LED screen upstream packaging industry ushered in improvement

The LED screen upstream packaging industry is ushering in improvement. You will find that behind a series of events, the industry structure of LED screen upstream packaging has improved. Around 15 years ago, international giants such as Philips, GE, and Osram announced their withdrawal from the Chinese market. In the middle of 2016, LED screen chips Packaging and packaging manufacturers began to adjust prices, indicating that prices were fiercely fought 15 years ago, and 2016 became an inflection point for the industry. Before 2016, LED screen chip manufacturers expanded their business one after another, resulting in obvious overcapacity, and the price continued to decline rapidly, causing drastic changes in the LED screen industry. Due to reasons such as backward technology, many poorly managed small companies have reduced production or transformed, and a large number of LED screen companies have withdrawn from the market.

However, since 2016, with the steady growth of demand, the relationship between supply and demand in the LED screen industry has gradually improved, and recently there have been intensive price increases for products. Industry insiders said that not only LED chips are rising in price, but LED screens are also rising. How does this roller coaster development affect the industry? Demand side: small-pitch, Micro-LED, IR, and automotive lighting markets are on the rise, and screen projects welcome development opportunities. In the demand structure of the domestic LED industry, in 2016, general-purpose screens accounted for 47.6%, and landscape screens accounted for 13.5%. , Backlight applications accounted for 12.1%, display screens accounted for 12.8%, and automotive screens accounted for 1.4%.

Referring to the growth rate in the past two years, it is assumed that the growth rate of general-purpose screens in 2017 is 15%, that of landscape screens is 7%, that of small-pitch LED screens is 70%, that of LED displays (except small-pitch) is 4%, and that of automotive use is 4%. 6%, the growth rate of domestic LED industry demand is about 10.44%. Considering the impact of the price decline of LED products in 2015, the growth rate of demand quantity should be higher than the growth rate of output value. With the rise of small-pitch LED screens, Micro-LED, IR, and car lighting markets, and the good development opportunities for screen projects under the financial expansion cycle, the demand for LEDs is accelerating. In 2017, only small-pitch LED screens will need to add about 26 Taiwan MOCVD equipment. The demand for inventory replenishment is determined, and consumption upgrades are good for leading manufacturers. The LED industry has entered the inventory digestion stage since 2012. According to the data of the Shenwan LED sector, since 15Q3, the industry's inventory turnover days have dropped from 117.94 days to 102.92 days in 16Q3. The lowest level since 2009Q3, and a new round of inventory replenishment demand in the future will push up the industry's prosperity.

In addition, we believe that "good money driving out bad money" is happening on the demand side. When the price of LED bulbs falls to the "comfort zone" of consumers, benefiting from consumption upgrades, the ability of some small and medium-sized manufacturers to increase purchase willingness through price differences has declined. The end increases the competitive pressure of some small and medium-sized manufacturers, accelerates the reshuffle of the industry, and benefits leading manufacturers. Supply side: Price wars have obvious crowding-out effects, and the industry’s competitive landscape has improved. According to statistics, the continued production of LED chip factories in mainland China has led to an oversupply ratio of LED chips as high as 22% in 2015. From 15Q1 to 16Q1, mainstream LED chips The price of packaging products has fallen by more than 30%, and the price of packaged products has also generally shown a drop of more than 20%.

According to the data of China Light Industry Network, the cumulative loss of the national LED screen industry in the first three quarters of 2015 was 16.66%. In this competitive environment of survival of the fittest, after Samsung withdrew from the LED screen business in all markets except South Korea in 2014, internationally renowned manufacturers Philips, Osram, and GE also withdrew from the Chinese market in 2016, providing more opportunities for the domestic LED industry. Large market space, improved industry competition pattern. The price increase of LED chips has spread from RGB to white light, and the structural imbalance between supply and demand has emerged. Following the shortage of quaternary LED chips in Q3 2016 and the price increase, Taiwanese manufacturers have increased their quaternary LED production capacity. In January 2017, Sanan Optoelectronics, the leading domestic LED chip, released The price adjustment letter raised the price of some white light products by 8%, and the price increase of LED chips spread from RGB to white light.

On the one hand, this reflects the structural imbalance of LED chips, that is, display applications and LED screen applications compete for the production capacity of GaN blue-green chips. On the other hand, it also reflects the vigorous downstream demand of the chip industry. According to survey feedback, orders for white light LED chips, packaging, and screens are in good condition recently, the industry is booming, and corporate profitability is gradually recovering. Taiwanese factories focus on the quaternary chip market, and the transfer of the GaN LED industry center to the mainland is accelerating. Due to the rise of small-pitch LED screens and IR sensing applications, Taiwanese quaternary LED manufacturers are actively expanding quaternary production capacity: Epistar will implement the expansion plan from 16Q2 , Huashang Optoelectronics concentrated its production capacity in Siyuan in 2016.

At the same time, Epistar and Cree began to reduce GaN production capacity in 2016, and major domestic manufacturers began to invest in GaN production lines this year. Considering the equipment purchase and commissioning cycle, the new investment in MOCVD by local chip manufacturers throughout the year was about 135 Taiwan, considering the exit of about 125 sets of equipment from Epistar, the new equipment in the world in 2017 is limited, and the domestic growth rate is lower than 11%. On the one hand, in full-color LED screens, the production capacity of blue and green needs to be doubled to match that of red and yellow; The transfer of industrial centers has accelerated. .