Nationstar Optoelectronics: LED packaging giant with steady growth

LED packaging market prices have stabilized, and Nationstar Optoelectronics is accelerating its production expansion or ushering in a new round of high-growth cycle. Upstream chip manufacturers have little room for price cuts (the gross profit margin of chip leader Epistar is only 0.5%). Chip manufacturers have begun to increase prices. It is expected that there will be no further price cuts in the third quarter, and packaging prices have gradually stabilized.

Nationstar Optoelectronics products are positioned in the mid-to-high end (EMC packaging, COB packaging, flip chip), and the gross profit level is higher than the industry average. You won’t get stuck in a price war with low-end products! LED packaging concentration is very low, with the top five companies accounting for less than 25%. The market has accelerated consolidation this year (industry leaders Mulinsen, Nationstar, and Hongli have all expanded production). The company has expanded production by 40%+ in two rounds this year and is still expected to expand production next year.

The leader in small-pitch LED packaging, benefiting from the high growth of the downstream market. The growth of the small-pitch LED packaging market comes from 1) with the cost reduction, the speed of commercial substitution in downstream applications + the acceleration of overseas market penetration; 2) the shrinking of small-pitch LED screen spacing brings increased demand for packaged lamp beads. It is expected that the annual growth rate of demand for small-pitch LED lamp bead packaging will exceed 100% from 2016 to 2018.

Nationstar is one of the largest small-pitch packaging companies in China. Its product technology and quality are world-leading, and it has localized supporting and price advantages. As the domestic transfer of packaging production capacity accelerates in the future, it is expected that small-pitch LED packaging may become an important profit contributor to the company in the next 2-3 years.

Backed by Guangsheng's big tree, chip + packaging + lighting to build an LED regional platform Guangsheng has settled in Nationstar. On the one hand, Nationstar will have synergistic effects with Guangsheng's Fo Zhao; on the other hand, it is optimistic about Guangsheng's potential resource integration and government project opportunities in Nationstar.

Nationstar is simultaneously deploying upstream chips (Avilano + Nationstar Semiconductor) and downstream lighting applications (general + automotive + UV). The integrated layout creates cost advantages. At the same time, it is expected to dig into application areas with higher profit margins to create new profit growth points.