LED lighting is still around the price of future boom to be observed

Research Center recently investigated several LED companies in Guangdong, with the industry to explore the prospects for the development of LED industry and the company. The manufacturer said, price is the biggest obstacle to the popularity of LED lighting, but the price is affected by many constraints, companies can pay close attention to price behavior; short term industry boom is still mixed, the need to observe, pay close attention to product prices. Research Center believes that the key to look at the cost of LED, with the cost advantage of the enterprise will have excellent viability and adequate competitiveness, thereby benefiting from the long-term development of the industry.

Price is the biggest obstacle

Research Center of the various manufacturers believe that the current price is still the biggest obstacle restricting the popularity of LED lighting. In fact, after in-depth comparison of LED and energy-saving lamps of the initial acquisition costs, saving costs, replacement of labor costs, we found that the overall cost of LED lighting is lower than the energy-saving lamps. LED universal lighting has failed to achieve universal, in the final analysis, the reason is still on the price. The same light intensity, the initial cost of LED lamps is almost two times the cost of energy-saving lamps. At the same time, subject to the actual use of LED is often less than its rated lighting time, its energy efficiency has not been recognized by the public.

From the survey results, LED manufacturers, especially in the middle reaches of the packaging manufacturers and downstream applications, in fact, is willing to sell in exchange for price increases. After the sale price can be increased, is conducive to the realization of the scale effect of the manufacturers, thereby enhancing the bargaining power of the upstream chip manufacturers, and ultimately to reduce the cost of hedging down the price to maintain the profitability of both manufacturers.

A manufacturer said that LED's high level of profit, can withstand the price, but also willing to cut prices, and thus the entire LED lighting cake, but they can not unilaterally price. The reason is that the domestic manufacturers focus on lighting package and application link, LED power chip cost a higher proportion of multiple purchases to foreign manufacturers, chip business high degree of concentration, such as giant Cree, Nichia chip etc. in short supply, strong bargaining power, if the chip manufacturers do not take the initiative to cut prices, the price of domestic manufacturers is so active losses. In fact, even if the packaging and lighting companies take the initiative to cut prices, but also to reduce the cost of the entire LED general lighting. Because the LED terminal price level, is determined by PHILPS, OSRAM, OPPLE and other giants of the industry. For these giants, whether it is the use of energy-saving lamps, or the use of LED, the general lighting market is a stock rather than incremental. Unless you can see the timing of LED lighting has been more mature, otherwise the giants will not take the initiative to provoke a price war. From this logic, pay close attention to the price trend of LED lighting giant, is an important way to determine the inflection point in the industry.

It is noteworthy that, GE, PHILPS, Toshiba, Panasonic has gradually begun to pay attention to the development of LED lighting applications, began to increase the type of LED lamps, and began advertising investment and internal business integration.

Boom still need to observe

LED long-term development prospects of the industry is worth the attention, but can not be ignored is that the recent performance of the industry still need to observe.

From the Taiwan LED industry revenue changes, since 2011 after the Spring Festival, chip and package revenue continued to decline, and since the fourth quarter of 2011 began to accelerate the decline in 2011, 12 month decline rate reached the highest, chip revenue fell 31%, revenue fell nearly 11% package. Inventory, South Korea, Taiwan, mainland enterprises inventory are at historic highs, destocking process has not yet ended, the price of the product is likely to continue to decline. Despite the short-term demand for LED backlight pick up, nor is it enough to change the whole industry downturn. In addition, according to the survey report of the latest price LEDinside display, the fourth quarter of 2011 due to inventory clearing effect, LED average price decline of about 10%, outlook for the first quarter of 2012, after a quarter price fell sharply, with the introduction of new products, the average price is expected to decline in estimated quarter narrowed.

During the investigation, some manufacturers said that some buyers believe that LED product prices will continue to fall, with its early buy as well as the price dropped to buy, which is another factor restricting the popularity of LED. If the decline in the price of the product is indeed narrowing, waiting for the early release of demand, the industry is expected to usher in a short-term rebound.

Cost advantage is long-term competitiveness

Continued downturn in the industry, has threatened the survival of many domestic LED industry chain company. In the case of falling prices, the test is actually the cost control capacity of the manufacturers. Data show that the cost of LED bulbs, LED epitaxial wafer and chip costs accounted for about 37%, accounting for LED packaging, sales costs of $15%. Has the cost advantage also has the better profitability, can play the price war, can meet the market reshuffle.

Reduce costs can be from the following aspects. The first is the scale of production and increase the rate of finished products, in this sense, the higher the revenue scale of the enterprise, the advantage is more obvious, related enterprises such as Sanan optoelectronics, honglitronic, nationstar etc.. The second is to reduce costs through technological innovation, which is divided into three sub levels, including reducing the cost of epitaxial wafers, reduce packaging costs, reduce the cost of sales. To achieve the integration of upstream and downstream enterprises, the greater the room for cost improvement. Domestic enterprises including Elec-Tech etc.. The equity investment projects to large-scale production of LED epitaxial films, covering the whole industry chain, as well as supporting sales channels, the same specifications of products, cost saving 10%-20%. Packaging costs and Fixtures