LED chip profit margins continue to compress in 2014 focused on the development of lighting market

In 2014 China's LED upstream chip technology will continue to improve, production capacity will accelerate the release, but corporate performance will be differentiated, some small, technical strength is not strong chip companies Shengcunzhilu will become increasingly difficult, while the number of epitaxial chip companies will be gradually reduced, concentration will be further improved.

Epitaxial chip localization is optimistic

2010 years ago, the LED industry has experienced a massive investment boom, since the gradual release of production capacity in 2011, showing a stage of excess capacity, is expected to be effective by the end of 2014 to ease.

With the urgent needs of energy saving and emission reduction, LED will become the mainstream of the field of general lighting, the demand for epitaxial chip products will grow rapidly. However, on the whole year, 2014 chip competition will continue, the situation in the low-end market, low gross profit margins will be difficult to change, the reality of the overall decline in the profitability of the industry can not be ignored. Therefore, to improve the level of technology, scientific adjustment of investment scale and product structure has become the most realistic choice for most of the chip manufacturers.

Reporters learned that the domestic part of chip products in technology, performance has been gradually approaching the level of foreign brands, reflecting the higher cost, but the yield performance and stability as well as to further enhance the space, and the main reason for this is also determines the chip utilization of domestic. Some midstream packaging companies said that the current domestic chip has been recognized to a certain extent, the use of domestic brands chips is their desire.

LED chip localization rate will continue to improve. Among the domestic chip, the current acceptance of the small power chip is relatively high, and the high power chip due to the higher requirements of technology, performance and reliability, the level of localization will lag behind the low-power chips. But overall, the localization of epitaxial chip technology, price and market acceptance are constantly improving, from the first quarter of this year cooperation packaging companies and epitaxial chip companies progress, believe that the market performance in 2014 epitaxial chip companies will be better in 2013.

Epitaxial chip link pattern or change

For the future there will be a number of chip companies exist, 70% of respondents believe that the chip will be left behind 5-10 companies; 12% of the respondents believe that there will be an oligopoly, leaving the remaining 3-5 companies.

On 2014, the upstream enterprises should be how to deal with changes in industrial structure, 60% of the respondents think that the change of upstream enterprises will deal with the horizontal integration of industrial structure, and there are some respondents believe that vertical integration.

Vertical integration is the main form of competition in the LED industry, but the difficulty of vertical integration is very large, there is a need for capital, and the risk is great, there is no lack of vertical integration in the case of the industry.

The future of competition requires a high degree of integration of resources in the country will be more reflected in the upper reaches of the way to achieve an excellent enterprise alliance, the enterprise will not only learn to let go more long-term.

Reporters learned that the current competition in the upstream part of the chip LED seems to have entered the white hot stage. In 2013, including EPISTAR, three chip manufacturers move constantly, to prepare for the future development. Whether horizontal integration or vertical integration, or overseas integration, win-win is an important measure for the enterprise's own capital, technology, talent, management and so is a huge test.

Chip profit margins continue to compress

A set of survey data about chip prices and gross profit rate showed changes in 2014 the price of chip, that survey chip prices will decline still accounted for 70% of respondents think the price will be chip flat with 2013 accounted for 30%. Most respondents think that chip prices fell about 10%, while the vast majority of respondents believe that, compared with the decline of 20%-30% a few years ago, prices of 2014 chip rate will not be too big, from the supplier's perspective, price range and time update and price adjustment are also slowing.

Some respondents believe, chip prices every year there are peaks and valleys, such as the annual 3-7 month price may be higher, but 7-12 months may be lower, comprehensive full year, chip price changes should be flat with 2013. In addition, according to the research chip enterprise gross margin changes found in, 47% of the respondents think that keeping the 2014 domestic LED chip enterprise gross margin in the 20%-30%, 30% of the respondents think that chip enterprise gross margin will remain at 10%-20%.

In recent years, chip enterprise gross margins are being squeezed, but to a certain extent after space will decrease, for the epitaxial chip companies, the minimum margin should be maintained at above 20%, the removal of the management costs to a profit, otherwise it will fall into a loss of basic. From this perspective, the chip companies to maintain gross margin is not high in 20%-30%.

Vigorously develop the lighting market

CSA survey data show that in 2014 LED chip companies should focus on efforts to develop the market, 90% of the respondents chose the lighting, and 10% of the respondents believe should focus on increasing the development of special custom market.

From the view of the overall lighting, LED lighting penetration rate is not high, with the decline of technology and cost, is showing its great potential for development, and the backlight and display market has gradually become saturated, growth space is not great. However, whether it is lighting, or backlight, display are relatively red sea state, but this is a special custom