In the LED display market, starting from the beginning of this year, a number of listed companies, including Chau Ming Technology and Lian Jian Optoelectronics, have launched a new round of price wars. At the beginning of this year, the lowest price of the full-color LED display of 7,000 yuan per square meter has dropped to about 2,500 yuan. Statistics show that the average price of domestic LED displays in 2012 dropped by 15%-20% compared with last year.

Looking back at the top of the industrial chain, in the past few years, the LED upstream chip field has invested heavily, the price has dropped to 30% in 2010, and the performance index has doubled in 2010. At the same time, private capital and publicly raised capital are invested in the LED industry. Upstream. Lehman Optoelectronics Li Mantie said, "In the second half of last year, especially in the field of chip extension in the upstream of the industry, the price of LED chips in the second half of last year has reached 40%."

At present, the demand for MOCVD in the world's LED chip market is about 1,600 units, but the number of existing MOCVD equipment in the world is about 2,800 units. According to the statistics of the High-tech LED Industry Research Institute (GLII), as of September 30, 2012, The number of domestic MOCVD equipment is 896, the average operating rate is 58.4%, and the capacity utilization rate is only 30.1%.

Even if the production capacity of LED chips is now available, only 70% to 80% of them can be sold out, and two or three percent are placed in warehouses for inventory. Many LED chip manufacturers have recently lowered the price of LED chips by about 10% to cope with market shocks. According to the data of the High-tech LED Industry Research Institute (GLII), only Sanan Optoelectronics has achieved a year-on-year increase in revenue and net profit among the six LED chip companies listed on the mainland.

The revenue and net profit of Ganzhao Optoelectronics, Dehao Runda, Silan Micro and Huacan Optoelectronics all showed different degrees of decline. Sanan Optoelectronics reported that as of September 30, Sanan Optoelectronics' inventory was as high as 900 million yuan. According to industry insiders, Sanan Optoelectronics will clean up inventory every quarter, and the sales price is much lower than the normal price. “It is generally 30% off the market price.”

Liu Qi, director of Inspur Huaguang Marketing, pointed out that in the context of overcapacity in the LED industry, price wars have become one of the main means of stimulating demand.

"In order to attract customers, many LED chip companies can only try their best to reduce prices in disguise, and the market competition is a bit into a disorderly situation." Sanan Optoelectronics, Ganzhao Optoelectronics, and Silan Micro's product gross margin for the first three quarters of 2012 were 26.93%. 42.22%, 22.36%, down 33.41%, 32.77%, and 27.68% from the first three quarters of last year. The gross profit margin of Huacan Optoelectronics in the first three quarters of 2012 was 33.06%, which was 8% lower than the first half of this year.

......

Will these phenomena still exist in 2013?

In the history of LED development, who is the big prophet?

(1) The price war will come? What will be brought to the enterprise?

Now and in the next 5 to 10 years, the LED market will be like the PC industry, especially in the 10th century at the end of the last century. The price war is hard to avoid. If you want to enter the homes of ordinary people, there will be long-term survival without preferential prices and excellent quality. But reducing profit by reducing profit margins is a clumsy way and it can't be maintained for a long time.

—— Zhang Wei, Vice President of the United Kingdom Seren Optoelectronics Co., Ltd.
May look specifically. Because everyone can do this thing, so there will be a price war, as this should be a small and medium power price war. Exceeding market demand, this is a problem of supply and demand. There will be a price war for more than the demand. This will not deteriorate. Everyone sees the challenge. There will not be so many new factories. There will not be so many new factories blindly expanding. The capital industry will slow down and it will become more and more demanding. Will continue, but will not deteriorate, normal price competition, will not be caused by external factors.

——Yan Chunhui, President of Yaweilang Optoelectronics (China) Co., Ltd.
The price war is the result of more competitors and homogenization of products. When everyone's products are similar and there are many competitors, the price war will be inevitable, especially now that the application market size is not large enough to accommodate so much capacity. As the market expands, the price war will improve, but this process will last for a long time.

——Zhang Shaohua, Marketing Director of Jingneng Optoelectronics (Jiangxi) Co., Ltd.
There is pressure on the market for chip prices. Lighting products need to be further reduced before they enter a wide range of markets. These pressures are closed from the luminaires. The cost is quickly reduced by the ratio. The chips still have some space, the equipment is improving, and the process is improving. Technology is also improving. For some products, this space is not big. If there is no profit after going down, it has already pushed to the corner. It will basically rebound. Without profitability, government subsidies are useless. Only the track can be changed. The rest are those that have the scale and technology, have their own market base, the price will be maintained, and there will be a healthy cooperation with the downstream. In fact, the price war has already existed. It should be more than a year. It is the spontaneous adjustment of the industry. Now every enterprise is doing something like this. The price should not be as dramatic as in the past two years. The trend is to go down the ages. Unchanging, but the magnitude and speed of change are more rational.

The price war is a large number of machine purchases to form capacity, which is a relatively important point in time. We can draw a simple supply and demand curve, the real Chinese market is good, this is not much change, the supply can change a lot, the beginning is the installation of equipment, when these equipment began to release something, broke Supply and demand balance.

——Wang Huaibing, General Manager of Suzhou Xinnajing Photoelectric Co., Ltd.
(2) What factors will generate price changes in the upstream?

Since the second quarter of last year, the price of sapphire materials has dropped to a record low and remained at a low level for more than a year. We believe that the price of materials will not increase much in the first half of the year, but it should be a half-year or a year later.
The substrate materials for semiconductor illumination include sapphire, SiC, Si, GaN, GaAs, ZnO, etc., but currently there are only two mainstream substrates for industrialization: sapphire and SiC. The sapphire substrate is currently the mainstream choice for GaN growth. Its manufacturing technology maturity, stability, and integrity of grown GaN are now better than silicon substrates. It is expected that the substrate will be in the next 5-10 years. There will be no major changes in the pattern. However, we do not rule out that new materials may replace some of the uses of sapphire materials. At the same time, sapphire materials are constantly expanding their new applications.

——Zhu Yong, Chairman of Guizhou Haotian Optoelectronics Technology Co., Ltd.
In 2012, the price of the chip has stabilized. The price of the chip was 1.0 yuan per piece a decade ago. Now it is a few cents, it is normal, and the volume increase is inevitable. There will be no profit before.

Zhang Shaohua, Marketing Director of Jingneng Optoelectronics (Jiangxi) Co., Ltd.: We believe that the price war will continue, but the price of the chip will not fall as fast as last year and this year, because many MOCVDs have not been used yet, even if the market is getting better. The excess equipment will not be disconnected, so that the market has always maintained a meager profit or no profit. As the cost of materials for chips declines, such as the decline in the price of sapphire substrates, organic sources, and the localization of MO, chip prices may continue to decline.

The chip factory still has room to continue to compress costs, and the price war will continue.

——Wang Huaibing, General Manager of Suzhou Xinnajing Photoelectric Co., Ltd.
(3) What adjustments will be made to the price war?

Companies must implement the aggressive cost reduction method mentioned above, which is achieved by increasing luminous efficiency without increasing costs. Secondly, from the sapphire-based LED production line, some foreign manufacturers have plans to put into use 6-inch MOCVD in 2013, and domestic manufacturers will be more and more difficult to deal with the 2-inch tablet. The LED industry is a very typical technology-intensive industry, and the space for low-cost competition with relatively cheap labor will become smaller and smaller.

—— Zhang Wei, Vice President of the United Kingdom Seren Optoelectronics Co., Ltd.
The current strategy is for companies to warm up, cooperate and even conduct mergers and acquisitions.

——Zhang Shaohua, Marketing Director of Jingneng Optoelectronics (Jiangxi) Co., Ltd.
What if the price war is coming?

What is the price cut?

In order to compete for market share to obtain sales and profits, companies mostly follow the price reduction strategy. The end result of this strategy is that when the price drops to the lowest point, one side is squeezed out of the market to end, or both lose. At this time, the overall strength of the enterprise is being played, and some small and medium-sized enterprises are at a distinct disadvantage in the competition.

Not falling?

Although others are cutting prices, if they follow suit, they will not only make money but also post money. This coping style has one drawback: it saves profits but loses market share. When I want to cut the price, I have missed the opportunity. In the end, I am still dead, and the company is in a dilemma.

Rest and living?

Change the positioning method to increase the added value of the product. When everyone cuts prices in full swing, they don't cut prices. Instead, they focus on improving the added value of products, such as increasing product after-sales service, so that they can sell products at a reduced price and sell their own brand value.

(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.)

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