According to the China Semiconductor Lighting Alliance (CSA), in 2011, the total scale of China's LED industry reached 156 billion yuan, an increase of 30% year-on-year. The growth rate has slightly slowed down.
ChinaVenture Investment Group analysis suggests that like other emerging industries, the LED industry is currently undergoing the pain of phase-based overcapacity.
Under the backdrop of energy conservation and emission reduction, as a model of low energy consumption and low emissions, investment opportunities in the LED lighting industry have become prominent. Relevant enterprises should increase R&D investment, break through core technologies of the industry, continuously reduce production costs, and improve product cost-performance ratios so that LED lighting can be applied and popularized in more fields. At the same time, relevant national departments should soon introduce industry standards and related support policies to guide the LED industry toward a healthier and more orderly direction from a policy perspective.
The application field of LED lighting is growing the fastest
In 2011, it was a turbulent year for the development of the LED industry. Despite the continuous turmoil in the international macroeconomic situation and the still severe domestic industrial investment situation, all segments of China's LED industry maintained a certain growth rate. Relevant data from CSA shows that in 2011, the total scale of China's LED industry reached 156 billion yuan, with a year-on-year increase of 30%. The growth rate has slightly slowed down. Among them, the scales of upstream epitaxial chips, midstream packaging, and downstream applications were 6.5 billion yuan, 28.5 billion yuan, and 121 billion yuan respectively.
In recent years, China's LED industry has developed rapidly. Under the support of national policies and the drive of downstream application demands, a relatively complete LED industry chain system has been formed. The LED industry chain includes upstream substrates, epitaxial wafers, and chips, midstream packaging, and downstream lighting, display, and backlight source applications. From the perspective of each link in the industry chain, in 2011, the overall scale of the LED application field was 121 billion yuan, with an overall growth rate reaching 34.44%, which is the fastest-growing segment in the entire LED industry chain.
Deeply concerned by the capital market
The LED application market is divided into several areas such as general lighting, landscape lighting, backlight sources, displays, and automotive lighting. Among them, general lighting saw the most significant growth in 2011, with its overall share reaching 25%, becoming the largest application area in terms of market share, followed closely by landscape lighting and backlight applications.
LEDs have many advantages such as high energy conversion efficiency, long life, energy saving, and environmental protection. Compared to incandescent lamps and fluorescent lamps, the power-saving efficiency can reach over 70%. The application prospects of LED lighting are broad, and it is expected that in the coming years, lighting applications will still be the fastest-growing application area and will become the key factor driving the development of the entire LED industry.
As an emerging industry of energy conservation and emission reduction, the LED lighting industry has always been highly valued by the state. To encourage and promote the healthy and orderly development of the industry, relevant departments of the state introduced a series of LED-related policies in 2011. The rapid development of the LED industry has also attracted the attention of VC/PE capital on related enterprises, and LED projects remain the focus of capital pursuit. According to incomplete statistics from CVSource, a financial data product under ChinaVenture Investment Group, since 2010, 14 LED-related enterprises have received VC/PE investments, accumulating nearly 10 billion yuan in financing, with investment directions covering the entire industry chain.
In the capital market, according to statistics, in 2011, seven LED industry enterprises achieved IPOs in the A-share market, accumulating a financing amount of 3.625 billion yuan, with an average financing of 518 million yuan per enterprise. From the distribution of the industry chain, the seven listed enterprises are concentrated in the midstream packaging and downstream application links.
Excess capacity in high-profit upstream
The design and production of epitaxial wafers and chips are at the upstream of the entire LED industry chain, representing a typical "four-high" segment of high technology, high cost, high profit, and high risk, and have always been a focal point in the LED industry. In the entire LED industry chain, upstream epitaxial wafer and chip manufacturers earn 70% of the profits, attracting excessive capacity expansion by industry investors, leading to a sharp increase in upstream enterprises, resulting in serious talent shortages and overcapacity.
At the same time, LED chip companies have also expanded rapidly. In 1998, there were only three related enterprises in China, but by 2011, the number of domestic chip manufacturers had reached nearly a hundred. Under the pressure of large-scale capacity release and slowing demand growth, LED chip prices have dropped significantly. Moreover, many Chinese LED companies only master low-power chip technology, and the performance of high-brightness products still lags behind world-leading levels. 80% of high-power chips still rely on imports.
For a long time, the core technologies of the upstream epitaxial wafer and chip markets have been monopolized by a few major global industry giants. China's LED industry is relatively weak in the two key areas of epitaxial wafers and chips, which is also the main reason why the cost of China's LED lighting has remained high. Secondly, the lack of technical patents poses potential risks to domestic LED companies. The core technical patents of the LED industry are held by LED companies in Japan, Europe, and America. During the research and development and production of LED products, Chinese companies easily trigger patent issues due to technical similarities.
High-end packaging holds great potential
LED packaging connects the upstream chips and downstream applications, acting as the throat of the LED industry chain. Due to the relatively lower technical content and investment threshold, it has become the fastest-growing area in China's LED industry chain. Although domestic companies do not have technological advantages, they occupy a certain competitive advantage in the LED packaging field. Statistics show that China is currently the world's largest LED packaging country, accounting for 80% of the global LED packaging capacity.
In 2011, the scale of China's LED packaging industry reached 28.5 billion yuan, an increase of 14% compared to 28 billion yuan in 2010. Production increased from 133.5 billion units in 2010 to 182 billion units, a growth of 36%. From the perspective of product and enterprise structure, the growth of surface-mount packaging has been the most significant, becoming the mainstream product of LED packaging, with a substantial increase in its proportion.
Facing dual pressures from upstream and downstream of the industry chain, domestic LED packaging companies need to make breakthroughs in high-end packaging, especially in high-power bright LED packaging, to stand out. Additionally, integrating resources and advancing towards upstream and downstream of the industry chain is also a trend. Upstream chip companies are gradually getting involved in the packaging process, directly selling packaged LED devices; downstream application companies with substantial funds reduce costs through internal vertical integration by packaging themselves, which has become the direction of development for many companies.
This article "LED Industry Overcapacity Growth Rate Slightly Slowed" comes from Lianchengfa Group's official website, welcome to reprint.
Link: http://www.lcf-led.cn/news/LEDxinwen_view563-108.html