Will the LED packaging industry be on the road to recovery in 2024?

Affected by many factors such as weak end market demand, slow LED inventory depletion, and intensified market price competition, the development of the LED industry will fall into a relatively sluggish situation in 2023. Against this background, the performance of LED packaging companies in the middle reaches of the industry last year was negatively affected to varying degrees.

Entering 2024, as demand in the downstream LED display and lighting market segments shows signs of gradual recovery, many domestic listed packaging companies also ushered in good news of performance recovery in the first half of the year. However, with the release of the recent three quarterly reports, there have been changes in the development of the LED packaging industry this year.

In the first half of the year, the performance of many companies increased, and the LED packaging business ushered in recovery

Looking back on the first half of 2024, many domestic listed packaging-related companies achieved revenue and net profit growth.

In terms of revenue, in addition to the decline in revenue of Dehao Runda and Changfang Group, eight companies including Zhaochi Co., Ltd., Dongshan Precision, Nationstar Optoelectronics, Jufei Optoelectronics, and Ruifeng Optoelectronics all achieved revenue growth in the first half of the year. Among them, Dongshan Precision has the highest revenue, reaching 16.630 billion yuan, a year-on-year increase of 21.67%; Furi Electronics has the largest revenue growth, a year-on-year increase of 28.41%, with revenue reaching 5.311 billion yuan.

In terms of net profit, the net profits of many companies showed a good trend of recovery in the first half of the year. Among them, Zhaochi, Jufei Optoelectronics, and Nationstar Optoelectronics achieved net profit growth; Wanrun Technology and Ruifeng Optoelectronics turned losses into profits; Changfang Group, Dehao Runda, and Furi Electronics reduced their losses year-on-year.

Focusing on the LED packaging sector, most companies achieved revenue growth in this business in the first half of the year compared with the same period in 2023:

Zhaochi Co., Ltd.: Zhaochi Co., Ltd.’s LED industry chain includes upstream chips, midstream packaging, and downstream applications. The revenue of this segment in the first half of the year was 2.584 billion yuan, a year-on-year increase of 29.39%, and its proportion of total revenue increased from 25.81% to 27.14%.

Hongli Zhihui: In the first half of the year, Hongli Zhihui’s LED packaging business revenue was 1.534 billion yuan, a year-on-year increase of 14.84%, accounting for 80.68% of total revenue, and the gross profit margin was 16.77%. During the reporting period, the company continued to optimize its customer marketing strategy, optimize its customer structure and improve the stickiness of existing customers through precise investment of resources.

Nationstar Optoelectronics: Nationstar Optoelectronics’ LED packaging and component product business includes display devices, white light devices, automotive applications, and optoelectronic devices. In the first half of the year, this business achieved revenue of 1.344 billion yuan, a year-on-year increase of 5.92%, accounting for 72.49% of total revenue.

Jufei Optoelectronics: Jufei Optoelectronics’ LED packaging products are mainly used in mobile phones, computers, LCD TVs, display systems, vehicle electronics, smart lighting, health testing, smart phones, etc. Wearable, light sensing and other fields. In the first half of the year, Jufei Optoelectronics’ LED products achieved sales revenue of 1.277 billion yuan, a year-on-year increase of 20.13%, accounting for 91.63% of operating revenue, and the overall product yield rate reached 99.33%.

Ruifeng Optoelectronics: In the first half of the year, LED products achieved sales revenue of 629 million yuan, an increase of 4.71% over the same period last year; accounting for 92.77% of the main business revenue; the gross profit margin of LED products was 25.08%, an increase of 11.68 percentage points from the previous reporting period.

Dongshan Precision: Dongshan Precision’s LED display devices are mainly used in professional fields such as indoor and outdoor small-pitch high-definition displays and display backlight products. In the first half of the year, Dongshan Precision’s LED display device revenue was 438 million yuan, a year-on-year increase of 4.30%.

Wanrun Technology: Wanrun Technology’s LED light source device packaging products are widely used in consumer electronics, TV backlights, fire and security, automotive electronics, smart homes and other fields. In the first half of the year, Wanrun Technology’s LED light source devices and related business revenue was 199 million yuan, a year-on-year increase of 31%. .84%; gross profit margin increased slightly from 27% to 27.52%.

Dehao Runda: In the first half of the year, Dehao Runda's LED packaging business revenue was 134 million yuan, a year-on-year increase of 29.64%; the net profit of the LED packaging business was 12.02 million yuan, a year-on-year increase of 72%; the gross profit margin increased to 19.82%, a year-on-year increase of 2.22 percentage points.

Changfang Group: Changfang Group’s SMD LED (including high-power) business achieved revenue of 28.2347 million yuan in the first half of the year, with revenue increasing by 39.73% year-on-year, and gross profit margin increasing by 39.69% year-on-year.

Packaging companies increased revenue but did not increase profits in the third quarter

In the third quarter, packaging companies generally performed better than the same period in 2023. However, compared with the performance in the first half of the year, corporate growth has shrunk.

In the third quarter, increasing revenue without increasing profits has become a common phenomenon among packaging companies. Judging from the statistics of packaging companies, except for Furi Electronics, Wanrun Technology, Nationstar Optoelectronics, and Changfang Group, the other packaging companies all achieved revenue growth. Among them, Jufei Optoelectronics’ revenue and profit increased, with revenue of 815 million yuan, a year-on-year increase of 17.78%; net profit of 80.78 million yuan, a year-on-year increase of 27%.

Most companies did not disclose the specific changes in third-quarter performance. However, the slow recovery of the global economy is still the main reason affecting the development of various industries, and the LED industry is no exception. Looking at the lighting market where LED is currently the largest application, according to the TrendForce consulting report "2024 Global LED Lighting Market Analysis-2H24" analysis and forecast, although the average price decline of the LED lighting packaging market will narrow in the first half of 2024, in the second half of the year, affected by the weak global economy and the significant slowdown in investment in the real estate market, the terminal LED general lighting market demand will not recover well, and the order visibility of LED packaging manufacturers is still unclear.

On the other hand, the LED lighting product structure is due to the differentiation of product demand in regional markets and the rise of demand in emerging markets, which is conducive to the continued increase in shipments of mid- to low-end products, partially offsetting the negative impact of poor demand in traditional regional markets. TrendForce estimates that lighting LED output value will decline slightly to US$3.518 billion in 2024 (-1.3% YoY).

The global economic recovery is less than expected, which has a negative impact on the The development impact of major LED applications continues. But judging from the situation in the first half of the year, some new opportunities for the development of the LED industry have arrived. Segmented application fields that are more professional, have high value and high growth potential have become the key driving force for the performance growth of LED packaging companies in the first half of 2024, and are also the main highlights of the LED industry's full-year development.

Looking to the future, the layout of these subdivisions will also become the key for LED packaging companies to break through the development difficulties. More packaging companies will get rid of the "involution" of the traditional market through multiple channels and find a new "comfort zone" in the new track.

The development effects of the new four modernizations of automobiles continue, and the demand for automotive LEDs is strong

Automotive LEDs have become a focus of many LED packaging companies in recent years. As the automotive industry continues to move towards the new four modernizations, the demand for high-performance automotive lighting and vehicle displays continues to increase, and LED packaging companies can continue to make profits in the automotive field.

Many packaging companies pointed out in their semi-annual reports the accelerated growth of their automotive LED product business. In the first half of the year, Hongli Zhihui won multiple LED automotive lighting project appointments, involving customers such as Geely, BAIC, Hezhong, and Yutong Bus. In order to cope with the rapid growth of new project orders, Hongli Zhihui expanded the production capacity of its independent dedicated line for car-grade LED lamp beads.

Nationstar Optoelectronics expanded its automotive LED applications in the first half of the year, making every effort to create LED product lines for automotive interaction, display and lighting applications, and built a rich automotive LED product matrix. Among them, exterior interactive display modules have been mass-produced and entered into many new models, and backlight LEDs have entered the best-selling models of many OEMs.

Ruifeng Optoelectronics’ automotive LED business grew significantly in the first half of the year, with sales revenue increasing by 68.07% year-on-year. same At the same time, Ruifeng Optoelectronics continued to launch automotive LED products, including automotive ultra-thin Mini LED COB backlight products, automotive-ADB modules and Smart RGB ambient lights.

Jufei Optoelectronics stated that the company has achieved rapid breakthroughs in the automotive lighting business and has entered the supply chain system of domestic independent brand OEMs including BYD Auto, SAIC Motor, GAC Group, and Changan Automobile. In addition, it has also reached in-depth cooperation with many important domestic Tier 1 manufacturers such as Huayu Vision, Jiali, Xingyu Auto Lighting, Verrico, Jinye Auto Lighting, etc., and conducted various forms of business with important international manufacturers such as Valeo and Marelli.

Dehao Runda achieved rapid growth in its front-mounted car lighting products in the first half of the year. The company achieved stable supply to well-known domestic car companies, which became the key reason for the significant growth in driver performance.

In the first half of the year, Wanrun Electronics also actively explored the LED automotive electronics segment and actively participated in exhibitions to display and promote LED automotive electronics products and technologies. It is committed to providing customers with comprehensive automotive lighting solutions and expanding the scope of LED automotive electronics. Automotive electronics business scale.

Automotive LEDs performed well in the first half of the year, becoming one of the key reasons for the rebound in performance of various packaging plants. As the automotive market continues to be electrified, connected, intelligent, and shared, it is expected that automotive LEDs will continue to maintain a stable demand throughout 2024.

According to "TrendForce 2024 Global Automotive LED Market - Lighting and Display Product Trends", in 2024 automobile manufacturers will face the pressure of market competition and cost reduction, and are actively moving towards adaptive headlights (ADB Headlight), Mini LED taillights, through-type taillights (Full-Width Taillight), grille lamps (Grille Lamp)/full-width front light bars (Full-Width Front) Stripe), (intelligent) ambient lighting, Mini LED backlight display and other advanced technologies are marketed as high value-added products.

The above products will drive stable market demand for car lights/automotive LEDs in 2024 growth, reaching US$37.395 billion and US$3.445 billion respectively.

Mini LED backlight TV market is booming; LED display screen welcomes the wave

In the TV market, there are more and more Mini LED backlit TV products. Terminal manufacturers have greatly increased the market competitiveness of Mini LED backlit TVs by actively optimizing the specifications and prices of new products, thus attracting more consumers to buy.

TrendForce pointed out that in the first half of 2024, TV brands will continue to face problems such as panel price increases and freight increases. In order to improve their revenue situation, manufacturers continue to expand product sizes. For example, Chinese brands TCL, Xiaomi and Hisense have reduced the number of Mini LED partitions to attract consumers with more competitive prices. The strategy has successfully stimulated market demand for Mini LED backlight TVs and also driven demand for LED backlight packaging.

Jufei Optoelectronics actively expanded its production lines in the first half of the year to meet customer needs in a timely manner and achieved rapid growth in sales of Mini LED backlight products. Sales of large-size Mini LED TVs such as 110/100/98/85 inches by domestic leading customers are booming, and terminal product application solutions such as 55/65/75 inches continue to Continuing to deliver large quantities of goods, the company, as the main supplier, has successfully introduced a series of new products to key customers.

Zhaochi Technology has successfully developed many domestic and foreign head TV brand customers in the LED packaging business, and new orders for Mini LED TV backlight modules have begun to be delivered.

TrendForce’s “2024 Mini LED New Backlight Display Trend Analysis Report” estimates that Mini LED TV shipments will increase by 55% year-on-year in 2024, reaching 6.35 million units. Therefore, in the coming time, as terminal manufacturers continue to build diversified Mini LED TV lineups and accelerate market penetration, the demand for Mini LED backlight packaging products may further increase.

From backlight to LED direct display, LED display products are also stimulating demand for packaging products.

According to the analysis of TrendForce’s “2025 Global LED Display Market Outlook and Price and Cost Analysis Report”, in the first half of the year, overseas In the market, the demand for LED displays in the Middle East and Southeast Asia continues to grow rapidly, and other markets such as Africa, Latin America, and Oceania also maintain steady growth.

LED display manufacturers Leyard, Unilumin Technology, Absen, Ledman Optoelectronics, and Alto Electronics all achieved year-on-year growth in overseas business. From an application perspective, the gradual rise of LED movie screens, virtual shooting, all-in-one machines, etc. will provide more new development directions for display manufacturers.

In the context of the rise of new markets and new applications, in order to meet the demand for high display and low-cost products in more emerging application markets, the COB and MIP packaging technologies that packaging companies vigorously promote in the field of direct display have also developed.

Among them, in terms of COB, Zhaochi's COB display application achieved operating income of 432 million yuan and a net profit of 77 million yuan in the first half of 2024. The annual revenue is expected to exceed 1 billion yuan, with significant performance growth. The penetration rate of Mini COB in the point pitch market above P1.5 has also increased significantly, and the COB display application business has developed rapidly.

According to TrendForce's "2024 Global LED Display Market Outlook and Price and Cost Analysis", although COB technology will still maintain rapid development in 2024, the proportion of MiP products will also increase. Driven by terminal demand, the LED display packaging market size is also expected to grow.

Market challenges continue, and new applications, new technologies, and new market exploration are the key to solving problems.

Despite certain twists and turns, LED packaging companies are still on the road to continued recovery in 2024. Faced with insufficient market demand and intensified industry competition, more LED packaging companies are gradually withdrawing from blind price wars and finding business paths that suit their own circumstances. While the future market situation may still be unclear, LED packaging companies have realized the key to future development.

That is, while consolidating the industry, increase exploration of new applications, new technologies, and new markets, and maximize the value of LED products. This is not only the only way for LED packaging companies, but also the entire LED industry to move towards a new golden period of development.