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Analysts said that before this, LED companies had high gross margins in their left hands and high government subsidies in their right hands. Since 2013, both weapons have been brutally suppressed. With the gradual reduction of the manufacturing threshold, the competition in the industry's internal channel will become more intense in the future, and the scale will be the winner of the decision whether the listed companies in the industry can maintain profits.
Looks beautiful
“In 2013, the lighting industry developed rapidly, which led to the full play of the upper, middle and lower reaches of the production capacity, and also caused the overcapacity situation to slow down. Whether it was made of materials, equipment or equipment, the whole industry 'looks beautiful'.†Gaogong LED Chairman Zhang Xiaofei said.
But the actual situation is not as optimistic as the industry imagines. According to data disclosed by Gaogong LED, the total size of China's LED industry in 2013 was 263.8 billion yuan, a year-on-year increase of 28%, lower than industry expectations. Zhang Xiaofei said that although there were many orders in the LED industry in 2013, the company's revenue increased, but because of the high price war, the bottom line of competition between enterprises was getting lower and lower, and the profits of the industry were rapidly diluted.
China Securities Journal reporter learned at the "2013 High-tech LED Conference" that most of the downstream customers of LED companies are increasingly crediting, the payment cycle is getting longer and longer, and the phenomenon of arrears in the industry chain is becoming more and more serious. "Today, I have dozens of phone calls, and I can only ask them to make a little money for me." An industry person complained.
The data shows that as of 2013, there are about 51 domestic LED upstream enterprises, 1750 mid-stream packaging enterprises, and 15,000 downstream application enterprises. In terms of industry concentration, there is no domestic manufacturer's share of more than 5%.
Zhang Xiaofei said that there will be more industry consolidation from next year, the number of enterprises turning traditional LED lighting to LED lighting will reach the peak, the total number of LED industry enterprises will reach the peak, and the market competition will become more intense: upstream, most local enterprises Will die, the final survival rate of local chip manufacturers is expected to be around 30%; in the midstream, enterprises can only survive by forming strategic alliances with the downstream, some enterprises will become large-scale professional manufacturers, and other more than 1000 LED packaging enterprises will be eliminated; downstream Application companies will also face a major reshuffle. It is expected that LED lighting companies will die more than 50% in the next five years, and traditional lighting companies will die more than 30%.
In fact, some enterprises have started the integration strategy of enterprises this year. Dehao Runda acquired NVC Lighting for vertical integration of the upstream and downstream of the industry chain; Sanan Optoelectronics plans to acquire Taiwan's Yuyuan Optoelectronics and the US lumens, both horizontally and vertically. Recently, Liard announced the acquisition of Jinda Lighting, hoping to use the latter's technological advantages, project experience, channel resources and customer resources to accelerate the expansion of the company's LED lighting business segment.
Experts pointed out that any industry will experience an evolution from growth to recession. LED has entered the growth stage. The market prospects are good at this stage. It is prone to competition between manufacturers' products. The bankruptcy rate and merger rate are quite high. Companies with weak technology, poor management, or newly joined companies are often eliminated or merged because of the high cost of the products or the lack of market demand.
Channel competition is still the focus
“LED is not only an electronic product, but its own consumer product attributes are now widely accepted by the market. But no matter how the concentration of the industry is improved, it is foreseeable that the channel is still the focus of the future enterprise.†An industry insider The Securities News reporter said.
On November 21, Qinshang Optoelectronics announced that the company plans to invest 40.395 million yuan to set up regional marketing management centers in Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Hefei, Zhengzhou, Shenyang and Xi'an to build a nationwide marketing management platform. . Some insiders pointed out that this investment amount has already accounted for about half of the profits of Qinshang Optoelectronics in the first three quarters. In the context of the decline in industry profits, the attention paid by industry players to the channel is evident.
An LED listed company executive who does not want to be named believes that LED is still a typical project-driven industry in the short term, and about 70% of the revenue comes from the project channel. The competition for channels will be the focus. "In addition to the upstream equipment, the overall threshold of the LED industry is not high, which makes the channel resources to a certain extent will determine whether the company can grow bigger." In recent years, as the concentration of the industry has increased, the number of companies in the industry has begun to shrink. .
A person in charge of Guangri Co., Ltd. disclosed to the China Securities Journal that the company's LEDs are basically sourced from imported companies such as Osram, and do not have an advantage in terms of sales unit price. However, relying on strong channel resources, products with higher gross profit can still be maintained. Higher profit. "But the pressure has been great this year. We have to get the first-hand bidding information from various places through various payment channels. At present, the competition among the major manufacturers is very fierce. A hot item usually has to be broken. Come down."
At the "2013 High-tech LED Conference", Sun Yong, general manager of Sunshine Lighting, said that in addition to project resources, the competition for dealer resources in the industry has also become hot. At present, there are three very obvious modes on the market: upstream and downstream cooperation, dealer self-built brands, and upstream industries entering downstream channels. Overall, the intensity of supply chain integration is very obvious.
Another emerging channel that LED can't ignore is e-commerce. The data shows that the sales of Op Lighting, Ao Duo, Chau Ming Han Yuan and other lighting brands during the “Double Eleven†period exceeded the 10 million mark. Mei Zhimin, the brand director of Chau Ming Technology, revealed that the sales of the “Double Eleven†activities of the brand-name LED lighting products of Chau Ming Hanyuan brand exceeded the expectations. “The sales of 'Double Eleven' will be 3 million yuan after one hour. At 24 o'clock, the total number of transactions has exceeded 20,000, and the sales have reached 21.42 million yuan." Many manufacturers in the industry have used the "double eleven" to conduct concentrated low-priced inventory of backlog products through e-commerce.
Guan Yong believes that, unlike traditional channels, the burden of e-commerce is very light, which is an obvious advantage. But the thinking on the line is completely different from the distribution thinking done offline. If you don't take the idea of ​​the Internet to do e-commerce, you will not succeed. The online marketing model requires more Internet genes, which is a huge change for the LED industry practitioners, not just to open an online store. Now LED's e-commerce channel is still very primitive. .
Localization of equipment is lower than expected
Since the second half of this year, the structural adjustment of LED upstream equipment has caused widespread concern in the industry. During the interim report, an industry insider told the China Securities Journal reporter that due to the increase in industry concentration, some small and medium-sized enterprises have begun to transfer MOCVD machines to large enterprises such as Sanan Optoelectronics. Since the MOCVD machine is the core production material for the production of LED chips, the source believes that the concentration of upstream production capacity to leading companies will make the past chip's fierce price-cutting scenes buffer.
Recently, news about the localization of MOCVD has also been frequently reported from the industry. Some people in the industry believe that the global MOCVD equipment market is monopolized by two foreign giants, Aixtron of Germany and Veeco of the United States, and about 70% of the world's MOCVD is sold to China. If the effect of import substitution is activated, it will not only greatly reduce the LED chip. Manufacturing costs, improve the profitability of the enterprise, but also help Chinese companies have greater say in the LED industry.
However, at the "2013 High-tech LED Conference", many industry insiders told the China Securities Journal that the localization of MOCVD would not be as smooth as the outside world imagined. "This year should be just getting started. Some products are shipped, but in the short term, this kind of products will still be in the debugging stage. There will be no market opportunities for domestic MOCVD equipment by 2015." Zhang Xiaofei said.
Zhang Xiaofei pointed out that domestic enterprises are just just assembling MOCVD equipment products. Some of the core components are still purchased from foreign companies. It cannot be said that localization has been realized, but it has only been able to achieve domestic production, and the debugging cycle of such equipment is long. Even if the current domestic equipment is used, the production cost of the enterprise cannot be reduced.
Other LED companies expressed the same opinion. Zhao Jinrong, president of Northern Microelectronics, told the China Securities Journal that most companies did not dare to expect too much from domestic MOCVD equipment in the short term because the average age of LED lighting equipment is around 5-7 years, which has high requirements for MOCVD. At present, the LED market competition is very fierce, and product quality is the life of the enterprise. If large-scale use of domestic MOCVD equipment in a short period of time may bring greater uncertainty to product quality, MOCVD equipment needs to be constantly maintained and updated. The strength of the provider is also high.
Regarding the relatively mature field of LED upstream equipment and the breakthrough in the future, Zhang Xiaofei introduced that at present, the domestic strength in packaging and testing is strong, and the technology is relatively mature. Some enterprises have no difference in equipment, and currently in the industrial chain. Related equipment has begun to replace imports on a large scale, and in the future it is possible to go abroad to achieve internationalization of products.
For the market prospect of packaging equipment, Li Guoping, chairman of Hongli Optoelectronics, which is the main LED chip package, said that the packaging industry is a typical large-scale industry. As the domestic LED market continues to grow, the company will continue to purchase packaging equipment in the future to improve The scale of production capacity will also be intelligent, and the packaging equipment will be continuously debugged to increase production capacity. 
As Qinshang Optoelectronics, Dehao Runda, NVC Lighting and other companies have launched a channel strategy of high-altitude, "outbreak" has become the key word of the LED industry in 2013. However, at the end of recent years, various problems behind the industry outbreak have begun to emerge. At the "2013 High-tech LED Conference" held on November 25th, industry insiders said that this year is a year for LED companies to increase revenue but not increase profits. Moreover, the price war that gradually slowed down in the second half of the year has not completely stopped. In the year, China's LED industry will still face the risk of gross profit being continued to be diluted.