Hot money into the mainland LED industry packaging plant profit decline

Light emitting diode (LED), the rapid growth of the market, but the upper reaches of the core technology by foreign manufacturers, so that mainland enterprises over investment focus on the industry in the downstream, the same layout brings the price war, especially lead to various manufacturers midstream packaging factory profit substantially reduced.

Good for LED industry prospects, the recent mainland companies are seeking to raise funds listed, only listed companies to financing, to expand the scale, increase the competitive advantage. According to the data, the mainland LED listed companies in the middle and lower reaches of the first half of 2011 will increase by 5. Coupled with other industries have also set foot in the LED industry, resulting in excessive capital into the downstream market.

According to the Institute of Engineering LED industry (GLII) data show that in 2010 the mainland LED industry contracted investment amounted to 217 billion 885 million yuan (about $33 billion 680 million), an increase of 248.6% over the year. Among them, only the amount of investment plans listed companies will have more than 30 billion yuan. In 2010 there were 74 new investment projects with a total investment of more than RMB $100 million and above in the year of 2009, an increase of more than 25.

In the case of competitors continued to increase, in order to expand market share, companies have cut prices, so that profit decline has become an irreversible trend. Such as the LED package large country star power will increase in production, due to the pursuit of market share and price, but the company is facing a profit decline situation.

China Star power in 2011 1Q profit of 34 million 370 thousand yuan, representing a decrease of less than the same period in 2010, net profit of less than 20.42%, to $25 million 510 thousand to $10.38%.

LED industry chain, the upper reaches of the LED substrate, epitaxial wafers and chips, the middle of the main package, while the downstream is LED lighting. Which is due to the lower threshold, so that most of the investment in this area.

2010 mainland LED industry output value of 126 billion yuan, packaging part of $27 billion, compared with an increase of 35% in 2009. The mainland LED packaging enterprises reached 440, compared with 2009 increased by more than 30%.

According to the Institute of industrial engineering LED 2010 ~2011 industry report, midstream package display, as of the end of 2010, nearly 130 of global LED packaging equipment manufacturers, including mainland enterprises is about 100, although accounted for 76.9%, but the value is only about 20% of the world.

The company's investment is mainly concentrated in the middle and lower reaches of the continent in the LED substrate, epitaxial wafer and chip industries upstream part, subject to the European and American manufacturers. As a result of the mainland engaged in LED upstream epitaxial wafer and chip companies only more than 10, in 2010 the total output value of RMB 126 billion yuan, the chip is only part of the output value of RMB 4 billion yuan, accounting for the overall figure of $3.2%.

In the production of epitaxial slice of the MOCVD machine, the United States Veeco and Germany's Aixtron only 2 companies will monopolize the market share of more than 90% of the world. The chip, epitaxial film, but accounted for the highest profit margins in the entire LED industry chain, up to 70%.

Currently LED market share in the mainland lighting market is only 5%, but its expansion rate of up to 60% to 70%, mainland China's LED industry company has about 4000, but within the next 3 years is expected to exceed $5000.

According to the Institute of Engineering LED industry statistics, in 2010 the total output value of the mainland LED industry reached 126 billion yuan, an increase of more than 2009 before the year of 50%. Is expected to reach 500 billion yuan in 2015.