In the commercialized modern society, soaring prices are an eternal topic. Price increases for everything have become a social norm. However, the price changes in the LED display industry appear to be some exceptions. From the initial rapid development to overcome the commanding heights of prices, prices have been declining in recent years, and gross profit margins have fallen below the cost bottom line. In the "price war" "Under the shadow of low prices, the entire industry has fallen into a whirlpool of low prices. However, this year, the "price reduction wave" in the LED industry has ushered in a rare turning point. The price increase has gradually become popular, and has been responded to by many manufacturers. Faced with the arrival of the "price increase wave", how LED screen companies should respond has become a top priority for the entire industry.
The era of bitter "price war" - can it really leave quietly?
The "price war" in the LED display industry has been going on for several years, and has experienced ups and downs. In the early days, the "sky-high price" LED displays were beyond the reach of ordinary consumers. In order to meet the broad needs of the market, LED display companies continued to improve production technology and reduce production costs, so that prices gradually dropped back to normal levels, moving towards "civilian" prices. However, this mutually beneficial and benign price trend did not last long. With the upgrading and popularization of production technology in the LED industry, strong production capacity has led to serious inventory backlogs in the industry. Under this situation, in order to reduce production capacity and stimulate market demand, price reduction has become the main strategy of LED display companies. Manufacturers' price cuts will naturally cause a butterfly effect. Especially when some large companies cut prices, small and medium-sized enterprises can only bite the bullet and face it. Therefore, the price war in the LED display industry has become a protracted war, and has even become a "loss-making" business. Many small and medium-sized enterprises in the industry have declined or even died.
In the first half of 2016, the smoke of "price war" still permeated the LED display market, and the entire LED industry was still forced to be shackles of the "price war". Although some people in the industry have suggested in the first half of the year that "the 'price war' in the LED display industry has gradually turned into a 'value war', which may become a turning point for the development of the industry." However, judging from the previous situation, the LED display industry as a whole still continues to compete at low prices, and small and medium-sized enterprises can only slowly survive the fierce industry competition.
However, the price turnaround for the entire industry came about at the right time. After Taiwan Epistar Optoelectronics launched its first price increase, mainland companies such as Sanan Optoelectronics, Nationstar Optoelectronics, and Mulinsen followed suit, and the LED industry entered a period of price recovery. San'an Optoelectronics, the mainland's LED leader, followed suit by raising the prices of some small and medium-sized products by 10%; Nationstar Optoelectronics decided to increase the prices of its entire line of display device products by 10%; Mulinsen decided to increase the prices of display RGB lamp beads by 5%. In addition, non-listed companies such as Cinda Optoelectronics have also raised lamp bead prices.
Industry insiders said that after the industry's "big reshuffle" in 2015, LED chip and packaging prices began to bottom out. Given 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 end product field. In fact, the recent "tide of price increases" that has hit the circle of friends is not a sudden outbreak. Price fluctuations are determined by market conditions. When prices continue to hit bottom, a fall and rebound will be inevitable.
In view of the fact that the prices of upstream chip companies and packaging companies have increased by about 5-10% in total.
Many people in the industry are analyzing the causes of this "price increase" and believe that market demand is the direct factor stimulating price increases in the industry. The market demand for small-pitch LED displays continues to grow, and the workmanship costs and investments of small-pitch LED displays are also gradually increasing, which fundamentally determines the inevitability of price increases.
Furthermore, due to the previous poor price competition in the industry, LED material prices have bottomed out, including substrates that have increased by more than 30% from June, gold that has increased by more than 27% from the beginning of the year, MO source prices that have increased by 10%, labor costs have increased, etc. This price bottoming out is the main factor for the price increase. In addition, the change of industry competition in a good direction is the inevitable result of the healthy development of the market. In the first half of the year, Epistar reduced production to increase the price space, and the effect of overcapacity in the industry gradually appeared. With the response of industry giants, the price boost promoted the trend of industry competition to compete in terms of quality. According to analysis, there is the possibility of continued improvement in the price increase space in the subsequent industry. Industry leaders also expressed great expectations for the effect of the "price increase tide" in the LED industry
However, in fact, in the face of price increases by LED chip and LED packaging manufacturers, there are still a few downstream LED display companies that have raised product prices. Most LED screen companies have adopted a relatively conservative wait-and-see attitude. Since this "price increase" involves the entire LED industry chain, some LED chip and LED packaging manufacturers have adjusted their prices, which has a greater impact on the midstream packaging industry chain. Industry insiders said that the downstream finished product market is unlikely to collectively increase prices due to upstream price increases, while whether midstream packaging companies increase prices depends on the company's control over the market. At present, it is difficult to say whether the price increase of LED chips will trigger a domino effect in the downstream industry. Many companies are taking a wait-and-see attitude. However, if LED packaging manufacturers collectively increase prices, other manufacturers will follow suit, and the pressure will eventually be passed on to finished product manufacturers.
Judging from the effect of the current price increase, the market sentiment is not up to expectations. Many downstream manufacturers do not dare to increase prices rashly. Small and medium-sized LED display companies have also become cautious about whether to increase prices. After all, small and medium-sized enterprises are relatively weak and will become victims of the reshuffle period if they are not careful. Therefore, most companies in the LED industry are currently cautious.
Enterprises should not be too obsessed with price - it is not just low-price competition that hinders the development of the industry.
The hotly-hyped “price war” seems to have finally come to an end in the positive transformation of the industry. However, it is not yet clear how much favorable conditions the price increase will bring to the entire LED industry. As the price adjustments of LED display manufacturers downstream of the LED industry chain are also crucial to the market, under the surge of the industry’s “price increase”, LED display companies may be able to get out of the dilemma of low prices and usher in new development opportunities.
Nowadays, the wave of price increases has spread to LED display companies. Screen companies can not only take this opportunity to get out of the quagmire of low-price competition, but also increase product sales prices, obtain higher profits without affecting the market, and provide more favorable conditions for the company to move forward.
In fact, what really hinders the advancement of LED display companies is not just the "price war". As industry prices rise one after another, the key to competition is that LED display companies strengthen technology upgrades and brand building. "Price" has always been a sensitive topic in the LED display industry, but today, the era of "disagreeing with price" seems to have gradually passed. LED screen companies should focus more on technology research and development and the establishment of international brands. The market has returned to rationality, and LED display companies should also use better technology and better products to repay the demand for quality markets.
ANNA