What Are the Opportunities and Challenges for the Development of LED Industry

2018 is a difficult year for the LED industry. Dr. Zhang Xiaofei, chairman of senior engineering led, once predicted that in 2018, the smoke of gunpowder in the LED industry will gradually disappear on the battlefield, and the competition in the future will be soft power. The industry has entered the post lighting era, the stronger the strong will be, and the weak will withdraw from the lighting stage.

Today, these predictions are becoming a reality. The growth of traditional lighting market is weak, automotive lighting, plant lighting and new display are in the early stage of development, and the performance of led enterprises is slowing down. At the same time, the change of domestic and international environment makes enterprises face unprecedented survival pressure.

Domestic environment - the prices of raw materials and labor have risen, product prices have continued to decline, environmental protection has become stricter, and homogenization competition is fierce; International environment - the Sino US trade war led to the contraction of exports and the rise of LED industry in emerging markets. These disadvantages are cascaded throughout 2018. Of course, when the general lighting market encounters a bottleneck, the new field of high-tech threshold shows unprecedented heat, especially automotive lighting and mini / micro led.

In order to meet the better development of LED industry, this paper presents the opportunities and challenges of LED industry in 2018 through several key words.

1. Slowdown in growth

In 2018, the LED industry as a whole entered the post lighting era, and the general lighting market encountered a substitution bottleneck with weak growth.

In Chinese mainland, the output value of LED lighting in 2017 was 296 billion 900 million yuan, up nearly 21% from the same period last year, accounting for 55.40% of the world's total, the LED Research Institute (GGII) data show. With the divestiture of general lighting business by international giants, China's output value will continue to increase. GGII expects that China's LED lighting output value will reach 341.5 billion yuan in 2018, a year-on-year increase of 15%, and the global share is expected to reach 61% in 2020.

Data show that although China's general LED lighting market is still growing steadily, the overall growth momentum has slowed down significantly. The growth of LED market slows down and the growth power of enterprises is insufficient. While the prices of raw materials and labor costs are rising, the prices of LED products are declining, resulting in the compression of profit space, which affects the performance of led enterprises.

From the performance of LED listed companies in the first three quarters of this year, nearly half of the net profits of enterprises showed negative growth. In the current situation of domestic and foreign difficulties, compared with the performance of the same period last year and the interim report, the overall performance of A-share listed companies fell slightly in the third quarter, and there are few outstanding lighting manufacturers.

2. Sino US trade war

The Sino US trade war, which lasted for more than half a year, has affected the growth rate of the domestic economy to a great extent; At the same time, it also restricts the export of Chinese products to the United States to a certain extent.

As for the LED lighting industry, the United States has a vast territory and a huge population base, so the consumption of LED lighting products is very considerable. According to the data of LED Research Institute of advanced industry and Research (GGII), the scale of American LED lighting market in 2017 was US $15.6 billion. It is expected that the American LED lighting market will continue to grow by 5-10% in the next five years.

The United States is the largest single destination for China's LED lighting exports. In 2017, LED lighting products exported to the United States accounted for nearly 27% of China's total LED lighting exports, and the export amount reached US $5.57 billion, a year-on-year increase of nearly 60%. Affected by the Sino US trade war, the amount of LED lighting products exported by China to the United States in the first three quarters was US $4.041 billion, a year-on-year decrease of 5.5%.

Senior engineering led-g20 member enterprises agreed that the Sino US trade war will not only hinder the export of lighting products, but also lead to export backflow, further increase the intensity of domestic market competition and accelerate industry integration.

3. Hand in hand with state-owned assets

This year, one of the most obvious characteristics of the LED industry is "national progress and people retreat". Many led listed companies have introduced strategic investors with state-owned assets background.

Hongli Zhihui introduced Golden rudder investment, which became the actual controller of the company, while Golden rudder investment is a wholly-owned subsidiary of Sichuan Luzhou Laojiao group; Dongshan precision plans to introduce Suzhou Yaowang, a strategic investor. Suzhou Yaowang is a wholly-owned subsidiary of Suzhou Wuzhong Financial Holding Co., Ltd., which is 100% controlled by Suzhou Wuzhong District SASAC; LianJian optoelectronics plans to introduce large-scale cultural media enterprises with state-owned assets to resolve the closing risk of actual controllers; Wanrun technology introduced Hongtai investment, which became the controlling shareholder of the company.

Since the beginning of this year, a shares have been in the doldrums, the financing channels of private enterprises have been tightened, and the financing cost has increased. For LED listed companies, the strong financial strength of state-owned assets can help them solve financing problems and promote their better development. It can be said that the cases of private enterprises holding hands with state-owned capital will continue to occur.

However, there is a widespread concern in the market: after the entry of state-owned capital, will the main business and strategic direction of these listed companies change in the future? After introducing strategic investors, we will wait and see how the enterprise will develop in the future!

4. Price rise of foreign enterprises

This year, affected by the Sino US trade war, the rise in the price of raw materials and the rise in labor costs, enterprises are generally facing greater survival pressure, and foreign lighting enterprises are facing the same situation.

However, different from the attitude of domestic lighting enterprises, foreign enterprises generally adopt the price increase strategy in the face of pressure, and then transfer part of the pressure to end consumers. In May this year, Eaton Lighting Department announced that the price of traditional lighting products and high-end LED and control products would be increased by 6%; Acuity, the largest lighting manufacturer in the United States, also announced a 6% increase in the price of all traditional lighting technologies and a variety of LED products in the United States.

Subsequently, many foreign lighting manufacturers such as landvance, current and Rab announced price increases. Moreover, Eaton raised product prices three times during the year, and acuity announced price increases four times during the year. However, the price rise trend of large foreign lighting manufacturers did not drive the price rise trend of domestic manufacturers. What is right and what is wrong remains to be tested by the market.

5. Share repurchase

The downturn of a shares, the psychological impact brought by the Sino US trade war and the increase of market expectation uncertainty caused by the transformation and upgrading of domestic economy have caused the wait-and-see of funds entering the market.

In order to boost investor confidence and mitigate the risk of equity pledge, state-owned assets around the country have rushed to the rescue in recent months. Regulators have issued policies and shouted on issues related to the capital market. Share repurchase is a major measure at the level of listed companies. For the LED industry, several listed companies have announced share repurchase plans.

Among them, San'an optoelectronics has paid a total of 332 million yuan for share repurchase; Infineon also announced that it plans to repurchase shares with its own funds of 50 million to 100 million yuan; Zhaochi also announced the repurchase of shares worth 200 million yuan to 400 million yuan; Alto electronics plans to repurchase shares for the implementation of equity incentive, employee stock ownership plan, or cancellation according to law to reduce the registered capital

It can be seen that more and more listed companies have joined the camp of share repurchase. According to the plans issued by various enterprises, the purpose of share repurchase of listed companies has three aspects: first, adjust the capital structure of shareholders; Second, stabilize the stock price; Third, as a stock reserve and anti takeover means.

6. Automobile lighting

With the weak growth of general lighting market, more and more enterprises have begun to turn to various segments to find new profit growth points. Due to the high technical threshold and the relatively closed supply of automobile manufacturers, the competition of automobile lighting is small.

However, in the field of automotive lighting, especially in new energy vehicles, LED light sources are rapidly replacing traditional light sources. In addition, in the future, automotive lighting lamps will no longer only have the functions of lighting and safety, but rise to the height of improving the quality of life of personnel in the vehicle, which will bring more imagination to the automotive lighting market.

Although international enterprises still dominate the automotive lighting market, the new automotive lighting market with high added value and high-tech threshold attracts domestic enterprises with technology as the core. Hongli Zhihui, Jingke electronics, Foshan Lighting and other domestic enterprises have made great efforts in the automotive lighting market.

Among them, Hongli Zhihui lamp LED products have passed the vehicle regulation level certification, indicating that they have obtained a closed market license; With its combined advantages of LED packaging products, lamp modules and optical components, Jingke electronics has taken the lead in the field of lamp application; Foshan Lighting has successfully reached cooperation with a number of host factories and developed new fixed-point LED module projects. Its independently developed LED afterloading product lines - Mingdao series, mingtu series, led T10 ice blue, led T20 and other products are deeply welcomed by the terminal market

With Jufei photoelectric lamp LED passing the vehicle regulation certification and Debon lighting establishing an automobile lighting subsidiary, it can be seen that the competition in the automobile lighting market has been opened.

7. New display

There has been a dispute between LED display and OLED display for a long time. With its natural advantages, OLED has not only won considerable attention for itself, but also completed many technical problems that LCD can not achieve. Once upon a time, OLED was called synonymous with future display technology.

However, due to the high manufacturing cost and low production yield of OLEDs, the penetration of OLEDs is not very high. At this time, the emergence of miniled and microled is generally considered as the main competitor of OLED in the future. And microled is regarded as the ultimate display technology.

As a new generation of display technology, miniled started late, but its development speed is beyond imagination. At present, many manufacturers around the world have actively laid out the relevant applications of mini led.

From wafer optoelectronics, Huacan optoelectronics and Qianzhao Optoelectronics in the upstream chip factory, to Guoxing optoelectronics, Ruifeng optoelectronics, Jingtai Co., Ltd. and Yiguang in the midstream packaging, and then to lyade, Zhouming technology and Alto electronics in the downstream application end, the positive layout of major manufacturers has promoted the rapid development of miniled industry.

However, miniled is still only a transitional product before the mass production of microled. Like OLED, it is a self luminous display technology. In addition to the characteristics of high brightness, ultra-high resolution, color saturation and high luminous efficiency, micro LED is not affected by water vapor, oxygen or high temperature. Therefore, it has obvious advantages in stability, service life and working temperature. However, at present, the whole LED industry is restricted by key technologies such as chip miniaturization and massive transfer. Therefore, at present, microled can only be used as a manufacturer's technology, and its commercialization still has a long way to go.

GGII predicts that the market scale of micro LED is expected to reach 100 million yuan in 2019, of which smart watch is its main application direction. Micro LED is expected to maintain an increase of about 75% from 2020 to 2025, and the market scale of micro LED will reach 4.9 billion yuan in 2025.

8. Patent disputes

Patent disputes have been running through the development process of the whole LED industry. In the early stage, international manufacturers represented by xinnuofei, OSRAM, Nippon chemical, Kerui and Toyota synthesis occupied the technical dominance, thus forming a strong patent protection network.

However, with the support and encouragement of China's policies, China's LED LED industry has gradually shifted to Chinese mainland, and Chinese enterprises have gradually stepped out of the patent blockade network. However, in the initial rough and crazy development process, Chinese led enterprises also faced many patent attacks. With the enhancement of Chinese enterprises' awareness of intellectual property rights, patent disputes are gradually decreasing.

In 2018, patent disputes continued throughout the year. From Chinese companies such as Jingyuan optoelectronics, Yiguang electronics and dehuorunda to international large factories such as Seoul semiconductor, Nichia chemical, Mitsubishi Chemical and LG, they have initiated at least one patent lawsuit in 2018. Moreover, the scope of patent infringement is extended from upstream manufacturing enterprises

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