Low-cost grabbing LED lighting 500 billion output value target "bottleneck"

After experiencing a round of irrational upstream capacity expansion, the LED industry seems to have entered the harvest period of the downstream application market.
Statistics show that in 2011, China's LED industry output value reached 154 billion yuan, an increase of 22, while output increased by more than 50. It is expected that in 2012, driven by the lighting application market, the industry's output value is expected to reach 200 billion yuan, an increase of 30%.
According to the industry target mentioned in the “12th Five-Year Energy Conservation and Environmental Protection Industry Development Plan” issued by the State Council, by 2015, the market share of general lighting products will reach 20 or so, and the output value of LED lighting industry will reach 450 billion yuan.
Indeed, the industrial development model with Chinese characteristics has spawned a huge LED lighting market, but it also masks the industrial malpractices such as product structure adjustment, technology research and development gap, market change tolerance, blind listing, and excessive capacity expansion.
The expansion of the low price of the rush to grab the market once in the past, LED is still a fragrant scent of everyone, up to sapphire substrate, MO source, epitaxial film, down to LED street lights, etc., almost all companies in the industrial chain can earn It’s full of pots. It doesn't last long. In the past two years, there have been many influxes in the market, and the market situation of oversupply has caused many LED companies to miss the scene of the order queue. The days of business are very sad now. In the past two or three years, LEDs have gone from aristocratic products to civilian products, and instantly to garbage products. A LED indoor lighting practitioner complained to reporters.
The reporter looked through the data of the third quarter financial statements of several listed companies. The market competition is increasingly fierce. Although the sales volume has maintained a certain growth, the decline in product prices has led to a decrease in revenue and a decline in net profit. The description is almost everywhere.
Although the relevant government departments have drawn a market-wide pie of nearly 500 billion yuan for the industry, the reality is that in the face of tens of thousands of LED lighting companies in China, the market cake is far from being as big as everyone thinks. Everyone is rushing to eat, and the level of market competition can be imagined. Zhang Hongbiao said that since the first half of 2011, there have been nearly 1,800 new LED indoor lighting companies in China. Among them, in the first half of this year alone, there were nearly 1,000 new companies.
As the first domestic MO source listed company, it is also the main supplier of raw materials for domestic LED epitaxial factories. In the first half of the year, Nanda Optoelectronics could not escape its performance. According to the company's financial report, in the first half of the year, Nanda Optoelectronics realized an operating income of 112 million yuan, a year-on-year decrease of 15.48, and a total profit of 64.386 million yuan, a year-on-year decrease of 27.15. Nanda Optoelectronics blamed the decline in revenue on the market price of MO source products. Although the sales volume increased significantly year-on-year, the decrease in sales unit price led to a decline in operating income and a decline in gross profit margin. The data shows that the company's main product, trimethylgallium (one of the main raw materials for LED epitaxial growth), fell from a high of 353,000 yuan per kilogram in the third quarter of 2011 to 21,400 yuan per kilogram in the second quarter of this year, and the price dropped nearly 40. .
The fall in the price of upstream raw materials also confirms the overcapacity of the industrial chain and fierce market competition from another perspective. As the mainland's subsidies for the LED upstream industry will end in 2014, the mainland LED chip factory will probably have only five in 2015. This is the recent statement of Li Bingjie, chairman of Taiwan’s Jingyuan Optoelectronics.
Compared with the stable supply chain system of Taiwan's LED chip factory, Li Bingjie's above statement also shows that after losing the government subsidy support, the mainland LED chip factory will stage a battle for future downstream customers. Perhaps no one wants to be the one that has been stumbled, especially during the critical period of capacity expansion. The most convenient way to win the market is the price war. Sacrificing gross profit margin can only be a helpless move for most companies, because without market share, it means that stocks rise and depreciate sharply.
Huacan Optoelectronics, which just landed in the capital market this year, recently announced its first-half earnings report. The data shows that the company achieved operating income of 187,177,500 yuan, down 17.97 from the same period of the previous year; the total profit was 43,356,800 yuan, down 39.25 over the same period of last year; net profit was 3,709,400 yuan, a decrease of 39.40 over the same period of the previous year.
For the main reason for the decline in profits, Huacan Optoelectronics stated in the financial report that due to the intensification of market competition, the unit price of chip sales fell more than expected, while the capacity of the company's expansion was not fully formed and released during the same period, resulting in chip sales in the first half of the year. The quantity exceeded the production warehousing volume, which was also higher than the same period of last year, but the sales revenue and gross profit still declined, and the net profit was significantly lower than the same period last year.
In the past, in the field of red and yellow light chips with relatively high gross profit margin, Ganzhao Optoelectronics realized revenue of RMB 193,304,700 in the first half of this year, although it increased by 6.03 over the same period of the previous year, but realized net profit of RMB 63,376,600, down from the same period of the previous year. 27.43, the chip gross margin was down 20.47 compared with the same period of last year.
Adjusting the product structure to break the bottleneck Many companies' product lines are too single, not competitive, and the future profitability is worrying. Zhang Xiaofei broke the common problem of most LED companies today. There are also a handful of companies that are beginning to seek active transformation.
Guoxing Optoelectronics is one of them. According to the company's semi-annual report, the product type has gradually been adjusted from the low-margin 3C home appliance and display application market to the relatively high-margin LED lighting market. The data shows that in the first half of this year, the production capacity of white light devices for lighting in SMD devices reached 306 million, an increase of 83.17 over the same period of last year. The output of high-power LEDs reached 3.52 million, an increase of 55.56 over the same period of last year. Improvement. It is expected that the proportion of white LED device capacity will reach 20 by the end of 2012, and it is expected to exceed 30 in 2013. At the same time, the company's LED lighting application product capacity continued to maintain rapid growth, the main products of light source modules, fluorescent tubes, light bars, etc. increased by 67.60, 63.93 and 57.76 respectively over the same period of the previous year.
For chip companies that have been stuck in the low-end display and landscape lighting applications market, how to quickly realize the market grabbing the market for lighting-level applications is also urgent.
Huacan Optoelectronics and Silan Mingxin, which have been deeply involved in the LED display chip market, have gradually turned their profit growth points into the lighting market with larger market capacity at the beginning of this year. Sanan Optoelectronics, which has also worked hard for many years in the chip market. Downstream customers have begun to expand from the original landscape decoration, display and other fields to LED street lights, indoor lighting, large-size backlights and automotive lighting.
How to control production costs and increase the added value of products is the most important thing. Ren Zhongxiang, deputy general manager of Shandong Inspur Huaguang Optoelectronics, said that especially in the case of relatively low chip prices, companies must upgrade their products as soon as possible, and target the more competitive potential market. He revealed that at present, Inspur Huaguang still lives relatively moist with its competitive laser business.
Market-for-investment aggravated risk In the context of such a sluggish market, LED companies that can still achieve net profit growth are not without. Sanan Optoelectronics and Dehao Runda are typical representatives. From the financial statements of the two companies, it is not difficult to see that the local government's large-scale subsidies and generous market-changing investment orders remain the main hedging tools.
According to statistics, in 2011, Sanan Optoelectronics' total revenue was 1.747 billion yuan, a year-on-year increase of 102.56, net profit was 936 million yuan, a year-on-year increase of 123.29, and the government subsidy included in the current profit and loss was as high as 805 million yuan. The contribution rate reached 86. In 2011, Dehao Runda achieved a net profit of 392 million yuan, a year-on-year increase of 100.44. The government subsidy included in the current profit and loss reached 310 million yuan, and the contribution rate to net profit reached 79.
The survival model that relies too much on government subsidies also has a negative impact on the performance of the company. Taking Dehao Runda as an example, in the first quarter of this year, the company realized a net profit attributable to shareholders of listed companies of RMB 61,244,300, a decrease of 6.10 over the same period of the previous year. The main reason was due to the decrease in corporate subsidies during the reporting period compared to the same period of the previous year.
In the first half of this year, Dehao Runda achieved operating income of 1.224 billion yuan, down 1.01 year-on-year, and achieved net profit of 124 million yuan, a year-on-year increase of 21.5, of which government subsidies amounted to 154 million yuan. This also means that Dehao Runda's net profit growth in the first half of the year came from government subsidies. If this subsidy income was removed, the company even lost a loss of 7.18 million yuan in the first half of the year.
At the same time, in addition to huge government subsidies, local orders are not the main way for the two companies to rely on non-market means to seek performance growth.
In 2010, Sanan Optoelectronics invested in the LED industry in Wuhu and obtained an order for nearly 600 million LED street lights. The financial report shows that the Wuhu City Housing and Urban-Rural Development Committee has become the top five customers of Sanan Optoelectronics for two consecutive years. In 2011, Sanan Optoelectronics invested in the sapphire substrate project in Quanzhou, and it also obtained a local procurement contract for LED application products of up to 1.6 billion yuan.
A senior executive of Dehao Runda also said that in 2011, Dehao Runda LED street lamps sold more than 100,000 baht, and it is expected to reach 200,000 baht in 2012. Most of the orders are from local government streetlight orders where the company invests.
In today's marketization and globalization, over-reliance on the deformed children fostered by the government cannot use market-based competitive means to operate independently. It is easy for enterprises to get into a dilemma in an instant. One industry insider admits that the root cause lies in the fact that relevant companies and government departments are not separated from the traditional mode of thinking.
For the current government to introduce subsidies for end-use products frequently, the above-mentioned industry insiders said that the emergence of market demand will take some time, and the government will provide more subsidies, which will not make the market demand bigger, nor will it shorten the market reaction. time.
Government subsidies can only boost industry confidence to a certain extent, and it is not possible to immediately increase market demand. On the contrary, under the stimulation and guidance of government subsidies, the enthusiasm of enterprises in all links of the industrial chain is too strong, but there is a huge market risk.
The previous round of overcapacity crisis was largely due to the government's artificial stimulation of the market by subsidies. Although this stimulus may be due to good intentions, it has objectively become the dependence of many enterprises on subsidies and the loss of market competitiveness. .

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