LED integration turned over and gold, the new oligarch pattern formed!
For a long time, Chinese enterprises have relatively clear division of LED chips and packaging. Foreign-funded enterprises belong to the operation mode of chip + package. With the rapid expansion of some LED companies in China and the maturity of new technologies, will the oligarchic pattern break the division of labor between domestic chips and packaging?
This round of chip price hikes is undoubtedly the turning point of upstream stage competition.
Chips, packages in depth?
In the past, the quality of core technology and high-end products in the LED industry was generally held in the hands of foreign-funded enterprises. However, with the rapid development of China's LED enterprises, China's core technology and core patents have quietly changed in the hands of foreign manufacturers. The entire upstream pattern has basically taken shape. In the future, a new competitive situation will be triggered. The background of China and foreign markets is different. The development of the chip and packaging industry is different from that of Japan, South Korea and Europe, whether it is R&D, technology foundation or industry development stage. In the future, there is a complete opportunity to take the route of integration of packaging and chips. The rapid development of the industry is inseparable from the need for effective integration and cooperation between chips and packages. This is a development path worthy of consideration!
The large number of enterprises, small scale, uneven technical level and lack of leading enterprises have always been the pain point of the development of China's LED industry. Now, this situation is gradually improving.
The era of oligarchs "unintegration is more painful"
The entire LED industry chain has officially entered the competition elimination period
The technical threshold of the LED industry is relatively low. In the past, many companies swarmed into the industry, which eventually led to a serious overcapacity and a big price war between enterprises. After a round of shuffling, many companies closed down. In the three years from 2012 to 2015, the price of LED chips dropped to one-tenth of the original.
Industry reshuffle, big waves, some entrepreneurs may feel that accepting mergers and acquisitions feels like selling their own children, but not integrating more fate is eliminated by the market. Not only is the Chinese economy going to reform, but the LED industry needs reform more. At present, the Chinese market is already the largest LED market in the world, and domestic LED companies have made many foreign big companies choose to withdraw from the Chinese market through competition. It can be said that the domestic enterprises are victorious; on the other hand, the number of domestic LED enterprises is now large. Up to 20,000, the production capacity is concentrated in the low-end market, the market products tend to homogenize, the price war between enterprises, the market malicious competition, the low profits have led to the collapse of many enterprises, just in 2015, there are 4,000 LED companies closed down.
Upstream concentration improvement
A rise in the price of chips and packages due to factors such as upstream raw materials, labor costs, and imbalances in supply and demand in downstream segments, bringing the market to the infinite imagination of the future direction of LEDs. In addition, with the elimination of incandescent lamps and the improvement of people's product quality requirements, the era of low-quality and low-price competition has become a thing of the past, and product price increases and benign market competition continue to be expected.
The core of the future of the upstream is technology, scale, capital, and cost control. The next step is to see if these small and medium-sized chip companies can persist, and some enterprises will be eliminated by the first half of next year. At the same time, constantly explore new growth points, continuous technology research and development and market layout of new products will also become the survival weapon of upstream enterprises.
As far as the upstream LED chip field is concerned, Sanan Optoelectronics, Huacan Optoelectronics, and Ganzhao Optoelectronics continue to expand their market share, and the industry concentration is also increasing. As the chip market is further highly concentrated, the oligarchic pattern is gradually emerging. Compared with last year, this year's chip market is more and more concentrated, forming a larger and larger, stronger and stronger pattern. Therefore, the scale advantage of large manufacturers is also becoming more and more obvious.
Accelerated capital admission
Industry consolidation momentum is fierce
In the past few years, capital has once again “invaded” the LED lighting industry, and the resulting capital operations such as acquisitions, mergers and acquisitions, and joint ventures have become more frequent. However, in the process, there are a lot of successful marriages, and there are quite a few people who have ended up in abundance. Or hi or sad, reproduce the market image.
Compared with the mergers between chip peers, many companies seem to be more optimistic about resource integration based on the upstream and downstream of the industry chain. M&A integration between upstream chip peers is difficult to make, because it involves a lot of equipment, technology, cost and other issues, requiring companies to conduct a cool analysis, and upstream and downstream integration has become the first choice of many enterprises.
After experiencing the “big reshuffle” of the industry in 2015, the price of LED chips and packaging began to bottom out. In view of the fact that price wars and disorderly competition have become a thing of the past, it is expected that this round of price recovery will continue and extend to the field of end products. More importantly, the price of domestic LED chips has fallen sharply due to increased production efficiency and increased competition, which has turned many small LED chip factories into “zombie” companies. Accelerated capital entry, the industry consolidation momentum is fierce. With the increase of demand, the output value of lighting has increased rapidly. LED lighting has gradually moved from the engineering market to the home market, and the traditional lighting space has been further oppressed, and the LED market space has been further expanded.
We also noticed that at present, the capital industry in the lighting industry is becoming more and more frequent, and cases such as acquisitions and mergers and acquisitions are increasing. But in my opinion, each company's development direction is different, and its development stage is different, so it is more due to the company's own choice. Enterprises hope to achieve multi-channel, diversified, multi-level development, relying on their own strength is difficult to achieve, which requires enterprises to go out, integrate resources, and develop hand in hand.
Reprinted "China Lighting Network"