The market downturn LED structural overcapacity will continue

The 2012 annual report released by major LED companies recently showed that the performance was generally low. The industry predicts that the structural overcapacity of the LED industry will continue in 2013, and related companies will continue to digest inventory and gain market share through price cuts.

Annual report bleak capital market performance is sluggish
Compared with 2011, many LED companies experienced a significant decline in both revenue and net profit in 2012. For example, the well-known LED chip company Dehao Runda, revenue in 2012 was 2.824 billion yuan, down 8% year-on-year; net profit was 168 million yuan, down 57% year-on-year. Silan's revenue in 2012 decreased by 12.74% year-on-year, and net profit decreased by 88.07%. In 2012, Guoxing Optoelectronics' revenue decreased by 11.87% year-on-year, and net profit decreased by 66.45%.

For the reasons for the decline in performance, the explanations given by various companies are generally: due to the intensified competition in the LED industry, the price of the company's products has dropped sharply, and this has squeezed the profit margin.

In the unfavorable situation of the market downturn, the number of LED companies that successfully met IPOs in 2012 has also decreased significantly. In 2011, there were as many as 13 LED-related companies in China, and only 4 in 2012.

At the same time, the issuance of fundraising plans for some LED listed companies has also been forced to die. Recently, the domestic LED leading company Sanan Optoelectronics announced that due to changes in the market environment, the company decided to terminate the two-year public offering of A shares.

Structural overcapacity triggers price decline
In the eyes of the industry, the growth rate of China's LED industry in 2012 reached 34%, indicating that the market growth rate still maintains a high level. However, the speed of capacity expansion of the entire LED industry is far greater than the speed of scale growth, and the fierce price competition has caused the entire LED industry to emit chills.

Affected by the global economic downturn, in 2012, the growth rate of LED market in Europe, America, Japan and other countries was not as good as that in the domestic market, which led to a general decline in orders for export-oriented LED companies; and with the sharp decline in the prices of domestic industrial chains, it directly led to corporate hair Interest rates fell rapidly.

According to the statistics of the High-tech LED Industry Research Institute, the average price of LED chips in China dropped by 32% in 2012, and the average price of some products such as low-power LED blue-green chips for display screens fell by more than 50%. In 2012, China's LED chip industry showed a breakeven or even a loss, which eventually led to the loss of most companies.

In the packaging industry in the middle of the LED industry chain, the average price of white LED packaged devices in China declined by more than 30% in 2012. The LED packaging industry has gone through a period of high gross profit.

In the downstream application industry, the average price of indoor LED lighting products such as LED fluorescent tubes, LED bulbs, LED panel lights and LED downlights in China dropped by 23% in 2012.

SEMI China senior analyst and LED project manager Qi Faxin told reporters that as a sunrise industry, LED market demand has not declined in 2012, but capacity expansion far exceeds demand. Moreover, in the high-end lighting field, domestic manufacturers have not allocated too much market share, and can only fight price wars at the low-end and low-end, resulting in structural overcapacity.

Promising prospects, oversupply in the short term
In order to support the development of the domestic LED industry, following the recent listing of LEDs in the government procurement list, the National Development and Reform Commission and the Ministry of Science and Technology recently released the “Semiconductor Lighting Energy Conservation Industry Plan”, indicating that it will gradually increase the financial subsidies for LED lighting products. To promote the demonstration application of LED products. This move is believed to be beneficial to the penetration of LED lighting in various fields, and the LED lighting market has a bright future.

"In 2013, for the domestic LED industry, there will probably be a year of slow growth." Tang Guoqing, secretary general of the Semiconductor Lighting Technology and Applications Committee of the China Lighting Society, said that the possibility of a decline in the LED market in 2013 is almost non-existent. But for individual companies, the possibility of a decline will still exist.

The industry believes that the survival competition in the LED industry will become more and more fierce in 2013. In order to gain market share, enterprises will continue to become a powerful means of price reduction. At present, LED companies are planning to cut product prices in 2013 to seize the market.

"From the perspective of supply and demand structure, the overall situation of oversupply in the LED industry will not change in the short term." Liu Liang, an analyst at Industrial Securities, said that the domestic LED industry has recently adopted a coalition and merger control of production capacity is a trend; in addition, various LED manufacturers will Seeking new applications and strategic alliances to ensure orders and profit margins.

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