Since the beginning of this year, LED packaging companies seem to have made a lot of moves: the unprecedented brewing of a new round of price increases has shocked the attention of industry insiders. Subsequently, following the national "supply-side reform" and "destocking" trends before and after the two sessions, packaging companies have expressed plans to expand production.
Relevant statistics show that in terms of packaging production capacity, the top three domestic packaging factories have accelerated their expansion this year (including: Mulinsen 25,000kk/month; Nationstar Optoelectronics about 4,000kk/month; Hongli Optoelectronics 3,500kk/month).
As leading packaging manufacturers expand production, it is expected that LED packaging prices will continue to decline in 2016 after falling sharply in 2015. Under price pressure, small companies will continue to exit. Although gross profits may be under pressure in the short term, they will still benefit from increased market concentration in the medium and long term.
Taking Nationstar Optoelectronics as an example, the company acquired Yavilant last year and combined it with its own holding of Nationstar Semiconductor to lay out the design of upstream LED chips. Currently, about 1/3 of the company's white light packaging chips have been self-produced. At the same time, the deep ultraviolet LED chips that Avilam is committed to research and development have also become the company's medium and long-term highlights.
Last year, many people in the industry said that the LED industry had overcapacity. However, at this year’s G20-LED Lighting Summit held by Gaogong LED, many LED company leaders unanimously stated that they will still expand production in 2016 and will expand production according to market demand.
This will directly bring about strong demand in the packaging equipment market this year. According to the LED Research Institute (GGII), the LED packaging equipment market will grow steadily at a compound annual growth rate of 2%, and the total revenue will exceed US$656 million by 2020. Among them, the Asia-Pacific region will be the main market for LED packaging equipment from 2016 to 2020, with a market share of approximately 88% by 2020.
At the same time, with the key markets in Asia-Pacific countries, such as India and China, residents' demand for home electronics and LTE broadband continues to grow, which will also promote the development of the entire LED backlight display market. At the same time, LED display lighting panel companies will also promote the development of the market in the next four years.
Does the LED packaging industry have overcapacity or does it need to expand production? Is it a price war or a price increase? There is no doubt that the overall trend of overcapacity and price wars is not controversial. So whether the expansion of production and price increases proposed by many LED business leaders are based on market demand, we still need time to wait and see how things develop...
1. LED packaging has entered the era of "the big one is Evergrande", Nationstar Optoelectronics' layout strategy
Whether it is a price war or the development of subdivided fields, it is an inevitable law for the industry to develop to a certain stage. The LED packaging industry is gradually becoming concentrated, and the situation of the larger Evergrande will become more obvious. For Nationstar, this is undoubtedly a new development opportunity.
This change in the pattern means that the LED packaging industry is gradually returning to rationality. After the price war and industry reshuffle in the past few years, the industry is changing from blindly pursuing low prices to focusing on the product itself, such as technology, performance, etc. These are the advantages of large companies such as Nationstar.
Small and medium-sized enterprises without core technologies have closed down or switched to certain subdivisions, which has led to a gradual increase in industry concentration. This is also a good trend in the industry as a whole.
Nationstar has been making research and development reserves for small-pitch packaging since 2011, and is one of the first domestic companies to carry out small-pitch layout. Currently, products such as indoor small-pitch 1010 are in an absolute leading position in the industry, and 0808 has also been stably produced and shipped.
The outdoor small-pitch 2727 and 1921 have received an enthusiastic response from the market. In particular, 1921 is the earliest domestically launched outdoor small-pitch product with the smallest size in the world, filling the gap in outdoor displays below P4.
In addition, Nationstar is also continuing to expand production and expand the production scale of small-pitch products to seize a larger market share.
2. Jinko Electronics’ revenue in the first half of the year exceeded 244 million yuan, with LED backlight and lighting becoming the main force
On August 18, Jinko Electronics (836789) released its 2016 semi-annual report. In the first half of the year, the company achieved operating income of 244.16 million yuan, an increase of 262% over the same period last year, operating profit of 13.49 million yuan, an increase of 221% over the same period last year, and net profit of 17.72 million yuan, an increase of 305% over the same period last year.
Jinko Electronics stated that in the face of increasingly fierce competition in the industry, the company will continue to increase investment in research and development in the field of LED backlight and lighting.
In view of the relatively popular CSP technology on the market in the past two years, Jinko Electronics has also made great efforts in research and development, and innovatively launched a series of NCSP products that are more in line with market demand.
At the same time, Jinko Electronics maintains its leading position in the industry in terms of technology and products through the improvement of current products and the continuous research and development of new products, especially in flip-chip, chip-scale packaging, integrated packaging, intelligent lighting, backlight solutions, etc., and continues to reduce costs and improve its market competitiveness.
3. Looking at the industry in half a year | "LED+" helps Taigon Technology to "improve quality and efficiency"
Since the first half of this year, Taigon Technology has always maintained a saturated production state, and the number of orders has continued to increase.
In view of the particularities of the current LED packaging equipment environment and equipment production, Taigong Technology's two factories in Dongguan and Shanghai are taking orders for production at the same time.
In order to prepare for the increasing order volume, Taiwanese engineers aim to increase the monthly production capacity from 200 units to 300 units in the second half of the year, and to reach a monthly production capacity of 400 units by 2017.
Judging from the equipment sales of Taigong Technology this year, the LED20BINE and 36BIN high-speed spectrometers are the most prominent.
Competition in the LED packaging industry is fierce. Where will the competition be in the next stage of the market? With market segmentation and differentiated production, the next stage is in the field of CSP testing and packaging. Taiwanese engineers have tailor-made CSP sorting machines and taping machines for packaging factories, which are now being stably used in the market.
In addition, looking at the second half of this year, Taigong Technology will continue to be committed to the research and development of diversified automation equipment. While mass-producing existing LED packaging models, we will continue to mass-produce equipment for LED bottom testing, chip flipping, IC, lithium batteries, inductors and other industries.
ANNA