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LED chip "oligopoly" industry experts on the formation of Qi

2016-10-22

China Electronics News, with the rapid growth of the global LED lighting market in recent years, LED lighting penetration rate increased significantly from 11% in 2012 to the current 30% or more. In contrast, PHILPS, Samsung, OSRAM and other international key enterprises have decided to sell or spin off LED lighting business. On the face of it, these international companies are giving up LED lighting because of their low profit margins. However, its fundamental, or forced by the rapid rise of China's LED lighting industry chain of the whole industry has brought tremendous competitive pressure. Among them, the significant improvement of industrial concentration is one of the decisive factors to achieve the overall competitiveness of China's LED industry.

Large number of enterprises, small scale, uneven level, lack of leading enterprises, has been the development of China's LED industry pain points, and now this situation is gradually being improved. As one of the most convenient and effective way to rise, mergers and acquisitions are increasingly favored by LED enterprises. Compared with previous years, the integration of mergers and acquisitions in the industry chain downstream packaging and lighting applications among enterprises becomes more and more frequent, from the direction of the integration of mergers and acquisitions into the strong weak strong merger and strong; the purpose of mergers and acquisitions in addition to extend the industrial chain to achieve diversified development, more attention to the channel, brand and production capacity, in order to grow to expand the scale of strength. According to statistics, since the beginning of 2015 so far, LED domain integration of mergers and acquisitions has more than 30, the size of the funds for mergers and acquisitions has more than ten billion yuan.

From the industry chain in the middle of the package link, the industry has officially entered the phase of the competition, in 2014 there are hundreds of packaging companies have been eliminated, the trend is more prominent. With the release of listed companies and the size of the expansion of production capacity, the traditional package will enter the era of low profit. While the small business scale production and technical capacity is limited, it is difficult to form a competitive with large enterprises, income does not increase the plight of small businesses to further deepen. China's LED package size of over 1 billion yuan, the number of enterprises will continue to increase.

From the downstream lighting applications, with the improvement of the performance and cost of lighting products to further decline, the homogenization of the product makes the competition between enterprises increased. In order to build brand awareness and to seize the sales channels, lighting enterprises ushered in a critical period of integration, the integration of mergers and acquisitions more frequently, the advantages of resources to focus further to the industry leader. LED Lighting Companies in China have done a good job in the hands of international enterprises to undertake the baton.

And the industry chain in the downstream of the merger and acquisition of a raging fire, the upstream epitaxial chip oligopoly situation is quietly forming. At present, the number of upstream enterprises has dropped from more than and 60 in 2009 to less than 20, the actual operation of the enterprise only about 15 or so, the top five chip companies market share has increased to more than 67%.

So, the upper reaches of the chip market to enhance the concentration of why it seems simple, first of all, the purchase of equipment to build a new chip manufacturing production line requires high sustained input. Early due to government subsidies, more than the purchase of MOCVD LED equipment companies, construction plant, a large area of LED chips launched projects, forming a group of industry leaders. With the gradual withdrawal of government subsidies, the new entrants will be difficult to bear with the industry leading to the formation of the required equipment expenditures. At the same time in order to expand the scale, need continued investment expansion funds or improve equipment performance, buy 4 inches and above more expensive equipment, some experience of poor small LED chip enterprises because of the lack of cash flow is difficult to carry out follow-up investment, will also be out of the market in the loss of subsidies. Secondly, to improve the competitiveness of the product requires a lot of R & D investment. LED industry is in a stage of rapid development, LED technology is developing rapidly, domestic and foreign technical equipment and production processes are constantly updated, the chip light effect of each quarter rose a step. In order to reduce production costs in a relatively short period of time to occupy the market, companies need to invest a lot of manpower and material resources for product development and technical inputs, the smaller size of the company's production and operation of pressure. Finally, the decline in chip prices lead to profitability difficulties. With the further release of the domestic chip production capacity, increased competition in the chip market, the price fell too fast, further squeezing the upper reaches of corporate profits. Leading enterprises by virtue of stable customers and bargaining power, and further strengthen the industry control, thus forming a stable industry competition pattern.