The LED display industry is starting to pick up, what do you think?

Since January 2016, LED-related listed companies have successively released performance forecasts for the first quarter of 2016. From the first quarter reports of 2016 issued by several companies that are mainly engaged in LED display business, it can be found that the performance of most companies shows a "pre-increase" status, and the LED display industry seems to be picking up.

Driven by the recovery in the performance of LED display companies, there have recently been voices in the industry circle of friends saying that some packaging companies are “increasing the price” of packaging devices. Li Cheng, general manager of Shenzhen Sikrui Optoelectronics Co., Ltd., posted a contact letter from Shenzhen Mulinsen Optical Display Technology Co., Ltd., a wholly-owned subsidiary of Mulinsen, on price adjustments for some products in his WeChat circle of friends.

In addition to Mulinsen, the prices of some packaged devices of Jingtai Optoelectronics and Guangdong Cinda have also been raised to a certain extent. The price increase of LED packaging devices can indeed be seen as a new thing for the industry. In 2015, the industry's continuous price war led to a sharp decline in the price of packaging device products. The product prices of domestic packaging companies were almost halved, and the product prices of international LED packaging manufacturers also fell by more than 20%. Increasing profits without increasing profits has become a common voice in the industry.

The increase in performance forecasts of listed companies and the increase in product prices of packaging companies seem to indicate that the LED display industry is already recovering, but is this fact?

Judging from the first-quarter forecasts released by several listed companies, the performance of these companies has indeed improved to a certain extent or even to a large extent compared with 2015. However, this cannot represent the entire industry after all, and we all know the fact that these listed companies with LED displays as their main business are constantly actively broadening their profit channels, such as Lia De's four-wheel drive strategy, Lianjian's "Digital Outdoor Media Empire" strategy, Unilumin's two wings flying together, Absen's "Two Wings and One Support", Lehman's "LED + Sports", etc., and the profitability of these business sectors other than the LED sector is constantly increasing. Taking Lianjian Optoelectronics as an example, the business revenue of the media sector in 2015 was 742 million yuan, accounting for almost half of the company's entire revenue. Therefore, it cannot be judged from a company's overall performance report that the company's LED segment revenue has achieved rapid growth.

In addition, the increase in product prices of packaging companies is not necessarily caused by the increase in orders from downstream LED display companies, because the current pricing of packaging device products is already very close to the material cost. In addition, the prices of some basic materials increased in the first quarter. Packaging companies are unable to absorb this additional cost, so they have to pass the cost to downstream applications.

Therefore, from two aspects, we cannot draw a direct conclusion that the LED display industry is picking up. Of course, we all hope that the LED display industry can recover as soon as possible and usher in a new wave of growth, but we must not send incorrect signals to the market because of this. The LED display screen is located at the downstream position of the entire LED industry chain, which can be said to affect the whole body. Every move it makes will have a direct and significant impact on the upstream epitaxial chips and midstream packaging links. Especially at present, competition in the chip and packaging markets is becoming fierce. Once a company is interfered by external public opinion and improperly expands production capacity, it is likely to directly bring losses to the company or lead the entire market into a more vicious price war.

Therefore, it remains to be seen whether the LED display industry is picking up.

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