Research and Analysis of Development Status of China's Lighting LED Industry

According to the "12th Five-Year Development Plan for the Integrated Circuit Industry", China's integrated circuit sales revenue will reach 330 billion yuan during the 12th Five-Year Plan period, with an average annual increase of 18%.

On March 5, Premier Wen Jiabao of the State Council made a report on the work of the government at the Fifth Session of the Eleventh National People's Congress. Careful people will surely feel that "promoting energy-saving emission reduction and ecological environmental protection" has been placed in an extremely important position both in the "2011 work review" and in "2012 major tasks."

Just recently, the “12th Five-Year Development Plan for the IC Industry” released by the Ministry of Industry and Information Technology, or “Planning”, has outlined a grand blueprint for the development of China's integrated circuit industry in the next five years. According to the "Planning", the IC sales revenue during the "12th Five-Year Plan" period will reach 330 billion yuan, an average annual increase of 18%.

One side is the "integrated circuit industry" and the other is the "energy saving and emission reduction and ecological environment protection." These two seemingly incomprehensible fields actually exist in an intersection, that is, the LED industry in China that is in the ascendant. .

The above-mentioned two messages were brought to the forefront of the newspapers, which gave the industry people and the capital market all cheer. As a result, many research reports have commented on this inconsistently. “In the future, domestic integrated circuit design, manufacturing, and packaging companies, especially the LED industry, will have unprecedented opportunities for development.”

China's Ascendant LED Industry Recently, Huabao Securities has analyzed the current status of China's LED market, and its research report points out that “Since the overseas market has high energy saving demand, the price of LED lamps is high, so the domestic LED lighting products are currently over 70%. Used to export overseas."

This "outside the market" situation has clearly continued for a long time. As early as the beginning of 2011, Wu Qingyi, director of Sunshine Lighting 600261, who was interviewed by Securities Daily, told reporters that “There are still many bottlenecks in China’s LED industry that require urgent breakthroughs. In the face of overseas markets, Chinese companies rely mainly on OEM profits."

Then, taking the LED lighting field as an example, even if its price is 2-3 times more expensive than an incandescent lamp, it can save nearly 70% and extend its lifespan by nearly 10 times. Is this product with absolute performance advantages unable to ignite domestic demand?

A businessman who has been in the LED industry for several decades, but who recently retired from his body, disclosed to the “Securities Daily” reporter that “the market for home lighting has so far been the most tempting for LED companies. But the Chinese people There are not a few lights in the home, and the power consumption of large appliances such as refrigerators will be insignificant. Therefore, even if the life of your LED lights and energy-saving effect are better, you want to open this market. It also takes a very difficult process."

"Compared to the lighting market of thousands of households, under the guidance of energy-saving and emission-reduction policies, more and more office buildings, hotels, hospitals, and even city plans are willing to pay real dividends in the upgrading of lighting equipment. The vast majority of them only regard the installation of LED lights as a kind of image project. But at least there is a demand, this market will be active." Mr. Wang added to the reporter.

However, it is this seemingly malformed market demand that has triggered the LED industry's own patients, Mr. Wang introduced, "This kind of lighting equipment upgrading project a large number, so the profits are also large. Units generally only care about is not LED In addition, the most important thing is the relationship, taking into account the life of the lamp itself, the energy saving effect is even more important.Because of this, LED manufacturers go all out to build contacts, take relationships, do public relations, but almost ignored the product quality. What is terrible is that, given the large differences in the prices of different quality LED chips, price wars without self-discipline can be seen everywhere in the industry."

Growth in industry with low profits Although the development model of OEM has severely squeezed the profitability of Chinese LED companies, the confidence of the people in the future of this industry seems to have never weakened.

Data show that from January to July 2011, China's LED industry plans to increase the total investment is still a huge 125.618 billion yuan, of which more than 40% of the funds are invested in a number of industries, or even the entire industry chain investment. What is more noteworthy is that investment made by non-LED companies into the LED industry has become an important part of the LED industry's investment. Such projects account for more than 45% of all investment projects, and the amount exceeds 65% of the total investment amount. In 2011, the average gross profit margin of listed and non-listed companies in the downstream applications industry was only 15%. Statistical data showed that gross margins of China's major LED lamp beads application industries continued to decrease from 2009 to 2011, and the average annual decline rate exceeded 13%. .

What is even more impressive is that even in such a thin profit space, China's LED companies have created amazing results. Data shows that during the “Eleventh Five-Year Plan” period, the size of the IC industry has doubled. The output and sales revenue increased from 26.58 billion and 70.2 billion yuan in 2005 to 65.25 billion and 144 billion yuan in 2010, accounting for the proportion of the global integrated circuit market from 4.5% in 2005 to 8.6% in 2010. The domestic market scale has expanded from 380 billion yuan in 2005 to 735 billion yuan in 2010, accounting for 43.8% of the global IC market share. Among them, in 2011, under the economic downturn in Europe and the United States, the export of China's LED and other energy-saving products still rose by 25% against the market.

The spring breeze of the industry's welcome policy should be said that the people of the country who are involved in the LED industry continue to benefit from the country’s increasing support for the industry.

In addition to the "12th Five-Year Development Plan for the integrated circuit industry" mentioned above, a series of specific measures to promote LED domestic demand have also been launched in the near future.

According to relevant media reports, China National Electronics Import and Export Corporation recently announced that it was entrusted by the Department of Economic Development of the Ministry of Finance, the Department of Resource Conservation and Environmental Protection of the National Development and Reform Commission, and the Department of High-tech Development and Industrialization of the Ministry of Science and Technology. "2012 semiconductor lighting products financial subsidies to promote indoor lighting products - LED downlights, reflective self-ballasted LED lights, outdoor lighting products - LED lights, LED tunnel lights" for domestic open tender.

According to the requirements of the Ministry of Finance and National Development and Reform Commission's Interim Measures for the Administration of Financial Subsidy Funds for the Promotion of High-efficiency Lighting Products, this tender will select a number of semiconductor lighting LED manufacturing enterprises and products, and confirm the supply price. The subsidy funds shall be indirectly subsidized, and shall be subsidized by the financial subsidy to the successful bidder. The subsidy shall be sold to the end-user by the bid-winning price of the bid-winning agreement minus the subsidy of the financial subsidy. The ultimate beneficiary is the end-user.

In addition, recently, China's Central Committee for the Promotion of China's Capital and Energy Conservation System announced that it will determine the implementation of green lighting energy-saving demonstration projects in 10 pilot cities in 10 pilot cities and 50 prefecture-level cities including provincial-level development zones.

According to the introduction of China’s Central Committee of Capital and Energy Conservation System Innovation Committee members, the China Central Capital Commission will allocate 8 billion yuan of central budget extrabudgetary funds to purchase 4 million LED efficient road lighting products during the “Twelfth Five-Year Plan” period. Local matching funds of less than 3 billion yuan.

Perhaps it is precisely because of the spring breeze that comes from the policy level that all sectors of society have generally been optimistic about the future of China's LED. Changjiang Securities was introduced in the research report. Some people from the National Development and Reform Commission predicted that during the “12th Five-Year Plan” period, the LED industry is expected to achieve a quadrupling target. By the end of 2015, China’s LED lighting penetration rate will reach 20%, and the industry’s general estimate is that More optimistic, it is expected that by 2015, China's outdoor LED lighting penetration rate of 60% to 80%, indoor commercial LED lighting penetration of 25% to 30%, indoor home LED lighting penetration of about 5% to 10%, the Chinese market The overall penetration of LED lighting will reach even more than 20%. The rapid growth of the LED lighting market is estimated to continue from 2012 to 2015.

LED is gradually promoted by the policy but the problem still exists Experts said: Although the LED industry is getting better, but in the past two years can not avoid the reshuffle After a long period of silence, LED subsidy policy began long ago, bidding subsidies Qi Qi, LED Industry is bustling again. From a fundamental perspective, capacity utilization continued to rise, order visibility increased, penetration in the backlight application area accelerated, and lighting prices almost equaled sweet spots, both showing positive signals. However, with the expansion of the market, problems in the LED industry have gradually emerged. Yesterday, the "Securities Daily" reporter interviewed the LED industry experts, deputy general manager of CCID Consulting's basic electronics industry research center Zhang Xiaokang, to solve the LED industry.

"Securities Daily": According to the current situation, for the support of policies and the expansion of the market, the LED industry has exposed many problems, for example, the industry does not have a clear standard, the entry threshold is low, the LED industry will be presented under the policy support Is there a panic like the photovoltaic industry?

The current situation of LED and PV have something in common, the upstream raw materials and key equipment are out, and the downstream indoor lighting market is out, but not exactly the same. On the one hand, the LED downstream market has no higher dependence on PV than the PV market. The LED display screen and LED backlight source market, which account for a large share of the downstream market, have grown rapidly in the domestic market and have relatively strong support for the upper reaches. On the other hand, the scale of the internal and external markets of lighting applications is continuously expanding, and it is in the period of market introduction, or the period of market development, and there will be huge market space in the future, which will gradually become the main force for pulling upstream demand. On the other hand, China's LED industry chain is more complete than the photovoltaic industry, and its downstream applications are abundant, and emerging applications are expanding rapidly. On the other hand, the LED industry has a smaller volume than the PV industry, with little pollution and low energy consumption. Apart from the sapphire growth process, low investment threshold, and large room for industrial adjustment.

Therefore, in the long run, LEDs will not be as bad as last year's photovoltaic industry.

"Securities Daily": There are now analysts have begun to predict that this year or will be a year of LED industry reshuffle, and whether the industry reshuffle can not be avoided? How to make the company survive in this industry?

I think the industry reshuffle in the past two years is certain. The LED industry is emerging as a high-tech industry. Government support and rich enterprises cannot solve all problems. The lack of core technical personnel has become a bottleneck for the development of various enterprises in all aspects of the industry chain. The industry reshuffle in the past one or two years is one of the reasons for the market. The other main reason is that experienced core technicians, such as the crystal growth furnace and the experience of the MOCVD epitaxial growth stage, are relative to the current domestic industry. The development is far from enough, and such experienced technicians have been training for more than three years. They have not built a factory building and entered the facility so quickly. In the past year or two, who can dig enough of truly capable technical personnel and experienced front-line operators is one of the key factors for companies seeking to survive and deliver goods to the next round of rapid growth.

"Securities Daily": As you mentioned before and the reporter, at present, the domestic LED lighting market, mainly concentrated in the tunnel, square lighting and other aspects, and this market size is now about how much? At present, the domestic LED market is not as widely used in foreign countries. Will this cause a deviation in the company's sales focus? With the expansion of the domestic market, will the company's sales focus return to China?

Currently, the market size of China's semiconductor lighting products is only over 20 billion yuan, and it will reach a scale of 50-60 billion within two to three years. At present, the domestic demand market for decorative landscape lighting and street lighting is still very large. In addition, automotive lighting, industrial and mining lighting, special lighting and commercial lighting are also rapidly developing. Only commercial and residential indoor lighting has not yet been launched on a large scale due to price. The manufacturers of these products are mainly exporting.

LED lighting companies belong to the downstream applications, lighting products directly to consumers, these companies have a high market sensitivity, the company's sales focus will be quickly adjusted according to market conditions, where the center will still be based on the quality of products, product breakdown Looking at the changes in positioning and internal and external market segments, it cannot be generalized.

For now, the scale of the lighting industry is much larger than that of the LED industry. At present, LED lighting is considered as one of the downstream applications in the LED industry. In the future, with the development of the LED lighting industry and the market, the industry scale of LED lighting products will be much larger than the industrial scale of the LED upstream and downstream links. I think that the current view of the industry should be gradually changed, semiconductor lighting should not be used as an LED industry applications, but the LED light source chip, package, module should be viewed as the upstream link of the lighting industry.

Jumping out of the LED industry, looking at the semiconductor lighting industry as a lighting industry. China is currently the world's largest producer and consumer of lighting products. In the future, the lighting source will rapidly replace incandescent lamps and energy-saving lamps with LED light sources. Therefore, the upper-middle part of the LED light source LED industry will be mainly in the domestic market and supply the needs of downstream lighting manufacturers. The sales of downstream LED lighting manufacturers also face the foreign market and the domestic market at the same time.

Be wary of LED walking the old road of photovoltaic industry, LED industry, has been hot for a short time, after "looking ahead" after, found that many places are still scrambling to do things, do things quickly, many approaches deja vu, wear new shoes to take the old road, play carefully Reading books should be more effective.

Looking back at the photovoltaic industry, it seems that "heat is in full swing." Before last year, the photovoltaic industry was shrouded in all sorts of halos. From the perspective of the industry itself, this is not unacceptable. However, after the capital and local governments’ love to pamper others, there are some that cannot be found in the North. According to relevant data, over 100 photovoltaic industrial bases have emerged in China to date, with production capacity accounting for half of the world's total. If the market is prosperous, this should be proud, but on the contrary, China’s photovoltaic industry is no longer a “sweet potato” that allows companies to embrace the industry. In 2011, the European debt crisis Overcapacity and disorderly industry “internal hazards” are intertwined. The ever-bearing industries have quickly entered the “winter season”. The hot and cold changes are so rapid that it is surprising that the annual report has not yet been released. However, from the last quarterly report, the four major photovoltaics The giants Yingli, Suntech, Tianhe and Saiwei suffered a loss of 290 million yuan. The misery of other SMEs is evident.

The photovoltaic industry's illness is that it lacks the necessary top-level design and lacks patented technology in the early stages. It has extensively moved up front, and policies and capital have, to a certain extent, been "pulled and fueled."

The LED industry seems to be telling a similar story.

Some experts "assert" that in the future LED lighting in the domestic market share will be trillions of dollars, cakes are scary.

Understand the LED, do not understand the LED, speculative ... ... all the way back before the crowd came to kill. A lot of capital is used to save money. Domestic three-an, Yinyu, Qinqin lighting industry "leaders" have actively laid out.

Some areas have already taken the LED industry as a breakthrough in strategic emerging industries and important support for industrial restructuring. This seems to be true, but it is too liberal in terms of concessions, resulting in the LED industry has continuously made new breakthroughs and leapt to new ones. Steps, there has been explosive growth. In a few places, the LED industry is already "every family smokes and villages ignite."

Currently, Shenzhen has more than 2,000 companies engaged in the research, development, production, and application of LED technology and products, most of which belong to the LED packaging and application technology field. There are 97 high-tech companies engaged in LED, accounting for only about 3.5% of the 2835 high-tech enterprises in Shenzhen. Among Shenzhen-related companies, there is only one chip production, and there is no such thing as semiconductor materials and phosphors that are crucial to product production. No matter whether it is technology, process, equipment, or key raw materials, it needs to be introduced.

In Guzhen Town, Zhongshan City, it was even worse than it was. There was an “infinity” small-scale “private workshop” small enterprise. “It's too crazy. Now all the lighting companies are rushing in, and they all want to do it first.” "The confusion in the development of the industry can be imagined.

However, more than half of the technologies and patents in the global LED industry are occupied by a few large companies in the United States, Japan, and Germany. Most of these patents are core technology patents, and domestic companies, especially SMEs, find it difficult to find a breakthrough. The current LED industry is hot on the surface. Many small factories have weak technological research and development capabilities. Most of them are buying and assembling parts. Their chip technology is purchased from abroad. Some companies even install fans on LED lamps to dissipate heat. Buying technology and fighting price wars have become a frustration for some companies.

Many companies only see the policy encouragement, the positive side of the industry outlook, and their head-ups are rushing in. Such impulses are easily hurt.

The LED industry should be designed to advance the top layer, guide investors who are “hot,” “lost,” and certain local decision makers to wear new shoes and take a new path.