Five methods for LED a vicious cycle of upstream enterprises out of price and production capacity
The 2015-11-20 10:50:26 source: electronic information industry network Author: zhu shao xin,
Takeaway: price competition to upgrade to the LED chip companies through continuous decrease the size of the LED chip to compress costs, not only makes the problem of excess production capacity is more serious, and further lead to price downward, and induce more upstream of the denotation and sapphire substrate enterprises overcapacity, forming a vicious cycle of price and production capacity.
OFweek semiconductor lighting since 2014, the LED industry upstream enterprise (substrate, extension, chips) highlighted overcapacity problem, combined with the downstream LED application products falling prices, and gross margins of upstream LED enterprises is running low.
Relative to the downstream applications, LED industry upstream is investment in highly populated areas, profit margins have been at a higher level. But in recent years the domestic LED market is developing rapidly, and so did the upstream enterprise rapid sales growth, under the double stimulation of market environment and government subsidies, LED the upstream enterprise expanding capacity, competition is increasingly fierce. Most enterprise by expanding the production scale to diluted the production cost, to lower prices in order to gain market share, lead to the LED chip prices are falling.
Price competition to upgrade to the LED chip companies through continuous decrease the size of the LED chip to compress costs, not only makes the problem of excess production capacity is more serious, further prices downward, and induce more upstream of the denotation and sapphire substrate enterprises overcapacity, forming a vicious cycle of price and production capacity.
Faced by the cost pressure from intense price competition, LED the upstream enterprise in order to remain competitive, can from the following breakthrough a vicious cycle of price and production capacity.
Through the integration of industrial chain "bulk"
Competitive pressure from the market downturn have allowed many LED enterprises contributed to a tide of integration of m&a. Happened in 2015, the LED industry has nearly 40 cases merger integration, a month on average have more than three merger cases occur, covering LED industry chain of each link.
The fierce market competition for LED epitaxy chip, small and medium enterprises is unsustainable and expect to be other epitaxial lateral integration chip enterprises. Upstream epitaxial chips in 2009, the mainland enterprises to achieve more than 60, has fallen to less than 20 this year, however, the actual function of only 15 or so. Bankrupt enterprises urgently looking forward to be leading enterprise integration of mergers and acquisitions, such as 2013, harmony technology m&a Jiang Xirui can science and technology, reorganization of harmony photoelectric. Horizontal consolidation for small business is "cool" with his back leaning against a big tree, for the big enterprise also can yet be regarded as to a smaller cost capacity expansion, a way of its own market position.
LED the upstream enterprise can also through vertical integration, give play to the industrial chain synergy effect. LED epitaxy chip companies can through the upstream sapphire substrate and chemical raw materials such as gas, vertically integrated companies, to reduce procurement costs, form the coordination effect, to raise their competitiveness. Such as three Ann photoelectric spent 126 million yuan this year to buy air chemical products (wuhu) co., LTD. 100% stake, and air chemical products (Shanghai) co., LTD., 11 sets of ISO containers, to further strengthen the upstream raw material supply ability; HuaCan photoelectric bid $1.08 billion acquisition of a 100% stake in blue SPAR in yunnan science and technology, effectively integrate the sapphire substrate blue SPAR technology capacity.
Through increased investment in research and development promote the competitiveness of the products
In the case of the market profit margins continue to be squeezed, to gain a competitive edge by falling prices is not a long-term solution. In order to cope with price competition, chip companies through epitaxial wafer cutting into more small size chips to diluted cost. But with the decrease of the chip size, in order to achieve the same luminous power it is necessary to improve the injection current, improve the power density of light, it puts forward higher requirements on the performance of the leds.
On the one hand, with the increasing density of power, LED the luminous efficiency of falling, this needs in LED epitaxial used when performance more superior structure to offset the decline in photosynthetic efficiency.
LED lights down under high power density, on the other hand, also means to produce more heat, it's for the LED chip heat dissipation performance and reliability of the higher requirements are put forward. If the enterprise just reduce chip size and not to form a complete set of extension and chip design research and development, not only will lose the competitiveness of the products, also can make the condition of the super power work products, have potential safety hazard.
Through the specific application market takes high-end course
In the face of price war intensified LED "red sea" in the market, LED epitaxy chip companies should have the courage to rush out of the "red sea" into the "blue ocean" in the field of high-end segment. Automotive lighting market is a typical LED the new "blue ocean". According to the national bureau of statistics, as of the first half of 2015, China's car ownership by 163 million. Such a large car market for auto parts market brings considerable development space. According to statistics, in 2014, the Chinese market with a total of 245000 sets of LED headlamps, the 2016 is expected to increase to 907500 sets, and the car tail lights LED permeability is very high.
However, the car into the market with LED does not want to go to. Now more than half of the domestic automobile LED lighting market dominated by foreign companies and especially the chip side, was almost swept osram and philips. And domestic in the product areas lack of car headlights from the chip to the module of the whole industrial chain. Osram and philips two giant in lamp market deep for many years and have rich lamp product line, and long-term cooperation with world-class automobile enterprise, to establish its own high-end positioning. China LED chip technology in the early part of the LED industry development is difficult to competent for LED headlamps, performance requirements, so missed the time to enter this market. In recent years the domestic LED chips both photosynthetic efficiency and reliability have made considerable progress, in the domestic market share of rapid ascension. In 2014, 83% domestic market share of LED chip companies. Represented by three Ann, HuaCan leading enterprises of the LED chip companies active in technology research and development, has ability to impact car LED headlamps market.
In addition, smart phone use leds - FLASH FLASH, plant lighting special wavelength leds and other high-end application are also LED upstream domestic enterprises need to enter the LED application "blue ocean".
Through the "going out" actively explore overseas markets
"Area" put forward by the Chinese government upstream enterprises "going out" strategy for the domestic LED provides a favorable policy environment. The current domestic market increasingly saturated, LED to replace the LED chip overcapacity, leds, small and medium enterprises generally operating difficulties, while emerging markets such as India, southeast Asia and Russia into the LED lighting to replace the exuberant demand period. The implementation of the strategy of "area" will drive along the country's infrastructure construction, LED lighting products will have broad market.
In the Russian market, for example. In 2014, Russian LED lighting market surge, permeability is about 30%, and in 2016, the market scale will exceed $5 billion, permeability, nearly five will become the world's fourth largest LED the market. And Russia's preferential policies for the domestic LED upstream enterprises to exploit overseas market provides a convenient conditions. In addition, China LED industry chain is perfect, can make up for the defect of the region industry chain is not complete, so as to have the opportunity to gain a significant market share.
LED at the same time of actively explore overseas markets need to strengthen quality control, perfect technology patents, improve after-sales service levels, setting up enterprise brand image, so that China's LED lights all the way "area".
Using LED technology accumulation explore potential markets
Sapphire substrate domestic enterprises as the upstream of the LED industry, both technical level and capacity are internationally competitive. However, which LED the price boom has sapphire enterprise are not immune, sapphire created serious excess capacity, the price of 4 inch flat piece of sapphire substrate has been reduced to less than $18.
In response to overcapacity and falling prices, companies seeking the LED substrate sapphire application market, such as consumer electronics, optical window screen etc. The sapphire industry overcapacity can be divided into two aspects: one is that if the sapphire is a LED epitaxial substrate material, the excess capacity is much, only by Mr Reid is a domestic production capacity is almost can satisfy the current market demand; Second, if the sapphire is used for intelligent mobile phone screen, its capacity is not enough. Rough estimation, Mr Reid about 55 million pieces/year capacity even if used in the production of all 6 inch screen, it can only meet about 6 million mobile phones, less than 1/10 of the iPhone shipments, so future sapphire has a great market space, in the field of consumer electronics is sapphire enterprise can consider the transformation of the upstream direction.
For the epitaxy chip companies, access has a broad application prospect of uv LED field. Uv LED theory can replace all of the mercury lamp uv light source, and has high photosynthetic efficiency, environmental protection, energy saving, compact structure, etc. The deep under 280 nm uv light has the function of sterilization can be applied to health. Recently, harmony photoelectric acquired in deep uv LED chip and MOCVD equipment subsoil Qingdao Jason electric for many years, and cooperate with sheng photoelectric in MOCVD equipment manufacturing enterprises develop MOCVD equipment for epitaxial deep uv LED material, formally entered large health industry, to become one of the few "healthy China" new three board stocks.
Domestic LED epitaxy chip companies can also be in compound semiconductor power devices. Compound semiconductor is a delegate with GaAs, GaN and SiC semiconductor material, it is not only available light electrical products, can also be used for the widely used power semiconductor devices, such as schottky diode, MOSFET and IGBT, etc. Compound semiconductor relative to Si with high frequency and high radiation and high temperature characteristics, is the future development direction of power semiconductor devices. And the manufacture of compound semiconductor device is based on MOCVD technology, with the existing GaN - LED epitaxy technology has the similarity, so the development of compound semiconductor devices both epitaxial domestic enterprises for many years accumulated technical foundation, and the extension of domestic surplus equipment capacity can be fully used.