The expansion of crisis looming closures will affect the packaging field

In the second half of 2014, China's LED packaging industry once again usher in the peak of expansion, packaging manufacturers have announced plans to expand production.

August, Ruifeng photoelectric release on the use of its own funds to invest in lighting LED and full-color LED announcement, plans a total investment of 430 million, to expand the lighting LED and full-color LED capacity. The project is expected in mid 2016 all production, after the package will add the EMC capacity 300KK/ month, LED filament product 30K / month, small and medium power LED packaging products 700KK/ months, 80KK/ months of full color LED.

At the beginning of September, honglitronic posted on the company's investment in the construction of LED industry base in Jiangxi city of Nanchang province and investment cooperation agreement signed < > announcement, honglitronic plan has 300 acres of land investment in the construction of LED industry base to self financing in Jiangxi province Nanchang City Airport Economic Zone Management Committee Park, and set aside 300 acres for a period of three this year, the project plans to invest 1 billion 9 million yuan. The base of the main R & D, production and sales of LED packaging devices and LED lighting applications.

At the end of September, nationstar issued a "non-public offering plan" announcement, intends to raise funds to invest in small spacing LED and outdoor surface mount LED display devices expansion project, the project plans to invest 210 million yuan, the project will be put into new small spacing LED 3600KK/ capacity, LED capacity 3000KK/ outdoor display.

At the end of October, Jufei issued a "non-public offering plan" announcement, intends to raise funds to invest LED backlight products expansion project and the expansion of LED lighting products, the backlight LED expansion project investment of 320 million yuan, LED lighting expansion project investment of 214 million yuan. After the project is expected to add new backlight LED packaging capacity of 1300KK/ years, backlight LED lamp strip 28KK / year, lighting LED packaging capacity of 2200KK/.

Table 12014 the second half of 2014 China's major LED packaging manufacturers expansion plan

In the era of scale economy, expanding production

2014, the general situation of China's LED packaging industry is not ideal, although the size of the market is still maintained rapid growth, but the company's earnings performance is still in the doldrums, the size of the second tier manufacturers is particularly evident.

Figure 1 China's major packaging manufacturers in the quarter gross margin (1Q13-3Q14)

Data source: LEDinside finishing

As can be seen from the table above, since, China's packaging industry mainstream manufacturers gross margin was a steady downward trend, 3Q14 average gross margin was only 24%. Intense competition in the terminal LED lighting market, resulting in a red light packaging market, lower gross margin. The first half of 2014, Jufei LED lighting business gross margin of only 16%, far below the backlight LED business gross margin of 31%; REFOND LED lighting business gross margin of only 13%, far below the backlight LED gross margin. The LED lighting industry honglitronic, rectangular lighting, gross margin level is not high. However, China's LED packaging manufacturers, the proportion of lighting LED business continues to improve, including poly fly, Ruifeng, Zhao Chi, as well as a number of second tier packaging plants, are cut into the field of lighting LED packaging. Lighting is the future of the LED industry, in the LED industry to fight, who do not want to miss the lighting, and thus create a competitive market in the current lighting LED packaging market, and this situation will further deteriorate.

In the highly competitive market, the ability of cost control determines the market competitiveness. In the LED lighting market still has a larger space for growth, the technical and financial strength of the manufacturers, began to expand production scale, the cost of dilution. Therefore, Ruifeng, including Hongli poly fly, Siu Chi and other manufacturers have expanded production line.

Capacity release, industry reshuffle inevitable

2014, for China's packaging manufacturers, business is not easy. On the one hand, the profit is not high, on the other hand have to bear higher business risk, once a customer has a problem, or the quality of a little error, a year of hard work even in vain, even serious point due to funding strand breaks collapse. 2015, the packaging plant capacity will be gradually released, the original competition has been very intense market, will be even worse. Without financial support vendors, business will be more difficult.

Lighting is the future of the LED industry, but will also be due to LED lighting, the next two years, China's LED packaging industry will face rapid reshuffle. If a few years ago the chip industry is in dire straits, the next few years, it is likely that the packaging industry to pick up the bar.

There will always be a rainbow after the storm, China's LED chip industry after several years of shuffling period, the market gradually stabilized, corporate profitability gradually improved. Similarly, the packaging industry will usher in this day, for packaging manufacturers, to do is to ensure that at that time you still healthy existence.

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