Stimulated by the high Lighting market last year, in the second half of 2014, China's LED packaging industry saw a peak period of expansion. With the continuous release of production capacity, this year the lighting market has come a 180-degree turn, and the price killing has pushed the package profit to freezing point, which has led to the narrowing of the profit margin of packaging companies.
Due to the continuous decline in lighting and backlight gross margins, domestic packaging companies continue to fall into the vicious circle of price declines and scale expansion. Obviously, scale cannot solve the problem of structural overcapacity caused by expansion, and enterprises need to transform and upgrade to optimize their profit structure.
"Increment does not increase profits" into a spell
In 2015, in the face of downward pressure on the domestic economy, the LED industry was particularly competitive. Affected by the price war of LED lighting products, the living space of LED packaging enterprises was further squeezed, and the market once again fell into a state of “incremental increase without profitâ€. Although the market size still maintains rapid growth, corporate earnings performance remains sluggish.
International giants such as Philips, Cree, EcoSmart and Verbatim reduced the price of LED lamps in the market, which led to an average 15%-17% decline in the price of LED packaging service providers in Taiwan in the first half of 2015.
At the same time, this has also had a certain impact on mainland packaging companies. Guoxing Optoelectronics and Hongli Optoelectronics achieved rapid growth in net profit due to the relatively stable profit spread of the product line. Wanrun Technology, Jufei Optoelectronics, Mulinsen and other companies, due to the concentrated product line, led to a sharp decline in profitability, net profit in the first half of the year was down 7%-18% compared with the same period last year.
Some insiders said that the sharp decline in prices directly led to the overall decline in the LED packaging market. Most of the profits of the companies did not increase with the increase in shipments, and some even fell. Taking 2835 as an example, as the mainstream LED device recognized by China's LED packaging service providers, the industry as a whole has dropped from 5~8 cents in the first half of the year to 3~5 cents now or even lower. About 60%.
According to relevant data, the rapid development of China's LED packaging industry has intensified competition in the global packaging industry. In the first half of 2015, the price of most LED packaging devices in China fell by more than 50%, and the price of international LED packaging manufacturers also fell by more than 20%.
“The display device has basically fallen more than half in the first half of the year. Although the order has been in short supply, the profit has not increased by the same amount.†Gong Wen, general manager of Jingtai Co., told the reporter that the company’s annual revenue has been in the past seven years since its establishment. Both are doubled, but the profit in the first three quarters of this year did not achieve the expected results.
In the fierce market competition, cost control ability determines market competitiveness. In 2014, under the premise that there is still a large room for growth in the LED lighting market, manufacturers with technical and financial strength began to expand production scale and dilute costs, including Hongli, Ruifeng, Jufei, Zhaochi and other manufacturers. Production line. In 2015, the capacity of the packaging giants was gradually released, making the market, which was already very competitive, even worse.
Application market changes quietly
According to data released by industry research institutions, the scale of China's LED packaging market reached 8.6 billion US dollars in 2014, an annual growth of 19%. In 2015, the LED packaging industry will maintain a growth rate of 15%-20%.
Backlighting and lighting have been the two major application markets for the LED packaging industry, with 15% and 50% respectively last year. Among them, the LED backlight application market is gradually saturated, the market share has dropped from 15% to 14%; the proportion of LED display applications has dropped from 28% to 26%; the proportion of LED general lighting application market has continued to increase, from 29% in 2013 to 34%. At present, white light lighting has become the main driving force for the development of the global LED packaging industry.
With the globalization of LED lighting in China, the space for lighting packaging is promising. In the first quarter of 2015, the national lighting industry completed a total export value of 9.584 billion US dollars, an increase of 22.42%. Emerging markets such as Southeast Asia, the Middle East and Africa have sprung up, and the ASEAN countries have soared by 90%, making it the third-largest export destination.
The reason behind this is that the LED products produced by Chinese manufacturers fully meet the high cost performance requirements of LED lighting products in emerging market countries. At the same time, because China's domestic packaging companies have completely occupied the market of low-end LED packaging, it has a cost competitive advantage. The rise of emerging markets will benefit the further release of LED packaging capacity in the future.
However, some analysts believe that the future growth rate of LED packaging may slow down due to the slowdown in demand for LED segments. First, the demand for the two segments of the LED flash market and the backlight market are declining. This is related to the maturity of the consumer electronics industry and the slowdown in industrial demand, such as the development of tablet PCs and smart phones.
The economic downturn has caused weak demand for backlights. In the first half of the year, Jufei Optoelectronic Backlight LED business realized a 11.7% reduction in operating income compared with the same period of the previous year. According to Yin Jinghuang, the director of Jufei Optoelectronics, the decline in performance, in addition to the reasonable price decline, is mainly due to the slowdown in demand in the mobile phone market. After the mobile phone screen has developed to 5.5 inches, the growth space is not very large, and LED backlights are also caused as the brightness of mobile phones increases. The amount of device used is reduced.
The reporter found that the growth rate of the domestic mobile phone market slowed down significantly in the first half of this year, and sales volume fell by 3%. The market is driven by pure price and turned to composite competition and returned to retail.
From the perspective of LED backlight market, the market share of domestic large and large sizes is gradually increasing due to the continuous improvement of the localization replacement rate. The small and medium-sized market has become saturated, and growth has been weak in recent years. In addition, many foreign mobile phone supply chains are difficult for domestic companies to enter.
Adjusting positioning is the first priority
Now, the LED packaging industry will officially enter the competition elimination period. The trend of “bigger Evergrande†is more prominent, and the industry concentration is rising. In 2014, hundreds of packaging companies have been eliminated. At the same time, last year, the domestic mainstream LED packaging company Mulinsen package scale will reach more than 3 billion yuan, the national star, Jufei scale will exceed 1 billion, Hongli, Ruifeng, Changfang will reach 800 million to 100 million, plus the potential enterprise Dongshan Precision , Zhaochi, Wanrun, Jingtai, etc. In 2015, China's LED packaging scale will exceed 1 billion enterprises, and industry concentration will move closer to large enterprises.
With the release of capacity expansion by listed companies and large-scale enterprises, traditional packaged devices will enter the era of low profit. Small-scale enterprises have limited production capacity and technical capabilities, and it is difficult to compete with large enterprises. The dilemma of not increasing revenues and increasing profits will be further deepened in small enterprises. Once the downstream application customers have problems, small-scale packaging enterprises will face greater risks. .
For Chinese packaging manufacturers, business is not easy. On the one hand, the profit is not high, on the other hand, it has to bear higher operational risks. Once a customer has a problem, or the quality is wrong, one year's efforts will be wasted, and even the capital chain will collapse. In 2015, the capacity of the packaging giants was gradually released, and the market, which had already been very competitive, became even worse. Manufacturers without financial support are more and more difficult to operate.
Obviously, many mainstream LED packaging companies have realized this problem, and even if they are large-scale, they cannot structurally optimize the profit structure of LED packaging companies. When prices continue to refresh the bottom line and competition continues to increase, domestic leading companies have adjusted their marketing strategies and actively deployed high-margin segment markets such as emerging markets and smart lighting .
In June, Lianchuang Optoelectronics acquired the wisdom of the company and quickly strengthened the short-board of the company's smart lighting, thus realizing the transformation and upgrading of the company's lighting business from lighting manufacturers and engineering contractors to smart lighting solutions providers; The introduction of overseas technical teams and resources will help the company further expand into smart cities, cloud computing and other fields.
In the first half of the year, Wanrun Technology also increased its R&D investment, investing 15.8246 million yuan, an increase of 132.90% over the same period of last year, actively deploying and developing smart transportation stations, infrared touch screens, rail vehicles, rail transit and airports. High value-added market segments such as halls and military special lighting.
In addition, Hongli Optoelectronics has built a platform of “LED main business + internet finance + car networking†through capital increase and shareholding; Jufei Optoelectronics also takes optical film business as an entry point to strengthen and expand existing LED and related main business. At the same time, actively explore the strategic emerging industries.
In the future, as the golden period of the LED lighting market fades, the LED packaging enterprises will further transform and upgrade. Only by the market and taking advantage of the trend, according to the market development, constantly adjusting their own positioning, in order to be invincible in the competition.
Due to the continuous decline in lighting and backlight gross margins, domestic packaging companies continue to fall into the vicious circle of price declines and scale expansion. Obviously, scale cannot solve the problem of structural overcapacity caused by expansion, and enterprises need to transform and upgrade to optimize their profit structure.
"Increment does not increase profits" into a spell
In 2015, in the face of downward pressure on the domestic economy, the LED industry was particularly competitive. Affected by the price war of LED lighting products, the living space of LED packaging enterprises was further squeezed, and the market once again fell into a state of “incremental increase without profitâ€. Although the market size still maintains rapid growth, corporate earnings performance remains sluggish.
International giants such as Philips, Cree, EcoSmart and Verbatim reduced the price of LED lamps in the market, which led to an average 15%-17% decline in the price of LED packaging service providers in Taiwan in the first half of 2015.
At the same time, this has also had a certain impact on mainland packaging companies. Guoxing Optoelectronics and Hongli Optoelectronics achieved rapid growth in net profit due to the relatively stable profit spread of the product line. Wanrun Technology, Jufei Optoelectronics, Mulinsen and other companies, due to the concentrated product line, led to a sharp decline in profitability, net profit in the first half of the year was down 7%-18% compared with the same period last year.
Some insiders said that the sharp decline in prices directly led to the overall decline in the LED packaging market. Most of the profits of the companies did not increase with the increase in shipments, and some even fell. Taking 2835 as an example, as the mainstream LED device recognized by China's LED packaging service providers, the industry as a whole has dropped from 5~8 cents in the first half of the year to 3~5 cents now or even lower. About 60%.
According to relevant data, the rapid development of China's LED packaging industry has intensified competition in the global packaging industry. In the first half of 2015, the price of most LED packaging devices in China fell by more than 50%, and the price of international LED packaging manufacturers also fell by more than 20%.
“The display device has basically fallen more than half in the first half of the year. Although the order has been in short supply, the profit has not increased by the same amount.†Gong Wen, general manager of Jingtai Co., told the reporter that the company’s annual revenue has been in the past seven years since its establishment. Both are doubled, but the profit in the first three quarters of this year did not achieve the expected results.
In the fierce market competition, cost control ability determines market competitiveness. In 2014, under the premise that there is still a large room for growth in the LED lighting market, manufacturers with technical and financial strength began to expand production scale and dilute costs, including Hongli, Ruifeng, Jufei, Zhaochi and other manufacturers. Production line. In 2015, the capacity of the packaging giants was gradually released, making the market, which was already very competitive, even worse.
Application market changes quietly
According to data released by industry research institutions, the scale of China's LED packaging market reached 8.6 billion US dollars in 2014, an annual growth of 19%. In 2015, the LED packaging industry will maintain a growth rate of 15%-20%.
Backlighting and lighting have been the two major application markets for the LED packaging industry, with 15% and 50% respectively last year. Among them, the LED backlight application market is gradually saturated, the market share has dropped from 15% to 14%; the proportion of LED display applications has dropped from 28% to 26%; the proportion of LED general lighting application market has continued to increase, from 29% in 2013 to 34%. At present, white light lighting has become the main driving force for the development of the global LED packaging industry.
With the globalization of LED lighting in China, the space for lighting packaging is promising. In the first quarter of 2015, the national lighting industry completed a total export value of 9.584 billion US dollars, an increase of 22.42%. Emerging markets such as Southeast Asia, the Middle East and Africa have sprung up, and the ASEAN countries have soared by 90%, making it the third-largest export destination.
The reason behind this is that the LED products produced by Chinese manufacturers fully meet the high cost performance requirements of LED lighting products in emerging market countries. At the same time, because China's domestic packaging companies have completely occupied the market of low-end LED packaging, it has a cost competitive advantage. The rise of emerging markets will benefit the further release of LED packaging capacity in the future.
However, some analysts believe that the future growth rate of LED packaging may slow down due to the slowdown in demand for LED segments. First, the demand for the two segments of the LED flash market and the backlight market are declining. This is related to the maturity of the consumer electronics industry and the slowdown in industrial demand, such as the development of tablet PCs and smart phones.
The economic downturn has caused weak demand for backlights. In the first half of the year, Jufei Optoelectronic Backlight LED business realized a 11.7% reduction in operating income compared with the same period of the previous year. According to Yin Jinghuang, the director of Jufei Optoelectronics, the decline in performance, in addition to the reasonable price decline, is mainly due to the slowdown in demand in the mobile phone market. After the mobile phone screen has developed to 5.5 inches, the growth space is not very large, and LED backlights are also caused as the brightness of mobile phones increases. The amount of device used is reduced.
The reporter found that the growth rate of the domestic mobile phone market slowed down significantly in the first half of this year, and sales volume fell by 3%. The market is driven by pure price and turned to composite competition and returned to retail.
From the perspective of LED backlight market, the market share of domestic large and large sizes is gradually increasing due to the continuous improvement of the localization replacement rate. The small and medium-sized market has become saturated, and growth has been weak in recent years. In addition, many foreign mobile phone supply chains are difficult for domestic companies to enter.
Adjusting positioning is the first priority
Now, the LED packaging industry will officially enter the competition elimination period. The trend of “bigger Evergrande†is more prominent, and the industry concentration is rising. In 2014, hundreds of packaging companies have been eliminated. At the same time, last year, the domestic mainstream LED packaging company Mulinsen package scale will reach more than 3 billion yuan, the national star, Jufei scale will exceed 1 billion, Hongli, Ruifeng, Changfang will reach 800 million to 100 million, plus the potential enterprise Dongshan Precision , Zhaochi, Wanrun, Jingtai, etc. In 2015, China's LED packaging scale will exceed 1 billion enterprises, and industry concentration will move closer to large enterprises.
With the release of capacity expansion by listed companies and large-scale enterprises, traditional packaged devices will enter the era of low profit. Small-scale enterprises have limited production capacity and technical capabilities, and it is difficult to compete with large enterprises. The dilemma of not increasing revenues and increasing profits will be further deepened in small enterprises. Once the downstream application customers have problems, small-scale packaging enterprises will face greater risks. .
For Chinese packaging manufacturers, business is not easy. On the one hand, the profit is not high, on the other hand, it has to bear higher operational risks. Once a customer has a problem, or the quality is wrong, one year's efforts will be wasted, and even the capital chain will collapse. In 2015, the capacity of the packaging giants was gradually released, and the market, which had already been very competitive, became even worse. Manufacturers without financial support are more and more difficult to operate.
Obviously, many mainstream LED packaging companies have realized this problem, and even if they are large-scale, they cannot structurally optimize the profit structure of LED packaging companies. When prices continue to refresh the bottom line and competition continues to increase, domestic leading companies have adjusted their marketing strategies and actively deployed high-margin segment markets such as emerging markets and smart lighting .
In June, Lianchuang Optoelectronics acquired the wisdom of the company and quickly strengthened the short-board of the company's smart lighting, thus realizing the transformation and upgrading of the company's lighting business from lighting manufacturers and engineering contractors to smart lighting solutions providers; The introduction of overseas technical teams and resources will help the company further expand into smart cities, cloud computing and other fields.
In the first half of the year, Wanrun Technology also increased its R&D investment, investing 15.8246 million yuan, an increase of 132.90% over the same period of last year, actively deploying and developing smart transportation stations, infrared touch screens, rail vehicles, rail transit and airports. High value-added market segments such as halls and military special lighting.
In addition, Hongli Optoelectronics has built a platform of “LED main business + internet finance + car networking†through capital increase and shareholding; Jufei Optoelectronics also takes optical film business as an entry point to strengthen and expand existing LED and related main business. At the same time, actively explore the strategic emerging industries.
In the future, as the golden period of the LED lighting market fades, the LED packaging enterprises will further transform and upgrade. Only by the market and taking advantage of the trend, according to the market development, constantly adjusting their own positioning, in order to be invincible in the competition.
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