In 2017, the LED industry experienced a significant recovery, bringing renewed hope and increased activity across the sector. The year saw major transformations, with intensified competition between Chinese and international companies, as well as growing disputes between large and small manufacturers.
The supply chain also underwent substantial changes. LED manufacturers extended their operations upstream and downstream to achieve greater self-sufficiency, while strategic alliances formed among various players in the industry. Additionally, rising raw material prices caused challenges for mid and lower-level LED businesses.
At the end of 2017, Gaogong LED reviewed the key developments of the year using seven keywords, highlighting several notable cases within the industry.
**Price Increase**
Throughout 2017, LED upstream materials faced persistent price hikes, especially PCB sheets, which remained expensive. Due to these rising costs, upstream LED companies raised their prices, while midstream companies struggled to maintain stability. Downstream lighting and display firms found it difficult to absorb these increases.
Sanan Optoelectronics initiated the first price increase of the year, raising the price of its S-30MB/S-32BB series by 8% from January 10, 2017. This move was partly due to higher costs and the consolidation of the LED chip market, where larger manufacturers gained more control.
Mulinsen also increased the price of some lighting lamp beads by 15% to mitigate the pressure from rising raw material costs. Multiple rounds of price adjustments had already been made since the previous year, reflecting the company’s market-driven approach.
PCB board manufacturers also saw a surge in prices, with copper foil and laminates increasing by up to 2000 yuan per ton. These price hikes significantly impacted downstream applications, particularly those closer to the end-user, which had limited ability to absorb these costs.
**Increasing Revenue and Profits**
With the overall recovery of the LED industry, product prices remained stable, and the growing penetration rate of LEDs created promising market prospects. As a result, most listed LED companies reported improved financial performance in the first three quarters of 2017.
Huacan Optoelectronics reported revenue of 1.87 billion yuan and net profit of 370 million yuan in the first nine months of the year. Mulinsen achieved revenue of 5.86 billion yuan and a net profit of 440 million yuan during the same period. Hongli Zhihui recorded revenue of 2.58 billion yuan, with a net profit of nearly 260 million yuan. Guoxing Optoelectronics also showed strong growth, with revenue reaching 2.582 billion yuan and net profit of 258 million yuan. Sanxiong Aurora and Moso Power also reported significant increases in both revenue and net profit.
**Expansion and Capital Raising**
LED companies expanded aggressively, aiming to increase market share through scale advantages. Ganzhao Optoelectronics invested 736.588 million yuan in expanding its red and yellow LED chips and gallium arsenide solar cells. Huacan Optoelectronics allocated 1 billion yuan to expand its LED substrate project. Zhaochi invested over 1.5 billion yuan in an LED epitaxial wafer project in Nanchang, expecting significant growth in production value.
Mulinsen also set up a joint venture to expand its presence in the American market, investing USD 4.9 million in Global Value Lighting LLC. These moves reflected the industry's focus on global expansion and strengthening its supply chain.
**Listing**
The pace of IPO reviews by the China Securities Regulatory Commission accelerated, offering new opportunities for LED companies. Several firms, including Sanxiong Aurora, Debang Lighting, Jucan Optoelectronics, and Igor Electric, successfully went public in 2017, signaling a positive trend for the industry.
**Vertical Integration**
The LED industry continued to see greater vertical integration, with companies extending their reach across the supply chain. Zhaochi redirected 1 billion yuan of fundraising toward an LED epitaxial chip project, enhancing its industrial chain. Guoxing Optoelectronics expanded its upstream and downstream operations, acquiring key semiconductor companies to strengthen its position in the market.
**Chinese Characteristics**
Chinese companies made a stronger global presence in 2017, with Mulinsen acquiring 100% equity in LEDVANCE, a former Osram business. Feile Audio acquired the remaining stake in FML, enhancing its global competitiveness. Meanwhile, GE and Philips also restructured their lighting businesses, selling off parts of their operations to focus on other sectors.
**Shuffle**
Despite the overall recovery, not all companies succeeded. Some faced challenges such as poor management, financial difficulties, or declining performance. Qinshang Shares divested its semiconductor lighting business, Qihao Optoelectronics shut down, and Kaisheng Shares ceased production. Guangdong Ganhua also decided to sell Deli Photoelectric, marking the end of its LED ventures.
Overall, 2017 was a transformative year for the LED industry, marked by growth, innovation, and restructuring. As the market continues to evolve, companies that adapt and innovate will be best positioned for long-term success.
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