LED industry still can't walk out of winter next year

LED is a sunrise industry and currently has a similar photovoltaic industry's predicament, that is, overcapacity, although the difficulties are not so exaggerated. Wuhu concentrates the production bases of the two giants in the upper reaches of the LED industry: Sanan Optoelectronics and BDO Runda.

“The relevant central government departments and cities that use LED as a key industry should help release the LED market demand. Otherwise, domestic production capacity will be released overseas. It may incur anti-dumping, like photovoltaic.” Wang Donglei, chairman of BDO Runda, was interviewed by reporters in Wuhu. That is the time.

Industry waits for digestion capacity

Wang Donglei appeared in front of reporters the day before, but also in Dalian. BDO Runda has three bases in Dalian, Yangzhou and Wuhu. The original plan was to invest 12 billion yuan and 200 MOCVD (the key equipment for producing LED epitaxial chips). Now the entire investment plan has been revised downwards.

What makes Wang Donglei correct the plan is that the LED industry will rapidly increase its production capacity. When BDO Runda entered the LED industry in 2009, the gross margin of the industry was high. Now that Dehao Run has reached the top of the industry, it also faces an overcapacity situation in the entire industry.

LED excess capacity is the last two years. As a branch derived from the semiconductor industry, LED was not a big industry in the past and is mainly used in small-size mobile phone backlight sources and other fields. In 2009, it was a watershed. Samsung pushed the LED into the field of TV backlighting. Each TV consumes hundreds of LEDs, and the sales of LCD TVs, which exceed 100 million units a year, led to the outbreak of the LED market. The number of MOCVD has grown rapidly. In 2011, half of the world's MOCVD equipment was sold to China. But the market did not expect to grow so fast. There are many domestic LED companies, most of which are concentrated in the downstream packaging industry. This year, there are more than 1,700 LED packaging companies with a volume production scale, accounting for 80% of the world's total.

At present, the BDO Runda Wuhu base LED chip operating rate of about 50%, this can be considered as Wang Donglei to avoid industry overkill. “Sanan Optoelectronics (Wuhu base) has been put into production rapidly in 6 months, which has reduced the market price of the chip by 20%. If BDO Runda is also driving its full capacity, it is not surprising that the market price will drop by 20% again.” In Wang Donglei’s opinion, the industry Mitigating the MOCVD in place under predicament can reduce production losses and wait for the industry to recover.

Wang Donglei points to the industry to pick up the time, roughly 2014. "What will happen to LED chips in 24 months? Someone will queue up to order."

Still in the winter next year

Wang Donglei said that Sanan Optoelectronics has been put into production rapidly in six months and is a successful case for investment promotion in Wuhu. Sanan Optoelectronics has been a leading company in the domestic LED chip industry in recent years, and the chip production base is mainly in Xiamen. Shortly after the Minjiang River planning was announced, Sanan Optoelectronics opened China's largest LED optoelectronic industrialization project in the Wuhu Economic and Technological Development Zone.

The LED projects of Sanan Optoelectronics and BDO Runda are all in the Penghu Economic Development Zone, but they are more than 10 kilometers apart. “The Wuhu base has been fully commissioned and is now full-load production.” In the office building of the Economic Development Zone, the director of San'an Optoelectronics, Xiao Hongzhu, received an exclusive interview with the Securities Times and said: “The entire 2013 is the winter of the LED industry. This round of adjustment will show horses. Too much effect, many small factories may shut down, and there will be less than 10 large factories left after shuffling."

According to Ju Hongzhu, the cruelty of the upstream chip industry may be slightly lower than that of the downstream application industries. From the perspective of new capacity, blind expansion has become rare. The downstream competition became more intense. In November this year, Shenzhen billion-grade LED company Haobo Optoelectronics exposed the news that employees were owed wages and were petitioned for arbitration. Haobo Optoelectronics has just been named “Shenzhen Well-known Brand” this year. Its main LED display is this year. Money casts LED lighting at the same time. As a result, a lighting project has not been obtained.

"The domestic LED lighting market is 95% government orders." Industry sources said. From the public information, government orders are basically the first-to-last-month model. Sanan Optoelectronics is headquartered in Xiamen and has projects in Huainan City. The orders for LED street lamps in these two cities fell into Sanan Optoelectronics. BDO Runda headquarters is located in Zhuhai, and at the end of November it also announced that it had obtained 30,000 LED street lights in Zhuhai City. At the same time, Wuhu’s two large giants, San’an Optoelectronics and BDO Runda, were weighed together.

In the first three quarters, only 7 of the 20 LED listed companies in the A-shares achieved growth, and the leading company Sanan Optoelectronics remained profitable, but its net profit growth rate of 14% was lower than the same period of last year. To shuffle at least half of the companies next year, this is a time when the LED industry is circulated to each other.

Will not be the next photovoltaic

BDO Runda believes that the photovoltaic industry will not fall into the same dilemma as photovoltaic. Chairman Wang Donglei is worried about overseas anti-dumping, but at the same time he believes that the use of photovoltaics depends heavily on government subsidies, and LED optoelectronics industry will be market-driven in consumption, such as LED lighting will be official, business lighting accounted for 70%, Homes account for 30%. In Wang Donglei's view, the main difficulty in the LED industry is that the production capacity is excessively fast, and the market launch needs to wait another 24 months. Wang Donglei believes that BDO Runda has a late-stage advantage: “When we were involved in the LED industry, the 2-inch production line was very mature, but I decided to go on a 4-inch production line and spent a lot of energy on commissioning the stove, but the production cost was lower by 15%-20%. ."

Sanan Optoelectronics also believes that the optoelectronic industry will not fall into the same predicament as PV. Director Wang Hongzhu said that the national LED market bidding has been started, which has a market of billions of dollars per year. It is estimated that the global economy will also pick up in 2014 and market demand will be released. Research institutions judge that there will be 500 billion market for lighting alone. Now the market size is only 100 billion. “After PV is mainly anti-dumping, the domestic market cannot digest, and the industry quickly enters a low point. The LED industry organization has to communicate more between upstream and downstream companies and spend the winter. Second, it must actively help companies, especially downstream application companies, to respond to overseas lawsuits. In the event of anti-dumping, responded actively.” Qi Hongzhu said, “In the first half of 2014, the industry reshuffle may be the winter of the industry next year, but it is an opportunity for Sanan Optoelectronics to adjust the product structure and accelerate the accumulation of talents—the industry's trough. It is necessary to recruit top-notch talents.” Sanan Optoelectronics is now mainly competing with international manufacturers, and its product targets are not lost to Taiwan Jingdian (the largest LED company in Taiwan). In fact, the deployment of Sanan Optoelectronics is underway. In November, Sanan Optoelectronics won the top shareholder of Taiwan's top three LED makers in cash.

LED boom and real estate hook?

The three-quarter report shows that BDO Runda’s profit growth rate dropped significantly year-on-year in the first three quarters of this year. “This year is the stage of burning money, debugging MOCVD furnaces and accelerating new product development.” Wang Donglei said that the slower rate of government subsidies is also the reason why financial statements are ugly.

This year, local finances are tighter than last year, mainly due to the impact of real estate regulation. Local finance and the LED industry are linked not only to financial subsidies but also to government orders. It is reported that not only the location of the production project, BDO Runda signed a framework agreement for LED street light projects in a number of cities, the total amount is relatively large; but in the workshop can be seen, BDO Runda lighting production line is not full of horsepower. In the workshop for testing LED street lamps, the person in charge of the workshop told the reporter that one wall of inspection products was less than 1/4 of full load.

"LED streetlights took more orders but did not dare to go too fast, afraid of affecting cash flow." Wang Donglei said. Government orders are often slow to repay, in the LED industry winter, Wang Donglei believes cash is king. If only the payment is slow, perhaps Wang Donglei has not had so many scruples. He also fears bad debts. Wang Donglei's observation point is whether the real estate market is picking up. Second, it is expected to start the LED lighting market for office buildings and shopping malls next year.

LED lights are much more expensive than energy-saving and incandescent lamps, and each ex-factory price exceeds 30 yuan. Wang Donglei said that the commercial lighting market will start mainly based on three points: First, due to technological progress, the cost of LED lights will continue to decrease, the price will continue to decline, and the second is a longer life, "I can guarantee 5 years, 5 years gone bad To you to exchange "; Third, power, according to the calculation of 12 hours a day on the lights, the province's electricity tariff is expected to be equivalent to the price of light in 1 year.

Although there is a delay between the start of market demand and the original assumptions, Wang Donglei still looks forward to the future of the industry: "The use of LED for television is becoming more and more common. When 70% of TVs use LED, all the current MOCVD furnaces in the world are not enough to start. Lighting market The launch of the market will further increase the market demand by more than 10 times."

Whether it is Wang Donglei or Ju Hongzhu, they are more than "fast" - R & D speed, new product launch speed, then the gross profit is high; Dalu goods face not only the excess capacity, as well as constantly lower gross profit. What Sanan Optoelectronics and BDO Runda want to do is to be bigger in the winter and be technologically advanced, waiting for the dawn of 2014.