Under the expansion tide of LED display raw materials do not fall but rise
Since the beginning of this year, the industry is more or less concerned that the LED display industry chip and packaging leaders are roaring ahead, frequent production expansion......
SAN 'an optoelectronics said in a statement that the company decided to invest up to 280 million yuan in its wholly-owned subsidiary, Xiamen SAN 'an Optoelectronics Technology Co., LTD., to add 20 international advanced single-cavity machines or five four-cavity machines with gallium nitride MOCVD equipment and expand the LED chip production line.
Guoxingguang said it will continue to expand the production scale of midstream packaging sector, and plans to invest no more than 400 million yuan of its own capital to expand production, in order to continue to improve the company's production capacity and seize a larger market share.
The construction of mullinsen's first phase plant in Xinyu, Jiangxi province has been completed, and part of it has been put into use. The first phase plant in Ji 'an, Jiangxi province is under construction. It is understood that in 2016, Mulinsen will accelerate the construction of two production bases in Xinyu, Ji 'an, Jiangxi, and improve the market share of products.
According to the forecast data of industry institutions, in 2015, the total scale of China's LED industry is expected to be 396.7 billion yuan, up 15.1% year on year, of which LED chip output value reached 13 billion yuan, up 8% year on year only, but LED chip output has increased by 60% year on year. In addition, at present, China's LED packaging industry has a considerable economic scale, accounting for about 70% of the global LED packaging output, and this proportion will be further increased in the future.
This is not the case as midrange manufacturers expand production, which normally leads to lower prices. Recently, there are LED display enterprises into a state of contradiction: raw materials do not fall but rise in price! What's going on here?
Rising costs force packaging manufacturers to raise prices
With the development and maturity of small spacing, some industry insiders say that the current LED display market is in a state of "demand is greater than supply". As the indoor and outdoor Spaces become more dense, the number of beads in demand is increasing, and this is prompting manufacturers in the upper and middle reaches to scale up production.
It is understood that with the decline in the price of some finished products, many downstream LED display manufacturers increase the expansion of production capacity, to ease the pressure of price competition, but the increase in demand from downstream manufacturers, but also prompted the upper and midstream raw material manufacturers to expand production scale, and comply with the demand of the downstream market.
However, in recent years, the economic downturn, enterprise survival pressure increased, with the rise of some costs, leading to LED display upstream raw material costs rise.
As we all know, in the production process of LED packaging devices, raw materials account for up to 75-80% of the production cost. Therefore, when the raw material cost rises, it will inevitably bring certain production pressure to the packaging manufacturers. It is understood that the number of LED packaging units with gold wire is about 15-18 yuan, while the relatively cheaper copper wire is 8-1.5 yuan.
At the same time, some industry insiders said that for high-end packaging devices, packaging manufacturers are more willing to purchase accessories of international brands, there is no doubt that the accessories of international brands are relatively high in price, in such a case, packaging manufacturers to adjust the price is not difficult to understand.
In addition, the cost of manpower is also the current LED enterprises have to face the problem. According to the information released by relevant institutions, from the industry labor cost situation, manufacturing, construction, wholesale and retail and other 15 industries labor cost increased compared with the previous year, especially the average manufacturing labor cost has been close to 120,000 yuan, the annual average level reached 119,788 yuan, an increase of 11.5% over last year.
To sum up, with the increasing cost of labor, rent and raw materials of enterprises, it brings challenges to THE OPERATION of LED enterprises, and also forces enterprises to survive or profit point. The means of price increase is only one of them.
Low price competition bottomed out and high quality drove prices up
In recent years, with more and more people making LED products, the homogenization is serious, resulting in a rapid decline in the price. Even if the production capacity and sales scale of enterprises have increased compared with the same period last year, but the intensified market competition LED to a sharp drop in product prices, gross margin space narrowed, there are industry insiders said that in terms of prices, currently LED chips, packaging and other raw materials have bottomed out. Or to put it another way, competition around low prices is no longer enough to support the long-term development of enterprises.
"The market price of LED packaging has halved twice in the past two years." Mulin Jiliang admitted that even though it occupies the absolute cost advantage and scale advantage of components in the packaging industry, the competition of LED packaging products in the middle and downstream is very fierce in the past two years. The overall price of the industry has been falling all the way. In 2014, the price was half of that in 2013, and in 2015, it dropped by 50% compared with the previous year.
The abundant production capacity highlights the industrial weakness caused by excessive supply, while the insufficient supply of high-end products in the industrial chain brings about structural concerns. And now consumers demand for LED display from "high light efficiency" to "high quality", which put forward more requirements for packaging, excellent performance, higher light efficiency, lower cost, higher display, but also constantly test the r & D and innovation ability of enterprises. Therefore, LED packaging enterprises began to break through the constraints of production factors to carry out structural adjustment, to seize the industrial chain space advantage driven by innovation. However, we need to realize that the development of high performance LED packaging products, enterprises will need to invest more money, which will inevitably increase the price.
The market pattern tends to stabilize. Do enterprises intend to control the bargaining power?
In the past two years, the global macroeconomic weakness, LED display demand is sluggish, SAN 'an Optoelectronics, Huacan Optoelectronics, Gan Zhao Optoelectronics, Aoyang Shunchang and other mainland enterprises chip production capacity expansion, further intensified the LED chip market competition, chip manufacturers will become increasingly fierce price war. At the same time, also prompted the packaging industry into a state of accelerated integration, today, LED packaging market is further concentrated to leading enterprises, industry concentration is high.
As the whole LED packaging market pattern tends to stabilize, the product pricing power gradually returns to the hands of leading enterprises, in such a case, if the enterprise wants to control the bargaining power of the product is not known.