China's LED industry "Red Sea" reshuffle will come

At present, the LED industry has become the main force of the new generation of energy conservation and environmental protection, and is also an important part of the new generation of information technology. China's energy consumption has ranked first in the world, and various forms of energy conservation are particularly important. In recent years, the LED industry has quickly become a dark horse in the field of energy conservation.
Since January 1, 2014, manufacturers of 40-watt and 60-watt traditional incandescent lamps commonly used in American homes will stop production and supply. Affected by this news, the A-share LED sector immediately rose, and the stocks such as Changfang Lighting and Ganzhao Optoelectronics were in a daily limit.
It is predicted that the shipment of LED lighting products in China will reach 1.32 billion in 2014, an increase of 68.
Despite the continued growth in demand for lighting, the overall overcapacity of LEDs in China has been around for a long time. The freezing of three feet is not a cold day. With the opening of the US LED lighting application market, can the domestic overcapacity be effectively alleviated? Can China's LED industry take the opportunity to get out of overcapacity? Will the industry's major reshuffle come?
Overcapacity under subsidies In 2011, the collapse of LED companies in the Pearl River Delta region was still in the eyes of the sunrise industry that was once chased by capital, and many business owners frequently ran on the road, and the transformation was jaw-dropping. Investment expansion has caused overcapacity in the industry and is generally considered to be the biggest culprit in the tide of closure.
Although it has been more than two years, overcapacity is still a lingering black cloud in China's LED industry.
Li Jun, director of the US investment agency luxresearch China, pointed out to reporters: For example, in the LED lighting industry chain in China, there are at least 5,000 enterprises in the production of light bulbs, which basically belong to places where enterprises and capital can no longer invest.
He told reporters that there are more than 1,000 LED packaging companies in China, and they are also very crowded. There are more than 50 companies that produce epitaxial wafers upstream.
The biggest reason for overcapacity is that the industry's expectations are too high. The country did introduce a lot of good policies and gave a lot of subsidies. Under this circumstance, the rapid expansion of enterprises led to an immediate surplus in the industry. Li Jun said.
Yu Lifeng, a partner of Jiyuan Capital, who also invests in LED lighting, also pointed out to reporters that China's LED lighting industry often relies on a large number of policies and financial subsidies, and even requires the government to directly project related projects, so the government will give money. Everyone is on the spur of the situation, and the industry threshold is relatively low, which is likely to cause overcapacity.
As a result, the Chinese LED industry has a strange scene in which the government is desperately subsidizing and the other side has closed down.
There is still room for development. However, Yu Lifeng believes that although there is overcapacity in the current LED industry, this is only a false proposition. China's LED industry still has a lot of room for development.
With the increasing pollution of China's atmosphere, air and soil, the general public's awareness of environmental protection has become more and more intense, and energy-saving and environmentally-friendly LED lighting has gradually begun to be accepted by the public.
People began to realize that they could not do things that pollute the environment while emphasizing energy conservation and environmental protection. Yu Lifeng said.
Yang Dongrui, senior vice president of Xinwo Capital, also told reporters that the current LED industry has indeed encountered some problems of overcapacity and technicality, but this is only a phased issue.
Many people in the industry also believe that the development of China's LED industry is still relatively healthy. Every industry will encounter the same problems in its development, such as technical barriers and short-term overcapacity.
From the current terminal price, the price of LED lighting products is falling very fast. Yang Dongrui said: At present, the unit price per watt is about 4~5 yuan. In the past, it cost tens of yuan. Basically, ordinary people can afford LED lights.
At the same time, the price of global LED lighting products has also dropped rapidly, and the replacement of alternative light source products such as bulbs and lamps is the most prominent. In North America, such as the US government, LED lighting support is gradually increasing. Manufacturers of 40-watt and 60-watt traditional incandescent lamps commonly used in American households will stop production and supply from January 1, 2014. One of the performances.
It is reported that the US energy star (energystar) and other plans to increase the number of subsidies for lighting products will increase, which will lead to further reduction in the price of LED lighting products. Market forecasts show that the growth rate of LED lighting products in North America is expected to reach 72.
The company's major reshuffle statistics show that the global LED lighting market in 2013 is about 27.2 billion US dollars; 2014 is expected to reach 39.2 billion US dollars, the market penetration rate is 34; 2015 will reach 45.9 billion US dollars, the penetration rate is expected to exceed 40% .
He Zaihua, a senior researcher at China Investment Consulting, told reporters that the opening of the US market can effectively alleviate the problem of overcapacity in China's LED industry.
At present, the US LED market is mainly concentrated on signdisplay and mobiledisplay. The high demand for LED is mainly reflected in signboard, billboard and mobile phone products, and the demand in these fields continues to grow.
Nowadays, with the opening of the demand for home lighting market, it is undoubtedly a good news for domestic companies entering the US LED market. He said in China.
However, the current average price of LED lighting products has dropped by more than 20%. Although the sales volume has increased further, the company's profits have not risen significantly. Most enterprises are caught in a cycle of increasing revenues without increasing profits.
He Zaihua believes that from the perspective of economics, in the case that the short-term oversupply is difficult to adjust quickly, the sharp increase in demand can change the situation that LEDs will not increase profits in the short term.
However, he also reminded that in the long run, enterprises may blindly continue to expand in order to obtain more income. If they are not regulated, the situation of overcapacity may continue to deteriorate.
For the future development of the LED industry, Li Jun pointed out that the current state subsidies for terminal subsidies are basically for large enterprises, so many small enterprises in the future will certainly face bankruptcy.
Huanhuang Securities researcher Duan Yingxi also believes that under the pressure of price wars and performance wars in the next two years, domestic chip makers will integrate from the current 51 mergers and acquisitions to about 10.
On the downstream side, traditional lighting companies with rapid transformation and channel advantages have great advantages, and traditional lighting enterprises with slow transformation will die. Powerful LED companies will begin to look for large-scale enterprises with channels and scale advantages to integrate or form strategic alliances.
This industry itself is the process of survival of the fittest. From the business model, it must be transferred from engineering companies to product companies and commodity companies. The future development of LED is very broad, but in the process there is a process of improving life expectancy, transforming business results and surviving the fittest. Yu Lifeng said.

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