Sanan Optoelectronics invested 10 billion to be the world's number one, Huacan Optoelectronics invested 1.18 billion to expand the epitaxial wafer production capacity, Guoxing Optoelectronics expects to increase packaging capacity by 40% in the middle of this year, and Qinshang Optoelectronics plans to invest 500 million to expand its main business... However, Is this wave of LED expansion? Does it also bury the hidden danger of "excess" in the future?
Recently, the LED industry has undergone a large-scale expansion, from upstream chips, midstream packaging to downstream applications, all companies are full of confidence and ambitious. Behind it is the decline in the price of LED lighting products brought about by cost reduction, which has led to the outbreak of market demand. The rapid growth in the next few years is expected. At the same time, the generous subsidies have also triggered the rapid expansion of enterprises. However, after the glory, will it be another industry decline.
LED ushered in "big market year"
"This year is definitely the big market year for the LED industry!" A senior executive of a LED listed company in Guangdong told the Shanghai Securities Journal at the beginning of the year that the same optimism was also spread by many LED listed companies visited by reporters at the beginning of the year, which not only originated from the LED industry. The overall prosperity of 2013 is also derived from the industry's confidence in the comprehensive replacement of traditional lighting products.
The data shows that compared with the overall decline in the industry's profits in 2012, the LED industry is beginning to usher in a boom in 2013. Most listed companies that have published annual reports have achieved positive earnings growth.
“The rising demand for the whole industry in 2013 is the direct cause of everyone's profitability. We judge that this demand increase will be sustainable in the next few years, and the growth rate will be very fast, and the root cause of this confidence is that The price/performance advantage brought by the decline in the price of LED products has completely replaced the traditional lighting products.†The above-mentioned corporate executives told reporters.
A first-line salesperson of a certain LED company also told reporters that in 2011 and 2012, every time they participated in a large-scale exhibition to introduce the energy-saving and various advantages of LED lights to customers, the customers showed great interest, but when it comes to The price, the customer shook his head.
"At that time, 5W LED lights were sold to 60, 80, but the same brightness of energy-saving lamps is only about 20. But since 2013, the price of indoor LED products has dropped significantly, and now 5W LED lights are also reduced to 20 The price of outdoor street lamps has not fallen as much as indoors, but it has fallen to the same level as that of high-pressure sodium lamps. Therefore, we have added a lot of civilian and commercial customers in recent days,†the salesperson said.
In this phenomenon, a brokerage analyst pointed out that this is mainly because the price of upstream chips will drop at a rate of about 30% per year. By the second half of 2013, it will begin to be transmitted to downstream end products, and the overall cost of the whole industry will continue to decline. carry on. Therefore, the LED industry has actually entered the stage of comprehensive replacement of traditional lighting products.
The decline in product prices directly led to an increase in demand. According to the forecast of Xiangcai Securities, the LED lighting market is expected to double in 2014 to more than 250 billion yuan. In 2015, it will double again to 500 billion. UBS Securities predicts that the lighting market will increase from 2013 to 2015. The speed is 36%, 37% and 38% respectively, of which the residential LED lighting market demand has increased by 157%, 90% and 62% respectively. Qilu Securities also predicts that the compound growth rate of LED lighting demand will reach 30 in 3 to 5 years. From % to 40%, lighting product penetration will increase from 10% to 15% to 40% to 50%.
Huge subsidies encourage industry scale
The LED industry, which has recently regained the “loved†capital market, is also headed by the aura of “national strategic emerging industriesâ€, which brings more real benefits to related companies: in addition to various tax deductions and policy awards. Local governments have introduced a huge subsidy policy for the LED project, which is considered by the industry to be another major driving force for the expansion of production capacity.
A foreign investment bank analyst told reporters that in the core electronic components high-end general-purpose chip major projects, central financial funds, 863 plan and other central-level special funds and awards list, LED companies frequently listed; and other places The government also gave enterprises huge equipment purchase subsidies as a condition for investment promotion.
In 2009, the Yangzhou Municipal Government took the lead in introducing a subsidy policy. Each time a company introduces a MOCVD machine (LED chip production equipment), it will provide a financial subsidy of 10 million yuan. In Hangzhou, the company purchases MOCVD equipment for 40% of the purchase price.
According to public information, from 2010 to 2012, Dehao Runda's wholly-owned subsidiaries, Wuhu Dehao, Yangzhou Dehao, Dalian Dehao and Yan Dehao, respectively received subsidies of 418 million, 25.746 million and 76.6 million. And 75.8 million. In the past three years, Sanan Optoelectronics has received nearly 3 billion yuan of government subsidies. The huge government subsidies accounted for a large part of the net profit of listed companies. From 2010 to 2013, Sanan Optoelectronics received net subsidies respectively. 60%, 86%, 60%, and 45.7% of profits. Taking the Anxi project as an example, in order to strive for Sanan Optoelectronics to enter, Anxi County of Fujian invested 4 billion yuan to subsidize MOCVD and sapphire substrate production equipment, totaling 2.2 billion yuan. In terms of land acquisition, infrastructure and R&D center, the construction investment will be 1 billion yuan, and the supporting construction project will invest 800 million yuan. In the Xiamen billion project launched by Sanan Optoelectronics in April this year, the Xiamen Municipal Government will purchase subsidies for 200 MOCVD equipment newly added by Sanan Optoelectronics. For each 5 million yuan calculation, the direct subsidy will reach 1 billion. .
Big expansion brings out overcapacity
"Government subsidies can be said to play a role as catalysts and expansion agents in the process of expanding production capacity. According to Sanan Optoelectronics, Xiamen's 10 billion project was originally planned to be implemented in Wuhu. At the beginning, it was not planned to buy so much. Equipment, the total investment is only more than 4 billion, Xiamen's subsidy policy is out, Sanan Optoelectronics purchased equipment increased to 200 units, the total investment has more than doubled." The aforementioned brokerage analyst said.
In fact, after several rounds of capacity expansion, only the upstream LED chips, the total capacity of domestic enterprises has accounted for more than 60% of the world. According to the above-mentioned LED listed company executives, there are currently about 1,500 MOCVD devices for global production of chips, and the number of devices currently owned by domestic companies is about 900. If the 300 MOCVD equipments of Sanan Optoelectronics are all produced, the total amount of equipment owned by the company will reach 350, which will exceed the number of Jingyuan Optoelectronics (244 units), Samsung (182 units) and LG (160 units). Rise to the first.
In this regard, an industry analyst who has long been concerned about government subsidies reminded that concerns about overcapacity in the LED industry began to exist at the end of 2011, but the release of demand in the past two years completely reversed this situation. From the current industry development speed, it may be too early to say that the LED industry overcapacity, but if the future demand growth rate is slower than the capacity expansion rate, the entire industry will begin to appear oversupply, trigger price wars and lead to industry reshuffle and other extreme phenomena. . Dairy farming subsidies and pig breeding subsidies implemented in earlier years are a good reference.
(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)
Recently, the LED industry has undergone a large-scale expansion, from upstream chips, midstream packaging to downstream applications, all companies are full of confidence and ambitious. Behind it is the decline in the price of LED lighting products brought about by cost reduction, which has led to the outbreak of market demand. The rapid growth in the next few years is expected. At the same time, the generous subsidies have also triggered the rapid expansion of enterprises. However, after the glory, will it be another industry decline.
LED ushered in "big market year"
"This year is definitely the big market year for the LED industry!" A senior executive of a LED listed company in Guangdong told the Shanghai Securities Journal at the beginning of the year that the same optimism was also spread by many LED listed companies visited by reporters at the beginning of the year, which not only originated from the LED industry. The overall prosperity of 2013 is also derived from the industry's confidence in the comprehensive replacement of traditional lighting products.
The data shows that compared with the overall decline in the industry's profits in 2012, the LED industry is beginning to usher in a boom in 2013. Most listed companies that have published annual reports have achieved positive earnings growth.
“The rising demand for the whole industry in 2013 is the direct cause of everyone's profitability. We judge that this demand increase will be sustainable in the next few years, and the growth rate will be very fast, and the root cause of this confidence is that The price/performance advantage brought by the decline in the price of LED products has completely replaced the traditional lighting products.†The above-mentioned corporate executives told reporters.
A first-line salesperson of a certain LED company also told reporters that in 2011 and 2012, every time they participated in a large-scale exhibition to introduce the energy-saving and various advantages of LED lights to customers, the customers showed great interest, but when it comes to The price, the customer shook his head.
"At that time, 5W LED lights were sold to 60, 80, but the same brightness of energy-saving lamps is only about 20. But since 2013, the price of indoor LED products has dropped significantly, and now 5W LED lights are also reduced to 20 The price of outdoor street lamps has not fallen as much as indoors, but it has fallen to the same level as that of high-pressure sodium lamps. Therefore, we have added a lot of civilian and commercial customers in recent days,†the salesperson said.
In this phenomenon, a brokerage analyst pointed out that this is mainly because the price of upstream chips will drop at a rate of about 30% per year. By the second half of 2013, it will begin to be transmitted to downstream end products, and the overall cost of the whole industry will continue to decline. carry on. Therefore, the LED industry has actually entered the stage of comprehensive replacement of traditional lighting products.
The decline in product prices directly led to an increase in demand. According to the forecast of Xiangcai Securities, the LED lighting market is expected to double in 2014 to more than 250 billion yuan. In 2015, it will double again to 500 billion. UBS Securities predicts that the lighting market will increase from 2013 to 2015. The speed is 36%, 37% and 38% respectively, of which the residential LED lighting market demand has increased by 157%, 90% and 62% respectively. Qilu Securities also predicts that the compound growth rate of LED lighting demand will reach 30 in 3 to 5 years. From % to 40%, lighting product penetration will increase from 10% to 15% to 40% to 50%.
Huge subsidies encourage industry scale
The LED industry, which has recently regained the “loved†capital market, is also headed by the aura of “national strategic emerging industriesâ€, which brings more real benefits to related companies: in addition to various tax deductions and policy awards. Local governments have introduced a huge subsidy policy for the LED project, which is considered by the industry to be another major driving force for the expansion of production capacity.
A foreign investment bank analyst told reporters that in the core electronic components high-end general-purpose chip major projects, central financial funds, 863 plan and other central-level special funds and awards list, LED companies frequently listed; and other places The government also gave enterprises huge equipment purchase subsidies as a condition for investment promotion.
In 2009, the Yangzhou Municipal Government took the lead in introducing a subsidy policy. Each time a company introduces a MOCVD machine (LED chip production equipment), it will provide a financial subsidy of 10 million yuan. In Hangzhou, the company purchases MOCVD equipment for 40% of the purchase price.
According to public information, from 2010 to 2012, Dehao Runda's wholly-owned subsidiaries, Wuhu Dehao, Yangzhou Dehao, Dalian Dehao and Yan Dehao, respectively received subsidies of 418 million, 25.746 million and 76.6 million. And 75.8 million. In the past three years, Sanan Optoelectronics has received nearly 3 billion yuan of government subsidies. The huge government subsidies accounted for a large part of the net profit of listed companies. From 2010 to 2013, Sanan Optoelectronics received net subsidies respectively. 60%, 86%, 60%, and 45.7% of profits. Taking the Anxi project as an example, in order to strive for Sanan Optoelectronics to enter, Anxi County of Fujian invested 4 billion yuan to subsidize MOCVD and sapphire substrate production equipment, totaling 2.2 billion yuan. In terms of land acquisition, infrastructure and R&D center, the construction investment will be 1 billion yuan, and the supporting construction project will invest 800 million yuan. In the Xiamen billion project launched by Sanan Optoelectronics in April this year, the Xiamen Municipal Government will purchase subsidies for 200 MOCVD equipment newly added by Sanan Optoelectronics. For each 5 million yuan calculation, the direct subsidy will reach 1 billion. .
Big expansion brings out overcapacity
"Government subsidies can be said to play a role as catalysts and expansion agents in the process of expanding production capacity. According to Sanan Optoelectronics, Xiamen's 10 billion project was originally planned to be implemented in Wuhu. At the beginning, it was not planned to buy so much. Equipment, the total investment is only more than 4 billion, Xiamen's subsidy policy is out, Sanan Optoelectronics purchased equipment increased to 200 units, the total investment has more than doubled." The aforementioned brokerage analyst said.
In fact, after several rounds of capacity expansion, only the upstream LED chips, the total capacity of domestic enterprises has accounted for more than 60% of the world. According to the above-mentioned LED listed company executives, there are currently about 1,500 MOCVD devices for global production of chips, and the number of devices currently owned by domestic companies is about 900. If the 300 MOCVD equipments of Sanan Optoelectronics are all produced, the total amount of equipment owned by the company will reach 350, which will exceed the number of Jingyuan Optoelectronics (244 units), Samsung (182 units) and LG (160 units). Rise to the first.
In this regard, an industry analyst who has long been concerned about government subsidies reminded that concerns about overcapacity in the LED industry began to exist at the end of 2011, but the release of demand in the past two years completely reversed this situation. From the current industry development speed, it may be too early to say that the LED industry overcapacity, but if the future demand growth rate is slower than the capacity expansion rate, the entire industry will begin to appear oversupply, trigger price wars and lead to industry reshuffle and other extreme phenomena. . Dairy farming subsidies and pig breeding subsidies implemented in earlier years are a good reference.
(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)
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