packaging capacity. With the best time is always the fastest to describe the packaging plant is appropriate, but in the two quarter of 2013 began to expand into the first quarter of 2013 and the first quarter of the four quarter of 2014 began to gradually release. The fourth quarter of 2013 new capacity is mainly to meet the demand gap, but in the first quarter of 2014, double the capacity release is almost a catastrophic blow to the market, the price of the package and started an endless cycle of decline. The price of the package, with the most typical 0.2W 2835 to count the beginning of 2014, prices are still in 0.1~0.12RMB, but in the fourth quarter of this year, the mainstream market prices have come to 0.04~0.06RMB, less than a year, the price almost halved.

However, for the chip factory, it is a belated happy time. The first quarter of 2014 doubled on demand release, make the whole market in the first half of the chip are in shortage of market, HC semitek (SZ300323) because from the beginning of 2012 in Zhangjiagang at the time of release of the project is to produce, Elec-Tech (SZ002005) stock production can also open at this time, chip revenue are is a hundred percent growth. Sanan Optoelectronics (SH600703) officially qualify for this market leader in price, other competitors are watching the three to adjust their price strategy every act and every move. And the packaging factory are aware of the chip to enter the shortage period, and have three supply agreements to secure chip priority supply.

Therefore, it is safe to say that the first half of 2014 is the best time for the chip factory.

This in turn, the capital market is very smart, most of which are expected to reflect through the stock. The main packaging factory (poly fly, Ruifeng, the largest increase is Hongli) occurred in the first half of 2013, while the main or the chip factory is mainly reflected in the second half of 2013, compared to the actual industrial chain improvement, at least half a year in advance is reflected in the share price.

And the price of the inhibition factor, packaging factory is no doubt that the future earnings outlook is really not optimistic. At least it's hard to see the situation in the second half of 2013. But as the industry reshuffle intensifies, packaging industry competitive enterprises will gradually withdraw, as the giant bright suddenly collapse, will lead to customers and suppliers of resources have begun to actively tilt to the listed company. More and more practitioners will gradually realize the industry slowdown in the maturity of the industry, extensive management of opportunistic could not be sustained, strategic, management norms, reputable enterprises will get more support resources. And the entire packaging industry has the opportunity to return to normal economic profits in the process, excellent enterprises to get more room for development.

From the chip side, now it seems the biggest bane or exit cost is too high, on the one hand is the extension of the chip is spending a large sum of investment in equipment, the pad high sunk cost, on the other hand, because many projects are highly involved in the local government, and because the performance is often tied together to be successful without fail, even if it is, it has no long-term competitiveness of the doomed projects, but