LED industry restructuring surges

Overwintering, surplus, and shuffling become key words in the current LED industry. In 2012, the LED industry did not expect a complete recovery as expected, and it was still struggling to make ends meet. "Triangle debt" plagues many LED companies. Will the industry accelerate the “shuffle” in 2013 and “shadow” in the integration?

The "triangular debt" spread

“In the past six months, the phenomenon of 'triangular debt' has been very serious,” said Liu Xiao, general manager of Intel Photoelectric (Shenzhen) Co., Ltd.. One of the major phosphor suppliers in the domestic LED industry also feels a headache for “triangular debt”.

At the "Second G20-LED Summit" held on December 14, 2012, Liu Xiaobiao spewed water: "The recent situation is worrisome. It may be that there are many manufacturers who have not paid for goods before. Take the goods without money, then look for another one."

"Also, the billing period is long. The account period is generally 60 days, and the actual 180 days, or even 200 days." Liu Xiao said, "The more serious problem is that the renminbi is gone and all me have given me acceptance bills."

This is like playing drums and relaying flowers. Customers owe money to application companies. Applied product companies also owe money to packaging plants. Packaging companies can only owe money from upstream material suppliers. The "triangular debt" resulted from this.

In order to avoid being dragged down by the "triangular debt," the 20 LED companies that initiated the G20-LED Summit have planned to establish a communication interaction platform. The companies will communicate with each other and blacklist the companies that have owed money to control the risks.

"shuffle" acceleration

It is understood that the capacity utilization rate of domestic MOCVD machines is only about 65%. Wang Lianghai, vice president of Tongfang Co., Ltd., believes that upstream chip companies have shifted from technological competition to cost competition, and LED chips are entering a period of low profit or even no profit.

In the packaging field, there are more than 1,700 companies in the domestic packaging industry alone, accounting for 80% of the world's total. In 2012, Guoxing Optoelectronics, Hongli Optoelectronics, Wanrun Technology, Lehman Optoelectronics and many other listed companies suffered from a decline in operating costs or net profit due to the decline in package prices. With the help of the capital market, the LED packaging capacity will be further released and market competition pressure will intensify. A group of small and medium-sized package factories with weak technical and market capabilities will be eliminated.

Another background of accelerating shuffling is that at present China's LED industry is still a government-led market. The civilian market has yet to be activated, and the commercial market is starting to start. A large number of demands are based on government engineering orders and policy support. Large enterprises rely on their advantages in technology and resources to obtain more government orders. SMEs that lack technology and brands are relatively difficult to obtain government orders. Under this circumstance, the LED industry will form a pattern of “strong and permanent” and polarized.

Reorganization tide

Difficult times have brought opportunities for the merger and reorganization of the LED industry. The reorganization between the upper-middle-stream enterprises and the upstream enterprises to accelerate the penetration into the downstream have become the focus of this round of restructuring.

In 2012, Sanan Optoelectronics, the largest LED chip company in mainland China, took a share in Taiwan's Yuen-Yuan Optoelectronics, kicking off the prelude to the reorganization of chip companies. Zhang Xiaofei predicts that there will be less than 30 LED epitaxial chip companies in China by 2013.

At the "2nd G20-LED Summit" forum, Ruifeng Optoelectronics chairman Gong Weibin and Lianchuang Optoelectronics director Jiang Guozhong expressed that they are interested in packaging and application companies with an annual production value of 100 million to 200 million yuan. .

"Upstream chip companies need to seek profit support from the expansion of the industry chain." Wang Lianghai predicts that the application of chips will become a trend. He revealed that Tongfang may expand from chips to packages and applications.

"There are too many downstream manufacturers, just like VCD more than 10 years ago, and market integration is inevitable." Shi Jiancan, deputy director and deputy general manager of Huizhou Yuanhui Optoelectronics Co., Ltd., believes that "the entire Chinese LED industry is waiting for the market to take off."

Of course, well-known downstream companies will also take the opportunity to get involved in the LED industry, or make up for their own shortcomings. Color TV company Konka has joined Ruifeng Optoelectronics. LED vertical integration companies represented by Neo-Neon lighting are lacking in overseas channels and brand building, and are also looking for relevant opportunities.