Government subsidies will tighten the price of LED chips or is expected to move?

According to Taiwan, China Science and technology media reported that the mainland government will require local governments to stop offering subsidies or tax incentives to LED related wafer and chip manufacturers. I do not know whether it is because of this news, LED upstream chip manufacturers Sanan optoelectronics, HC semitek shares fell 0.7% and 1.4% respectively.

"Now Sanan optoelectronics have received official documents, but the future of the LED industry is the trend of tightening subsidies. "Sanan optoelectronics Secretary Wang Qingru said. Wu Yulin, President of FSL lighting industry association also believes that the current domestic production of imported equipment chip is too large, in fact, due to the support of the local government is too large, the industry is expanding too fast. Data show that in the past 6-7 years, China imported MOCVD equipment for the production of LED chips invested 10 billion yuan, of which local government subsidies accounted for about $70%.

"There is no effect on elec-tech. "The deputy general manager Dunfee told reporters, according to its introduction, the company completed the production layout and investment in 2012, then put money into the downstream channel and brand NVC, upstream of government subsidies is mainly aimed at the chip production equipment MOCVD. De Ho Runda said in the 2014 annual report, in February 11th of this year, the company's extraordinary general meeting adopted the termination of the use of funds to raise funds for the implementation of the project LED epitaxial chip, suspended the purchase of MOCVD equipment. Sanan optoelectronics, HC semitek will continue to increase the production capacity. In January this year, HC semitek announced the launch of the 15 billion 400 million chip production to 305 million yuan; in April, Sanan optoelectronics is to set up a subsidiary in Xiamen, the total size of 10 billion investment and 200 MOCVD.

From the earnings point of view, government subsidies accounted for a large proportion of these manufacturers revenue. An optoelectronic report shows that in 2013, when the company won a total of about 458 million yuan of government subsidies, accounting for the proportion of net profit reached 44.21%; HC semitek received a subsidy of 135 million yuan is still a net loss of 8 million 620 thousand yuan; the profit or loss of government subsidies the first three quarters of this year (and closely related to the company's business, except in accordance with the national standard of government subsidies quotas or quantitative enjoy), reached 110 million yuan.

Wang Qing believes that the abolition of the new financial subsidies for the LED industry's influence, has achieved a certain status in the industry Sanan optoelectronics. "Even if the impact is positive. "Elec-Tech also believes that the industry next year after the restoration of normal state after the withdrawal of subsidies, chip prices get pulled in favor of business.

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