LED industry upstream investment far downstream demand slow

Light-emitting diode (LED) industry investment in upstream of the sapphire substrate is like a raging fire. As of May this year, in 2011 the new sapphire substrate project reached 12, with a total investment amounting to $19 billion 620 million. In sharp contrast, this year, its market price all the way down, compared to the upstream investment or overheating.

The day before, the largest sapphire project - a total investment of 2 billion 400 million yuan in the East China Sea sapphire photoelectric annual output of 12 million sapphire production project was formally signed settled in haiyan. Listed companies also have a lot of investment in sapphire substrate. Tian Tong shares (600330) and crystal source electronics (002049), respectively, in August announced plans to invest $360 million and $79 million to build sapphire substrate material project. East Crystal Electronics (002199) also signed a cooperation agreement with the Zhejiang Normal University, LED sapphire wafer development and LED chip technology development and other areas of cooperation projects.

Upstream investment enthusiasm continues to rise this year, the price of sapphire substrate has continued to decline. This year, 1~7 months, the price of 2 inch sapphire substrate from the beginning of the maximum $35 / piece, down to $13 / piece ~15 U.S. dollars / piece, the average decline of more than 50%.

But for downstream companies, this is a good thing. Upstream overcapacity will inevitably lead to a decline in the price of LED chips, while the proportion of LED chips in the higher cost of products, so that the end product is expected to further price cuts. Chau Ming Technology (300232) secretaries Chen Jian said the company will determine whether to expand production capacity in accordance with market demand.

The application of LED products and solutions for the downstream suppliers, sapphire prices decline is expected to reduce their costs, improve the LED terminal products, and further accelerate the promotion of LED terminal products in some areas. The industry generally believes that the future prospects of the LED industry will focus on the lighting market. The price of LED lighting products is higher than that of general lighting products, which has been an obstacle to the promotion of LED lighting products.

Of course, not only the price of LED product promotion in the price. LED industry experts, Dr. Zhong Qun, said the United States, LED lamp price is higher than the general lamp, but not the main problem. Now a lot of small and medium enterprises in the production of LED lamps in quality and technology are not clearance, often necrosis. Bell group suggested that companies need to work harder in the application of technology, rather than blindly invest upstream.