Explain the intensive release of positive Sanan optoelectronics deterrence strategy

In April 3rd, an official announcement will be planned in Wuhu implementation of the photoelectric industry (two) project moved back into the company headquarters in Xiamen, and the total project investment of 4 billion 76 million yuan to 10 billion yuan. At the same time, the establishment of a subsidiary of Xiamen Sanan optoelectronics Co. Ltd. in Xiangan Development Zone, the registered capital of 10 million yuan.

Sanan optoelectronics and Xiamen Torch Development Zone Management Committee signed the "investment agreement" bill, decided to R & D and manufacturing industry project investment of LED epitaxy, chip in the development zone.

The project total investment of 10 billion yuan, the total size of 200 MOCVD (54 to 2 inches for the base conversion), the first launch of 100 sets of MOCVD equipment, the construction period of one year, the entire plant and related production facilities built within two years, started to be the first phase of the remaining 100 sets of MOCVD equipment in operation, no later than in the end of 2018 and put into use, otherwise the Xiamen Torch Development Zone has the right to cancel the subsidy is not yet in place of MOCVD equipment.

In April 10th, three optical announcement and semiconductor companies in Seoul and Seoul Viosys company (Seoul semiconductor subsidiary) decided to carry out business cooperation, jointly set up a joint venture in Anhui's three photoelectric Limited company, the joint venture will be led products for South Korea production, registered capital of 2 million US dollars. Sanan optoelectronics to its own monetary funds invested $980 thousand, accounting for 49% of the registered capital of the joint venture. The three optical chips into the patent industry chain opportunities across the threshold.

In April 11th, three optical announced that its own cash invested 325 million yuan, with the Chengdu optoelectronics, Xiamen aviation joint venture in Fujian city of Xiamen Province, the name "Xiamen Sanan integrated circuit Co. ltd.". The joint venture total registered amount is 500 million yuan, three shares accounted for 65%, operating range of design, manufacturing and sales of integrated circuits, the official to cut a wide band gap semiconductor three industry.

So intensive release is not just to hype the stock price? Maybe. But just the completion of the issuance of three did not reduce the motivation, or at least the time hasn't come. Do not see the need to fry the necessity of the high price earnings ratio of convertible merger, because cash is enough, after the issuance of billions of cash income. When the third Ann canyuan shares is expected to cash depth strategic cooperation, but is subject to regulatory factors and finally became purely financial investors, although the loss of some three canyuan, but the loss is not small, if the time is not only the exchange transaction, the two companies combined more closely, expand canyuan strategic choice just look at the space, even if the equity value of at least three Fuying 1 times. In the three layout more complete at this time, except to help break through restrict Sanan patent trap, there are few other targets like that canyuan in three seems worthy of convertible merger.

So what is a better explanation? With all the signs show that since last year, all of this is the implementation of the strategic deterrent capacity three.

LED chip makers on 2012 overcapacity may still remember. In 2009 three, Silan stock prices of the stimulus, in the government subsidy policy under the temptation of a large number of "three second" self styled LED chip projects have been launched. The market is clearly punishing those blind followers.

However, people always choose to forget the painful memory. Since 2013, the LED industry to pick up, LED downstream feel the rise of the economy, this boom is also gradually passed to the upstream chip industry. So a variety of chips out of stock theory, MOCVD valuation theory have been released, a new round of capacity expansion competition is about to pull open the curtain.

To avoid once again into the terrorist cut throat price war how to do? In October 16, 2013 LEDinside sponsored by the Taipei LEDforum, Mr. Lin Ke Chuang Sanan group first openly Sanan will increase by 100 units of MOCVD machine program in 2014. This is of course a deterrent strategy. However, this strategy does not seem to deter competitors within the next few months, long dormant LED chip industry began a new round of plus wave machine.

Hua photoelectric Zhangjiagang plant has been installed in 34 MOCVD after the machine, the project will be moved to Wuhan in the second phase of the project, the total planned capacity will reach 120 units by the end of. Brokerage analysts have speculated, is expected in 2014 will also expand production 60 units, 50 units in 2015 to expand production, then Huacan machine MOCVD ownership will reach 180 units, only three.

Australia Shunchang to raise 500 million yuan, of which 400 million investment and the company Aoyang photoelectric company, plans to add 25 MOCVD machine in 2014, from 2013 to 5 to 30 Taiwan Taiwan amplification.

German power photoelectric plan in 2014 added 10 units of MOCVD, from the original expansion of the 10 units to 20.

In the gross profit level of the whole industry is still far from returning to normal condition, this capacity is tantamount to the competition for 1 years after the price war once again set off a bloody cloth ". In the opponent's interpretation, three claims to add 100 units is MOCVD signal chip market better, they will think that even if this time release signal plus capacity, three not dare really add, because once again overcapacity, serious price war machine the most loss of profits will be more three heavy. Let's look at a one stage Cournot game:

Three and his competitors if at the same time to choose their own strategy, then the Nash equilibrium of this game is (an opponent without expansion, actively expansion). Because regardless of competition