LED overcapacity emerging price war pros and cons coexist

Affected by multiple factors, LED chip, package, price since the beginning of continuous decline, the average decline in the first seven months of more than 20%. For overcapacity worries has become the most concerned about the topic of entrepreneurs.

Sapphire substrate investment overheating

Since the beginning of the year, the price of LED chips fell more than 20%, the growth of the application market is less than expected, many companies bear a huge pressure on the ship, the chips are sold on the pounds. A LED chip manufacturers yesterday admitted that sadly, this is only the beginning.

According to the engineering LED Industry Institute statistics show that 1-7 months of this year, the 2 inch sapphire substrate prices from the beginning up to $35 / piece, down to the current $13-15 / piece, the average fell by more than 50%; the average price of LED chip 25%, the maximum reduction of 42%; the average price of 23% LED package, the maximum reduction of the application of LED 37%; the average price reached 21%.

LED sapphire substrate investment overheating the most serious, followed by epitaxial chips, packaging capacity is relatively surplus, the overall performance of LED applications better. Zhang Xiaofei pointed out that in favor of local governments preferential policies to promote competition, in 2011 1-7 months, the number of mainland China MOCVD increased by more than 200 units. Expected to 2012 LED chip production capacity will reach 10 times in 2010.

According to statistics, at present, Chinese LED epitaxial chip planning a total investment of 183 billion 500 million, of which 73 billion 500 million projects under construction planning; planning the total size of 4519 MOCVD equipment, in the construction project planning 1642 units, the actual current has a capacity of 543 units. Last year, Yangzhou, Wuhu and other local governments have large-scale subsidies MOCVD equipment, expand the size of the LED chip industry, but at the same time, the application of the market growth is barely satisfactory.

In the application, the backlight has been regarded as the main driving force to promote LED applications, while the two quarter panel manufacturers have lowered the shipment plan. Senior analysts believe that due to the fourth quarter of 2010, the first quarter of 2011 and second degrees of early LED backlight TV stocks higher and slow sales, LED backlight market demand is therefore reduced.

China's Taiwan manufacturers are facing the same problem. According to the Taiwan optoelectronic semiconductor industry association secretary general Zhan Yiren introduced, driven by LED TV industry boom this year last year and did not continue; if the backlight lighting can not support capacity, hope can drive; but from the current situation, but also need the price of LED lighting products more competitive, or the government introduced corresponding policy stimulus, to be effective wake up the market.

With the release of the second half of the production capacity, enterprises will face more severe price challenges, short-term overcapacity is certain. Ruifeng photoelectric chairman Gong Weibin said. The coexistence of "price war" pros and cons

The industry generally believes that the price war will accelerate the industry reshuffle, the elimination of some small and medium enterprises, so that the market share of more focused on leading enterprises, which is more evident in the packaging segment.

According to Zhang Xiaofei introduction, this year the number of business failures LED package was significantly higher than in previous years, significantly reduced the number of new enterprises, and most of the LED packaging industry gross margin decreased significantly, the total investment is more than 20% lower than in 2010. LED packaging enterprise risk resistance is the lowest, and in 2010 more than 90% LED packaging enterprise profit, the proportion of loss making enterprises will be greatly improved this year; in addition, it is expected that there will be 10% of the enterprises were forced to collapse. He said.

In LED investment, some companies have been more cautious. Tongfang shares (600100, shares) vice president Wang Lianghai told reporters that the current investment will not be the same side in the field of LED more than 20% of assets, the follow-up will depend on market conditions decided to increase or not; at the same time, the company has a comprehensive layout in the industry chain has been considered.

But Gong Weibin believes that price competition for enterprises is a very suitable for the performance of the difference between the period. "Price war is conducive to the two core competencies of LED manufacturing enterprises to come to the fore, one is a leading technology; the other is the cost leadership. He said that in this regard, the company will pay more attention to technology to reduce costs, in order to reduce the quality of the premise of not reducing the apparent cost of 30-50%.

He also pointed out that, on the other hand, the decline in LED prices also contributed to the expansion of the market, will prompt the LED into the application of lighting market.

Hold together to warm, chaotic win

Societe Generale Securities analyst pointed out that in the context of oversupply of LED chips, more optimistic about the downstream industry chain, especially the future of the general lighting market. According to the latest DisplaySearch data, LED backlight demand will reach a peak in 2013, and then the demand will turn to lighting, estimated 2011 lighting LED usage will grow by 20% compared to 2010.

High tech LED Industry Research Institute data also pointed out that, although the gross margin of LED applications has declined, but the overall scale of production grew rapidly, especially landscape lighting and general lighting products. Thanks to the growth in the size of the sales, the overall profitability is better than in 2010, the proportion of loss making enterprises will be greatly reduced. Zhang Xiaofei said.

Xiamen LED promotion center director He Kaijun pointed out that in the current market situation, companies must respond quickly to the high growth of the market, alone is no way out, we must integrate resources to form a joint force. Ruifeng optoelectronics, Zhejiang sunshine and other enterprises in the presence of yesterday's forum, said it has reached an agreement on the establishment of patent pool, personnel cooperation and other issues.

For chip companies, less to buy some MOCVD equipment, and invest more in the middle and lower reaches of enterprises, the formation of the upper and lower