(Text / high-tech LED reporter Tang Guirong)
Since 2010, a number of domestic companies in the LED industry chain have continued to invest in the entire industry chain. At that time, who can vertically integrate the LED industry, who is the big winner.
However, the vertical integration model may lead to a large fluctuation in profits affected by downstream demand, but it is an indisputable fact. The biggest risk of this model is that if the downstream demand slows down, the company's various cost costs may not be allocated upstream, and the cost and expense ratio may increase.
Unfortunately, due to the lower-than-expected release of downstream lighting application market demand last year, many domestic LED companies in the vertical integration stage are encountering the most difficult moments in history.
"At present, it is only the eve of vertical integration." For the current situation of LED lighting development in China, Zheng Tiemin, chairman of Shandong Inspur Huaguang, expressed his views on Gaogong LED reporters. Dr. Zhang Xiaofei, CEO of Gaogong LED, also said in public that the domestic LED companies have not yet qualified for vertical integration. This so-called qualification is reflected in many aspects. In the case of immature technology, market, etc., doing the entire industrial chain is tantamount to catching up with the ducks.
Upstream brake
"Now you also do packaging and application yourself, you are looking for packaging and application companies to do business, will people buy your account? If you are doing closed, the upper and middle reaches must match the capacity, if it does not match it is very troublesome. Li Xuliang, the chairman of Dongguan Qinshang, told reporters about the embarrassing situation of some domestic extension projects.
According to the high-tech LED reporter, as the downstream market demand cannot be smoothly opened according to previous investment expectations, almost all the extension projects in China are now facing the problem of chip inventory backlog. The most embarrassing companies that are partially integrated with the industry are the matching of their upstream and downstream production capacity and competition with downstream customers.
Take Sanan Optoelectronics, the largest LED epitaxial manufacturer in China, as an example. As of November last year, the company had about 80 MOCVDs in operation. According to Sanan Optoelectronics' third-quarter earnings report, the company's current chip inventory has reached 900 million yuan.
According to the high-tech LED reporter confirmed from relevant people, since the first half of last year, Dehao Runda's MOCVD arranged in Yangzhou has delayed production.
The days of epitaxial chip manufacturers that rely solely on export sales are still the same. For those companies that are deploying the entire industry chain, I am afraid that the difficulties will be even greater. In the current situation where demand and output are extremely unequal, the vertical integration of enterprises and the large purchase of MOCVD equipment are tantamount to the growth of seedlings.
Recently, Gaogong LED reporter learned from many channels that Zhenmingli Yangzhou production base was in a state of suspension due to the inability to find a partner. The Jiangmen base has been affected by the previous personnel changes and low product yield. It was once reported that the company's epitaxial chip production has been in a semi-stop state. When the reporter calls the relevant person in charge of the company, the answer given by the other party is inconvenient to disclose.
Zhen Mingli, who started with lighting, has entered the LED packaging since 2003, and then entered the LED upstream epitaxial chip manufacturing in 2008. It is regarded as the first Taiwan-funded mainland factory to vertically integrate in the LED lighting industry chain. The person in charge of Zhen Mingli told reporters that at that time, he chose to cross the LED chip field, mainly because Taiwan chips could not be imported to the mainland, and the mainland LED chip technology was not yet mature. Vertical integration by the company to ensure the source of raw materials and reduce costs. According to the statement at the time, the self-made chip can save 40% to 50% of the cost.
However, in the past few years, the domestic LED chip market has long been a battleground for global giants. According to the statistics of the High-tech LED Industry Research Institute (GLII), as of November 2011, the price of LED-power white light chips in the domestic market has dropped by up to 70.71% in the past two years.
According to the 2011 semi-annual financial report released by Zhen Mingli, as of September 30, Zhen Mingli had a revenue of 788 million Hong Kong dollars in the first half of the year, a year-on-year increase of 7.9% and a loss of HK$102 million. In the financial report, Zhen Mingli said that due to the worsening economic environment, the amount of customer orders has generally shrunk. The excessive investment in domestic LEDs led to a significant oversupply of LED production capacity and a rapid decline in market prices.
As for the suspension of production, there are upstream companies that say this is quite a helpless and painful choice. Every day when the MOCVD furnace is stopped, it will not only cost more than 10,000 yuan. More importantly, when the furnace is restarted, it requires a half-year commissioning period. After the commissioning period, the customer has a one-year trial period for the chip. Calculated in this way, the time and financial cost of the enterprise is huge.
A person in charge of the mid-stream package told reporters that "the upstream chip makers' production scale is greater than the demand, we will not place so many orders."
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