LED light ring under the hidden worry
——Interview with Dr. Zhang Xiaofei, CEO of Gaogong LED and Dean of Zhejiang Higher Industrial Research Institute
In the first half of this year, there were four or five Chinese LED companies listed, and the refinancing activities that have been listed have become large, and other capitals have begun to lay out LEDs. The LED market prospects are yearning for the market, but companies are rushing to bring risks such as overcapacity, homogenization competition and falling gross profit.
Investing in excess capacity is difficult to release
"Investor News": What is the outlook for the LED industry, and what are the main considerations for companies to build LEDs?
Zhang Xiaofei: The LED industry has a bright future. China's LED output value last year counted 126 billion, and this year is expected to have a 50% increase, reaching 180 billion yuan. The investment scale of the LED industry this year will reach 65 billion yuan, exceeding the investment scale of last year. For enterprises, LED is a better concept, and listing may bring better market performance; LED companies that have been listed are financing to expand their scale and seek competitive advantage; traditional enterprises are involved in LED, mainly because LED is a new industry. Its gross profit is higher than that of traditional industries. What is more prominent is that traditional home appliance enterprises are accelerating the layout of LEDs, such as Midea, Haier and Dehao Runda. In addition, foreign companies have entered the LED industry in various similar fields, which has intensified the Chinese enterprises to follow the trend of the LED industry.
"Investor News": What risks should these companies bring to the LED industry?
Zhang Xiaofei: There has been a serious problem of overcapacity. LED investment is mainly in the upstream, and the planned investment of four new sapphire substrate projects in the first quarter of this year will be 3.3 billion yuan. The profits of companies doing well upstream are about 30%, while the downstream profit is about 10%. High gross profit has led to a enthusiasm for investment, and the investment in the substrate has reached more than three times the demand. The overall investment scale is quite obvious. However, due to factors such as technology and talent, its production capacity may not be released. A large number of MOCVD inputs, such as Sanan Optoelectronics and Inspur Huaguang, have been released in production capacity this year. Due to the obstacles in talent and imported technology, Dehao Runda has a very slow progress. Because Sanan “attracted†a group of talents in Jingdian, the pace of Jingdian’s domestic slowdown.
"Investor News": In the quarterly report, the gross profit of listed companies in the LED industry such as Guoxing Optoelectronics, Hongli Optoelectronics, and Dehao Runda is obviously declining. What are the main factors caused by this?
Zhang Xiaofei: The decline in gross profit in the first quarter was mainly due to the mismatch between investment scale and demand, which led to an increase in corporate inventories, which was the most obvious performance among packaged companies. There are more than 1,200 packaging companies in China, and the production capacity is more than the market demand. In addition, the price of materials such as phosphors in the packaging industry has not decreased, and although the chip has declined, it is not enough to reduce the packaging cost. There are too many packaging companies, small scales, price wars under homogenous competition, and gross profit margins are getting lower and lower. According to the latest research conducted by the High-tech LED Industry Research Institute, some medium and small packaging companies have begun to work. In order to expand market share, Guoxing Optoelectronics, a listed company, has taken the initiative to cut prices. Although sales have increased, gross profit has declined.
Competitive situation in various industrial chains
"Investor News": Among the upstream companies, which listed companies have an advantage in the competition?
Zhang Xiaofei: Do LED chip epitaxial wafers, either with technology or scale. At present, Sanan Optoelectronics has invested the largest in epitaxial chip companies and has a relatively large advantage in the future competition. However, if Sanan still wants to go to the middle and lower reaches, this advantage will disappear. The unique advantage of Ganzhao Optoelectronics lies in its differentiation and specialization. It has a great advantage in the market segment. It is especially worth noting that its battery chips will occupy a monopoly position in the huge market in the future. In the first quarter of this year, the gross profit of Ganzhao Optoelectronics (Xiamen Headquarters) reached 52%, which has exceeded the highest level of peers in Taiwan. Wuhan Huacan, which is running fast on the market, is also very fast in the market, and has become a major provider of low-power chips, which deserves attention.
"Investor News": In the middle of the package companies, which listed companies do better, where is its core competitiveness?
Zhang Xiaofei: China's LED packaging companies are numerous and scattered. At present, they have not yet formed leading enterprises in the industry, and the overall technical level is quite equal. Among the listed companies, Guoxing Optoelectronics, Hongli Optoelectronics and Ruifeng Optoelectronics are relatively large.
"Investor News": In terms of lighting applications, is LED lighting dominant? What are the good companies?
Zhang Xiaofei: LED light source has the advantages of long service life, energy saving and environmental protection. If you are doing a good job in lighting application, there will be a lot of room for future development. The current problem is that the investment situation of the whole industry is funnel-shaped, most of the investment is concentrated in the upstream, and the R&D investment in downstream lighting applications is very small. This model needs to be broken in the future. Local governments have local protection in LED street lights, which has led some good companies to fail to open the market.
Export companies of LED lighting applications currently have a first-mover advantage. Taking Zhejiang Sunshine Lighting (600261) as an example, with the extensive experience of its traditional lighting products in Europe and the United States, the export of LED lighting applications has formed an advantage.
As a switch supplier,most of our products compliance with TUV,CE approval which based on EN 61058-1;2002+A2,the current rating from 10amp to 16amp,Ranging from 3 to 6 poles,with many choices of functions.Including series KR1,KR2 and KRX.Different size of the panel cut-out,kinds of functions for different application.
For example,the following item KRX meet TUV/CE requirment at 2A 250VAC:
TUV Approved Switch,Professional TUV Approved Switch,safety TUV Approved Switch
Ningbo Kara Electronic Co.,Ltd. , https://www.kara-switch.com