LED is a compound semiconductor, and its technical model and business model are consistent with those of silicon semiconductors, so the industry is also in line with Moore's Law. Precisely because of the consistency of industry attributes, the future development trend of the LED industry can be deduced from the development path of integrated circuits.
The MOCVD industry is the commanding heights of the entire industry chain.
The MOCVD industry has very high technical barriers, so the concentration is quite high. Two companies monopolize nearly 90% of the global market share. The impact of the MOCVD industry on the industrial chain can be seen in the impact of integrated circuit equipment on the industrial chain. The market space and profitability of the midstream and downstream industries in the industrial chain will be affected by the progress of MOCVD technology improvement. In this field, it will still be difficult for Chinese companies to occupy a certain market share in the future.
The LED chip manufacturing industry is transitioning from a growth stage to a mature stage
The life cycle of the LED chip manufacturing industry is transitioning from a growth stage to a mature stage. The industry will face an increase in industry concentration in the future, and companies with competitive strength at this stage will benefit. If we use the history of the development of the silicon diode industry as a blueprint, once the LED chip manufacturing industry enters a mature stage, its future profitability will be closer to the industry average.
The LED packaging industry will undergo major changes in the future
Semiconductor packaging technology is undergoing rapid changes. With the application of wafer-level packaging and other technologies in the LED field, the market space of the LED packaging industry will be squeezed. In the future, a large number of companies will exit the industry, but we should not be pessimistic about this industry. Many companies will actively choose to transform, and there will definitely be more investment opportunities.
The LED at the other end of the smile curve
Application industry In the LED industry chain, MOCVD is undoubtedly at the left end of the smile curve, while the LED application industry is at the right end of the smile curve due to its customer resources. At present, LED applications are mainly in the fields of backlight, display screen and lighting. Among them, the lighting field has the broadest market space and is generally optimistic about the market. As LED replaces traditional lighting, the properties of the lighting industry will change, and the concentration of the industry will increase moderately in the future, which provides an opportunity for rapid development for competitive and innovative companies.
Stock selection ideas
1) First of all, we are strongly optimistic about the investment opportunities in the LED lighting industry. At present, the penetration rate of LED is not high, so it is the best time to lay out the industry. There are two types of companies in the LED lighting industry, one is LED companies and the other is traditional LED lighting companies. Both types of companies have their own pros and cons. When choosing investment targets, we value traditional LED lighting companies that have completed transformation and LED companies that are actively expanding channels, so we recommend Sunshine Lighting and Shiyida. 2) At the same time, we are also optimistic about the transformation of packaging companies, so we recommend Jufei Optoelectronics.
Risk Warning
Macroeconomic risks, the risk of a sharp decline in prices due to too fierce competition, the unsuccessful transformation of enterprises, channel development lower than expected, and the risk of exchange rate fluctuations.
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