On the morning of June 24, Hefei Rainbow Blue Light Technology Co., Ltd. (hereinafter referred to as Hefei Rainbow Blue Light) seemed relatively quiet under the scorching sun. Two security guards were on duty at the door, and occasionally vehicles and people came in and out. The reporter walked around the outer wall of the company and found that in addition to the already built factory buildings, the huge base also had large open spaces covered with weeds and trees.
Four years ago in 2010, the Hefei Rainbow Blue LED project officially started construction. According to the plan at the time, the total investment in the project was 10 billion yuan. It will take three years to build 200 MOCVD (more than 45 pieces of machines) and supporting chip production lines in two phases.
If this plan is successfully completed, Hefei Rainbow Blue Light will become the top two companies in China with the number of MOCVD (Metal Organic Compound Chemical Vapor Deposition, an important equipment for the production of LED epitaxial chips). In terms of production capacity, it will be the undisputed leading company in the field of LED epitaxial chips.
However, four years have passed, and this goal of Hefei Rainbow Blue Light has not been achieved. Not only that, the company was in a semi-stop production state in the first half of this year. At this time, my country's LED chip industry has begun to enter a golden period, and many companies are planning to expand more production capacity.
Hefei Rainbow Blu-ray Headwear wears a state-owned enterprise halo. It is a holding subsidiary of Shanghai Blu-ray Technology Co., Ltd. (hereinafter referred to as Shanghai Blu-ray), which in turn is a secondary subsidiary controlled by the central enterprise Rainbow Group.
So, why does this happen? What happened behind the scenes? Recently, reporters launched an investigation into this.
The company once half-suspended production
On June 18, 2010, the "Hefei Rainbow Blue LED" project with a total investment of 10 billion yuan officially signed a cooperation agreement. According to the plan at that time, the total land area of this project was 500 acres, and a total of 200 MOCVD and supporting chip production lines were built. The specifications of MOCVD equipment require more than 45 chips (the higher the number of chips, the greater the output).
200 production lines will be constructed in two phases. Information shows that the first-phase project plans to invest 2.025 billion yuan, covering an area of 300 acres, and will have 50 production lines with an annual output of 42 billion chips and an annual output value of 2.3 billion yuan.
At that time, an article from Xinhua News Agency mentioned that "After the project is fully completed, it will achieve an annual output value of 11.5 billion yuan and will become China's giant LED industry base."
This is also true, because even Sanan Optoelectronics (15.54, 0.32, 2.10%), the leader in the domestic chip industry, had only more than 70 MOCVD equipment in place at the end of 2010. As of April 2014, the number of Sanan Optoelectronics equipment was 160. This means that if 200 MOCVD equipment are successfully put in place within three years, Hefei Rainbow Blue Light may rank first from the perspective of production capacity.
On August 30, 2010, the groundbreaking ceremony for the Hefei Rainbow Blue LED project was officially held.
At the end of December 2012, a report on the official website of the Hefei Xinzhan Comprehensive Development Pilot Zone titled "The Successful Acceptance of the First Phase of Hefei Rainbow Blue Light LED Project" showed that on December 18 of that year, Hefei Rainbow Blue Light held an acceptance meeting for the first phase of the LED project. The report mentioned that at that time, 46 MOCVD units and their supporting production lines had been completed, with a total fixed asset investment of 1.611 billion yuan.
Subsequently, there was no news in public reports that Hefei Rainbow Blu-ray started building the second phase of the project. According to statistics, as of the end of June this year, Hefei Rainbow Blu-ray has 45 MOCVD units and Shanghai Blu-ray has 19 units, with a total of 64 units in the two bases.
This is a far cry from the original plan. Not only that, in the first half of this year, the company's LED epitaxial chip production was semi-stopped.
"From the beginning of the year to April and May, (epitaxial chips) have not been started." On June 24, under the dormitory building of Hefei Rainbow Blu-ray, a person who claimed to be an employee of the company said.
A Shanghai Blu-ray chip agent told reporters that since December 25 last year, the company has been in a semi-stop production state. It still maintains large customers but has lost small customers.
"For example, if we are their agent, we can't get the goods." The person said that the situation of Hefei Rainbow Blu-ray and Shanghai Blu-ray is similar.
An equipment supplier of Hefei Rainbow Blu-ray also told reporters that the company had "stopped for several months."
Regarding this news, the reporter obtained confirmation from at least two other information sources. However, from June 24 to June 26, reporters tried to contact the management of Hefei Rainbow Blu-ray through door-to-door visits, phone calls, etc., but failed. However, the reporter learned during the interview that Hefei Rainbow Blu-ray has recently resumed production.
The industry is in the "Little Indian Spring"
During the period when Hefei Rainbow Blue Light is semi-stopping production, the domestic LED epitaxial chip industry is experiencing the "Little Indian Spring" in recent years.
Ye Guoguang, marketing director of Guangdong Deli Optoelectronics Co., Ltd., told reporters in early June that the LED industry is currently in a boom stage.
Starting from the second half of 2013, the entire LED industry has seen a boom in supply and sales. Driven by downstream applications, the shipments of upstream epitaxial chips have also gradually increased. In 2013, the MOCVD capacity utilization rate increased to 52%, and the startup rate increased to about 70%.
At the end of March this year, the reporter obtained information from the Sanan Optoelectronics Securities Department that the company's MOCVD equipment was in full production.
At the same time, many LED epitaxial chip companies are also gearing up to expand production.
In January this year, Huacan Optoelectronics announced that the company planned to invest 305 million yuan with its own funds to start the construction of the "Huacan Optoelectronics (Suzhou) Co., Ltd. LED epitaxial wafer chip phase II project". The project plans to have an annual output of 480,000 2-inch chips. The production capacity of red and yellow LED epitaxial wafers (for self-use) and 15.4 billion red and yellow light chips; in April, Sanan Optoelectronics announced that it had decided to set up a wholly-owned subsidiary in Xiamen to invest in the construction of LED epitaxy and chip R&D and manufacturing industrialization projects. The total project investment is 10 billion yuan, with a total scale of 200 MOCVD units; on June 24, midstream packaging company Hongli Optoelectronics and Sanan Optoelectronics signed a "Strategic Cooperation Agreement"...
Against this background, Hefei Rainbow Blue Light unexpectedly half-stopped production, confusing the outside world.
Shanghai Blu-ray once occupied an important position in the field of LED chips in my country. According to its official website, the company was founded in April 2000. It is the first domestic enterprise engaged in the research and development and industrial production of gallium nitride-based LED epitaxial wafers and chips. It is a base for the transformation of scientific and technological achievements in the optoelectronics field under the national "863" plan.
In 2007, in order to achieve business transformation, Rainbow Group announced that it would invest 130 million yuan in Shanghai Blu-ray and achieve a controlling stake in the latter, thus entering the LED industry.
"LED is the industry with the most growth prospects in the world and is also planned as one of the group's three core businesses." At that time, Zhang Shaowen, deputy general manager of Rainbow Group, said.
What are the reasons for the poor operation of Shanghai Blu-ray?
"There are many reasons for poor management. Ask the operator for details." As the second shareholder of Hefei Rainbow Blu-ray, a person in charge of Hefei Xincheng State-owned Assets Management Co., Ltd., which invests on behalf of the government, said.
During the interview, the reporter noticed that many interviewees used words such as "many aspects" and "various" when analyzing Shanghai Blu-ray.
The above-mentioned Shanghai Blu-ray agent told reporters that the main reason for this situation is that the company has too many small shareholders and there are conflicts in interests between shareholders. He told reporters that Shanghai Blu-ray is planning to move its production line to Hefei. The land used for the Shanghai factory was originally industrial land and can be converted into commercial land. Small shareholders have conflicts over how to distribute land income, which in turn affects corporate production.
An executive from an LED chip company told reporters that the main reason for the semi-stop production of Shanghai Blu-ray is that chip prices are too high. He said that the company's initial investment was too large. For example, the planned output was 600,000 pieces, but only 100,000 pieces were produced. Then expenses such as electricity bills and wages were spread out relatively high. As a result, the cost of chips was much more expensive than others.
The above-mentioned Hefei Rainbow Blu-ray equipment supplier told reporters that the company had a lot of inventory last year and "if you don't sell it at a loss, the more you don't sell it, the more it will lose money."
According to the reporter’s understanding, from 2012 to 2013, the entire domestic chip price dropped very quickly.
However, the above-mentioned Shanghai Blu-ray agent denied the claim that the chip is more expensive.
A person close to Shanghai Blu-ray told reporters that Shanghai Blu-ray’s state-owned enterprise background may also be a reason. He said that for companies like Blu-ray, it is difficult to afford senior technical personnel from overseas, and it is difficult for them to reach a certain level of technology. In addition, state-owned enterprises may not be very efficient in terms of efficiency.
However, the person emphasized that in fact, all epitaxial chip companies have not made money in the past two years, and they have invested a lot, but prices have fallen sharply. In this way, some companies choose to stop production, and some choose to make inventory. "I think everyone's situation is similar."
Hefei base has restarted construction
Fortunately, Shanghai Blu-ray is showing signs of recovery again. The above-mentioned person close to Shanghai Blu-ray told reporters that in the first half of this year, Shanghai Blu-ray began to make adjustments and moved its production lines from Shanghai to Hefei. The Hefei base has also begun to restart operations.
On June 24, the above-mentioned Hefei Rainbow Blu-ray equipment supplier told reporters that the factory has just restarted and it will take about three months of trial production before the chips can be produced.
That afternoon, the reporter met another employee downstairs in the dormitory of Hefei Rainbow Blue Light. He told the reporter that it was his first day at work. The company had recruited a new group of employees, and there were dozens of people who went in with him.
When Shanghai Blu-ray started again, the competition it faced was no less than the previous two years. Currently, Sanan Optoelectronics has 161 MOCVD units, and its total production capacity ranks first in the country. Dehao Runda has received 92 pieces of equipment, 52 of which have been debugged and started mass production, and are expected to be fully operational by the end of the year.
In June last year, at an industry forum, Wang Donglei, chairman of Dehao Runda, judged that the LED upstream could not escape the development pattern of the semiconductor industry in the future. Currently, there are only 3 to 5 relatively successful semiconductor companies in the world. He believes that there may be only 3 to 5 LED epitaxial chip companies left in the world, maybe 2.
Ye Guoguang believes that even when the chip market is good this year, the overall capacity utilization rate of domestic chip companies is only 70%.
An analyst who asked not to be named told reporters that in fact, Shanghai Blu-ray's current plans are still relatively vague. On the one hand, we want to grow bigger, but growing bigger is a burden. "For companies like this, which have 30 to 50 MOCVD equipment, the marginal benefits of expanding production cannot be improved, and they have to invest heavily. If they do not expand production, the cost pressure will be great, and the price war will be fierce."
Liu Jun, deputy secretary-general of the Guangdong Provincial Lighting Electrical Appliances Association and director of the Guangdong Guangya Lighting Research Institute, analyzed to reporters that there are currently three camps of LED chip companies. The first is foreign brands represented by Cree, Nichia, Osram, etc., whose market share in China has maintained a steady increase; the second is chip companies in Taiwan, such as Jingyuan, New Century (29.82, 0.02, 0.07%); the third is mainland chip companies, such as Sanan Optoelectronics, Dehao Runda, etc. "It will be more difficult for Shanghai Blu-ray to reposition its advantages now."
Liu Jun said that for Shanghai Blu-ray, whether it is positioned in the automotive, display or lighting fields, there are actually companies already there. He suggested that Shanghai Blu-ray should first clarify its market positioning, and secondly focus on the light efficiency and price of the product itself, that is, cost-effectiveness.
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