The development direction and strategies of the eight major LED packaging companies

With the continuous development and maturity of the LED industry, new challenges and opportunities are posed to LED packaging both at the market level and at the technical level. Since 2016, the LED packaging field has been extremely active in terms of market and capital.

However, with the changes in market demand and the development of LED chip preparation technology and LED packaging technology, where is the development space for LED packaging in the future? What market strategies will LED packaging companies adopt for future development? Then follow the editor of OFweek Semiconductor Lighting Network to take a look at the future development direction and strategies of the eight major LED packaging listed companies.

Mu Linsen: Focus on building an integrated aircraft carrier of "packaging + lighting application"

After the great waves in the LED industry, the packaging camp has become significantly differentiated. The "warlords" who once separated themselves from one side may transform and gradually fade out of the market, or engage in differentiated competition. Mulinsen has large-scale cost advantages (large-scale production expansion + large-scale digestion of production capacity), radical market strategies, and innovations in production equipment, process technology, etc., and is undoubtedly the absolute leader in the LED packaging industry.The current annual production capacity is 350 billion SMD/Lamps, and after expansion, it will reach 490 billion, fully leading the competition.

It is understood that Mulinsen can achieve unshakable cost leadership in the packaging field mainly by relying on the "scale expansion/process innovation-->radical market strategy-->scale production capacity digestion-->scale expansion again", such a cyclical strategy. Without the support of keen sense of smell and super strong execution ability, it would be impossible to continue this strategy in such a continuous cycle.

At the same time, Mulinsen actively deploys downstream lighting applications, expands mid-to-high-end brands and channels, and improves valuation space. The company's LED lamp beads have obvious cost advantages, and the layout of downstream lighting will not affect the company's lamp bead business sales. There are strong expectations for the acquisition of Osram's general lighting business. Osram has the largest market share in lighting distribution channels in Europe and second in North America, making it the second largest lighting manufacturer in the world. The industrial chain is complete, it has strong technical strength in the upstream, monopolizes the high-end product market, and has high brand recognition. The spin-off business includes traditional light bulbs, rectifiers, and LED lighting and system departments. These businesses account for approximately 40% of Osram's annual revenue. For Mulin SenzhaoFor Ming Application's overseas expansion, it is very important to choose the right outlet, and Osram's brand and channels are undoubtedly the best outlet.

Milinsen’s investment strategy for new business expansion is very clear. For example, in upstream chips, the company is very cautious. The investment in chip production capacity is huge, and the risks that companies need to bear are also huge. Mulinsen did not choose to advance prematurely, but established strategic cooperation relationships with Taiwan Jingyuan and Mainland Huacan. Large-scale production drives the company to implement large-scale procurement of chips, which enables it to obtain lower chip prices from suppliers, stabilizes the company's chip supply channels and effectively reduces chip procurement costs. In the mid-to-high-end market (overseas markets with high patent barriers and prone to lawsuits), the company uses patented wafer chips to avoid systemic risks while developing the market. In the mid-to-low-end market, Huacan's chips are used to further reduce costs. The market operation strategy is clear.

Nationstar Optoelectronics: Focus on packaging, taking into account both upstream and downstream

In the past six months, the price of LED mainstream white light chips has dropped by more than 20%; while the import and export prices of LED devices have also dropped over the past year.dropped by 29% year on year. Although the decline in product prices has affected the revenue of Nationstar Optoelectronics in the industry to a certain extent, it has benefited leading domestic packaging companies to continue to expand their scale and segregate the market: On the one hand, foreign leaders such as Osram and Philips have shrunk their LED business, leaving broad room for foreign substitution; on the other hand, domestic small and medium-sized enterprises have continued to withdraw from the market, increasing market concentration. As the second largest packaging company in China, Nationstar Optoelectronics will continue to expand production this year. At present, the company's packaging production capacity has reached 4000kk/m, a significant increase of more than 40% from the end of last year, helping the company's performance to steadily improve.

Nationstar has launched a large number of vertical layouts and corresponding technical reserves in the past few years. In the upstream field, Nationstar already has chip manufacturers Nationstar Semiconductor and Avila, while downstream Nationstar has also established a lighting channel of a certain scale. In addition, the parent company Guangsheng settled in Foshan Lighting in 2015 and became the major shareholder of Foshan Lighting. In the short term, the company and Foshan Lighting are expected to develop collaboratively, and their performance can continue to grow steadily; in the medium and long term, the Guangsheng platform integrates upstream, mid-stream and downstream industrial resources, exerts synergy between regional enterprises, opens up the entire industry chain, and creates a large LED platform.

As market competition intensifies, Nationstar Optoelectronics has adjusted its corporate development strategyStrategies, management methods, organizational structure changes, team building, market predictions, etc. to cope with the increasingly competitive landscape of the LED industry. After a series of strategic measures, Nationstar Optoelectronics will usher in new development opportunities in 2016, and its performance is expected to reach a higher level.

Hongli Optoelectronics: "LED + Internet of Vehicles" dual main business-driven development

The expansion of SMD LED packaging production capacity is the main driving force for rapid performance growth. Currently, Hongli Optoelectronics’ LED packaging production capacity is 2,200KK/month (including wholly-owned subsidiaries). After the capital increase is completed, Jiangxi Nanchang's production expansion plan will determine the progress of the expansion based on market conditions. After completion, the production capacity is expected to increase by more than 1,300kk. As the demand for LED lighting continues to increase and industry concentration increases, the further expansion of main business production capacity is expected to continue to drive the rapid growth of the company's performance.

The automotive lighting and general lighting business layout is in-depth, and 2016 will usher in a harvest period. The automotive lighting business, which is handled by subsidiary Fouda Signal, performed well. The net profit contributed in the first quarter of 2016 was approximately 1000 million yuan. As the trend of the LED industry shifting to mainland China becomes more and more obvious, Hongli Optoelectronics' active layout will bear fruit this year. The LED general lighting business will also usher in a performance explosion as the global market capacity steadily increases.

Actively expand other LED subdivisions and long-term layout of the UV LED blue ocean. Hongli Optoelectronics is actively deploying new application areas in the LED industry in other LED subdivisions, such as ultraviolet LED, optical lenses and other fields, and strives to integrate LED industry resources to form new competitive advantages. UV LED is still in the early stages of market development and does not have a price advantage over UV mercury lamps, but it has many advantages in performance. The company has laid out its plans in advance and will be the first to benefit when the UV LED market matures in the future, bringing new profit growth points to the company.

Comprehensive layout of the Internet of Vehicles industry. Since 2015, Hongli Optoelectronics has formulated its development strategy as the dual main business drive of "LED + Internet of Vehicles". In the second half of 2015, it invested in Dyna Technology, plans to invest in Zhuhang School Bus, and jointly established an Internet of Vehicles industry fund with Jiupai Capital, Tiansheng Yunding, and Oriental Yunding. In order to reflect the company's strategic transformation, it was announced on June 7, 2016 that the company's securities abbreviation was to be changed to "Hongli Zhihui".

Jufei Optoelectronics: Increase the expansion of optical film materials and explore strategic emerging areas

Currently, Jufei Optoelectronics’ main business is LED packaging. After years of accumulation, it has developed into a leading enterprise in the domestic backlight LED packaging field. In order to realize the great vision of "relying on the LED industry, becoming more refined and stronger, and becoming a respected world-class enterprise".

In response to the adverse effects of the macro environment and the industry, Jufei Optoelectronics is actively promoting its internationalization strategy while consolidating its original market share. Jufei Optoelectronics' large-size LED backlight business continues to maintain its rapid growth momentum, further strengthens its sales position among a number of large customers, and continues to increase its market share. Now taking the optical film business as an entry point, Jufei Optoelectronics attaches great importance to the development of the optical film business and is striving to build comprehensive competitiveness with leading technology, reliable quality, cost advantage, and considerate service: on the one hand, it develops a variety of mid-to-high-end products through technological innovation, occupying the technological commanding heights, and at the same time, through the introduction of advanced equipment, it improves product quality and establishes quality and cost advantages; on the other hand, it actively develops first-line major customers and utilizes andThe good cooperative relationship that has been established with customers will give full play to the advantages of being close to the market, expand product sales scale, and increase market share. At present, first-line customers have been introduced one after another, the number of customers continues to increase, sales increase month by month, and the products have been widely recognized by customers. The management team has enough confidence to cultivate the optical film business into a new profit growth point for the company. While strengthening and expanding its existing LED and related main businesses, the company is actively exploring strategic emerging industries.

Ruifeng Optoelectronics: will launch its second main business

After several years of rapid growth, the LED industry has experienced increasingly acute conflicts such as overcapacity and price wars. Under the fierce competition in the LED market, bankruptcies and mergers and acquisitions have occurred frequently in the industry. Whether the downstream market demand can continue to grow directly affects the development of the midstream LED packaging industry.

In order to cope with market competition, Ruifeng Optoelectronics has developed FEMC products, which mainly use 3D technology to successfully implement flip-chip packaging on EMC brackets. It is currently the first in China and is also at the forefront internationally. The products can be widely usedIn indication, display, backlight, lighting and other fields. At the same time, Ruifeng Optoelectronics also launched a series of new products including filament lamp products, ultra-thin TV backlight products, and thin PCBs for smart wear and health monitoring.

At present, Ruifeng Optoelectronics’ main LED business is mainly lighting LED, medium and large size LCD backlight LED and small size backlight LED products. Although competition in the LED industry is fierce and corporate bankruptcies occur from time to time, in the view of Gong Weibin, chairman of Ruifeng Optoelectronics, the future development prospects of LED lighting, which accounts for the largest share in the LED field, are still relatively obvious. "Lighting will have about 30%-40% of development every year in the future." He also said that the next step in the LED industry will be rapid growth in the fields of health and infrared security.

Changfang Group: LED packaging + LED lighting + Internet finance

Changfang Lighting’s main business before the acquisition included in-line LED, SMD LED and packaging supporting products, with stable revenue growth. The company has 14 utility model patents and 23 design patents in the field of white light LEDsand 3 national invention patents.

The acquisition of Kangmingsheng will realize the vertical layout of the LED upstream packaging and downstream application industry chain. Changfang Group acquired 60% of the shares of Kangmingsheng in June 2014. Kangmingsheng was originally the company's second largest customer and mainly engaged in LED mobile lighting products such as portable searchlights and emergency lights. After the acquisition, the company realized the integration of its own LED upstream packaging and downstream LED application industry chain, reduced LED production costs, and complemented the company's LED street light investment business to promote the stable growth of its main business.

In addition, Changfang Group has also established the Changfang Financial Holdings Internet Finance Platform to solve the two major pain points of market fragmentation and mismatch of key resource capabilities. The demand and manufacturers for street lamp renovation across the country are relatively scattered, and there is a problem of difficulty in matching project resources and funds. The Internet financial platform of Changfang Financial Holdings has solved the biggest pain point of financing difficulties for project parties in the PPP model of LED street lamp renovation. By locking in high-quality project parties and leveraging the power of capital, it has achieved rapid business development and seized industry opportunities. At present, the company has reached project agreements with Huaqiyuan, Xinyang Blu-ray and Asia-Africa Energy Savings, and will actively expand cooperation with more companies in the future.

The company is actively seeking transformation and plans to invest a total of 740 million yuan to acquire 100% equity of Dingshengyixuan and Yiwan Wireless. It has also invested 30 million yuan to acquire 21.4% of the equity of Botu Advertising to accelerate its entry into the field of digital marketing.

Dingsheng Yixuan is the leader in domestic home decoration search advertising services. It is the exclusive agent of Baidu KA department home decoration and 360 real estate home industry. It mainly provides big data, SEM and new media marketing services. Its net profit in 2015 exceeded 30 million yuan; Yiwan Wireless provides one-stop mobile Internet In terms of marketing services, it has carried out in-depth cooperation with Internet giants such as Tencent, Baidu, and JD.com. The net profit in 2015 was approximately 41.98 million yuan, and it has a high profitability level and the ability to integrate long-tail traffic. Botu Advertising, in which it holds shares, provides full-service Internet marketing for brand companies and female vertical industry customers, with a net profit of more than 10 million yuan in 2015.

Dingsheng is strong in search and big data, Yiwan is more focused on operations, and Botu is good at creative planning. The three synergize and complement each other, which is the key layout for the company to build a digital marketing ecosystem. In the future, the company will continue to build a full industry chain digital marketing enterprise integrating creative planning, technology platform, data mining, wireless distribution, media resources, and advertiser customized services through mergers, acquisitions, and reorganization.

Positioning mid-to-high-end services, LED profitability increases. Wanrun Technology's LED lighting business has formed cooperation with mid-to-high-end customers in finance, communications, consumption, media and other fields. Its products have obtained multiple certifications at home and abroad, and it supplies its own light source devices, which makes the gross profit margin of lighting products higher. The acquired Rishang Optoelectronics promises to have a net profit of more than 50 million yuan in the next two years, which will effectively enhance the profitability of the company's lighting business.

Furi Electronics: Further improving the LED industry chain

Currently, Furi Electronics’ three main businesses are LED optoelectronics and green energy environmental protection, communications and smart home appliances, and domestic and foreign trade supply chain business. The company acquired MaruiOptoelectronics, Yuanlei Technology, Zhongnuo Communications, etc. have improved the business structure and industrial chain layout of LED display, lighting packaging, mobile communications, etc., and improved profitability. In 2015, net profit achieved a year-on-year growth of 49%.

Furi Electronics has successively acquired Marui Optoelectronics and Yuanlei Technology to fill the company's gaps in the fields of LED displays and lighting packaging. Through the acquisition, the company has the capabilities of LED display, lighting, packaging, engineering and other solutions, and has improved the layout of the LED industry chain.

As one of the only two listed company platforms under Fujian Electronic Information Group, Furi Electronics has successfully achieved strategic transformation through resource integration, asset reorganization, structural adjustment and other methods since its listing. Fujian Electronic Information Group is a joint unit of Fujian and Taiwan's LED, IC, LCD and communications industries determined by the Fujian Provincial Party Committee and the Provincial Government. It is jointly building a 12-inch wafer factory in Xiamen with UMC. Fushun Microelectronics, a semiconductor company in which the company has a stake, has a 4-inch integrated circuit production capacity of up to 100,000 pieces/month, and a 6-inch production line with a production capacity of 24,000 pieces/month. As the group's key enterprise in the fields of integrated circuits, consumer electronics and LED, the company is expected to become an important platform for the group to develop the semiconductor industry.

Summary: In recent years, the prices of LED lighting products have continued to fall, and lighting manufacturers have been under pressure to reduce prices, forcing packaging manufacturers to also respond to price cuts, resulting in declining profits and compressed revenue. In order to cope with the new market competition, many domestic listed LED packaging companies are also making adjustments and transformations, extending into education, sports, media and other fields. This is also a manifestation of the high concentration of the LED industry. Some companies may strategically choose not to continue to go deeper into LED, but to gradually adjust their development direction.

Need to respond to price cuts, causing profits to decline and revenue to be compressed. In order to cope with the new market competition, many domestic listed LED packaging companies are also making adjustments and transformations, extending into education, sports, media and other fields. This is also a manifestation of the high concentration of the LED industry. Some companies may strategically choose not to continue to go deeper into LED, but to gradually adjust their development direction.