If you want to ask why LED chip manufacturers' profits fell in 2012, the answer is mostly "chip prices have dropped too fast." The reason for this is that chip manufacturers in mainland China, represented by Sanan Optoelectronics and DHL-Runda, have entered the market at low prices in recent years, causing chip companies in Taiwan such as Epistar (hereinafter referred to as "Jindian") to be tired Handle.
Statistics show that in 2012, among the seven chip listed companies in Taiwan, except Guanglei and Guangjun, which specializes in the high-power stage lighting market, achieved profitability, all other manufacturers lost money.
As the leading chip company in Taiwan, Epistar has a poor overall market situation in the past few years. The company still maintains profitability. However, due to the severe losses of the two holding companies of Thai Valley and Guangzhou Gallium last year and the impact of low-cost chips in the mainland, Epistar Eventually "lost".
Judging from the financial report released by Jingdian, its sales fell from approximately NT $ 197.66 billion in 2009 to NT $ 17.532 billion in 2012, and its gross profit also fell from NT $ 7.081 billion in 2009 to NT $ 2.715 billion in 2012. In NTD, the net profit was a loss of NT $ 1.203 billion in 2012.
Low price shocks from mainland manufacturers
According to the statistics of GLII, the price of LED chips in mainland China in 2012 continued the trend of a sharp decline in 2011. The average price dropped by 32% year-on-year, and the decline of some products was as high as 50%.
It was learned from some packaging plants that the price of Jingdian's chips fell by about 20% last year, while Sanan Optoelectronics' chip price fell by more than 25%, especially since the end of 2011, Sanan Optoelectronics "sell goods" action. At the same time, the emergence of the price butcher De Hao Runda, also made the chip market price war suddenly upgrade.
In addition to the oversupply of its own production capacity, the root cause of the chip price war is also related to the substantial price reduction of downstream LED display, backlight, and lighting products.
LED display is the most tragic battlefield of the "price war" last year. GLII statistics show that the price of LED display continued to decline in 2012, a year-on-year decrease of 15% -20%, and the gross profit margin of LED display sales through channels It was reduced to 10% -15%.
"Last year, the price of LED display devices dropped by 50%. We must rely on greater production capacity to increase sales." Wu Xianghui, general manager of Anpuguang, once said that for mainland customers, we use Silan's chips, and most foreign customers use Epistar's chip. "The price difference between the two is around 5% -10%."
The LED lighting market scale has grown rapidly last year. From the perspective of LED indoor lighting in mainland China, the statistics of the High-Tech LED Industry Research Institute (GLII) show that the market scale reached 33.5 billion yuan last year, an increase of 80% year-on-year.
Among them, the price of LED bulbs in mainland China continued to decline in the first half of 2012, which was 8% -10% lower than the same period last year. For example, the price of 3WLED bulb lamp is 10 yuan / piece, some have reached 8 yuan / piece; the price of 5WLED bulb lamp is 21 yuan / piece, and some have reached 18 yuan / piece.
From the information collected by the stations in various regions, the price of LED bulbs in the second half of 2012 has dropped by at least about 20% on the basis of the first half of the year.
Even if prices are falling so fast, the market penetration of LED lighting in 2012 is still only 7%, and the biggest influencing factor is price.
Last year, many companies vigorously promoted cheap lamps at all costs. The average market price is even close to 3 yuan / W, and the downstream price has a significant transmission effect on the upstream. In particular, mainland China ’s huge base of packaging companies began to seize market share. Switch to cheaper mainland-made chips. After all, compared with chips in Taiwan, Europe, America, Japan and South Korea, there is still a 10% price difference between chips made in China.
The comfort of the high-end market
Faced with today's market conditions, Jingdian must solve two problems, one is to increase sales, and the other is to reduce the loss of two companies held by Guangzhou Gallium and Thai Valley as soon as possible.
I visited many mainland LED packaging listed companies and learned that at present, people generally use the products of Jingdian for export or special customers with high quality requirements.
Because customers in overseas markets still value chips, phosphors and structures the most, the patent authorization of JD and major international manufacturers has enabled lighting products based on JD chips to be more recognized by foreign customers.
Simply put, Jingdian's products show more advantages in the field of higher technical requirements. Because the smaller the technical difficulty, the smaller the gap between domestic chips and Epistar, the price disadvantage will be more obvious.
On April 23, the third quarter (January to March 2013) financial report released by CREE showed that its revenue increased by 23% annually (quarterly increase of 1%) to 348.9 million US dollars, and its gross profit margin also It has rebounded synchronously, and its operating conditions have exceeded market expectations.
"This year the market is obviously still oversupplied, especially in the low-end market. But in the high-end market, the supply is still in short supply, and the chip unit price will be better. This is also evident from Cree's financial report. Jingdian will further develop its own high-end products this year. Taking this as an opportunity to increase revenue. "Wang Junbo, deputy general manager of Jingyuan Baochen Optoelectronics (Shenzhen) Co., Ltd., said that in addition to the above measures, Jingdian will also work hard to establish deeper cooperation with customers this year.
"It is now a flat world, and it is not realistic to seek long-term differentiation, because differentiation will soon disappear due to plagiarism." Wang Junbo said that the long-term development of chip companies requires the promotion of downstream LED lighting. What can be done now is how to improve the cost-effectiveness of their products and help customers improve the cost-effectiveness of their products.
It is understood that at the beginning of this year, Jingpin Changzhou Plant, a joint venture between Lite-On and Jingdian, will add 8 MOCVD machines to expand the production of LED lighting. With the effect of the scale of pan-crystal power formed by Guang gallium machines, it is expected to further reduce chip costs.
As for the performance of Thai Valley and Guangzhou Gallium, Wang Junbo said that Jingdian only participated in Thai Valley and did not have a controlling stake. At present, Guangzhou Gallium has already merged with Jingdian's technology, and some chip models with no cost performance have been discontinued, and the loss has also shrunk month by month.
In fact, from the financial reports of mainland-listed chip companies such as San'an Optoelectronics and Dehao Runda in recent years, it can be seen that, except for the huge government subsidies, their main business is almost loss-making or low-profit.
"Jingdian has no government subsidies and is a Taiwanese company. It is not easy to stand firm in the mainland market." An industry source said that last year the local government of the mainland has reduced the subsidies for upstream projects, and also hopes that mainland chip companies can participate freely. market competition.
On the other hand, in recent years, mainland chip factories have also improved rapidly in terms of quality. Many chip factories have expanded production capacity, reduced costs, and improved quality by continuously absorbing talents, participating in shares, and purchasing. However, judging from the current market situation, the confrontation between mainland chip makers and chip makers in Taiwan is still inevitable in the short term. Who can win this war may have the answer in the past two years.
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