Changjiang Securities: 2017 LED industry price trend for the better, chip prices are expected to heat up

Clearing capacity, from shopping to return to reason

LED 2016 is the year of change in the industry. At the beginning of the year, the small and medium-sized manufacturers but the enemy LED winter have closed down, OSRAM, PHILPS and other international giants adjust the strategy, shutting down product lines, overcapacity can ease. But Sanan optoelectronics, Linsen, and other local enterprises LED audio for overseas mergers and acquisitions, expanding coverage and technical strength. After the integration of the industry, the ability to clear the market, industry concentration gradually increased, the pattern gradually improved. In addition, the cost price does not match the supply and demand side to promote the LED industry ushered in the four times the price boom, by conduction of chip and package link to the terminal products, corporate profits rise, the industry boom picked up further return. In 2017, especially in small space, high value-added smart lighting, auto LED and other emerging markets, Changjiang Securities after the reorganization of the judgment of LED industry will change in the relationship between supply and demand under the trend of price.

Supply and demand differences, chip prices are expected to rise

Conform to the industrial chain of transmission order, in front of the industrial chain of LED chip enterprises mainly by raw materials, labor costs, manufacturing costs; cost package link 45% from downstream to upstream chip; lighting for example, 40% of the cost from the package link. Visible, there is a role of mutual transmission between the three links, the cost of the front will be passed on to the downstream. Generally speaking, the supply and demand does not match directly affect the price, and the price changes will reverse the supply and demand guide. According to the LED industry chain forecast, Changjiang Securities believes that in 2017 LED chip annual output will reach 73 million 680 thousand pieces (2 inch tablet), with a pace of expansion in packaging factory between, on the other hand, downstream applications gradually expand. Supply side of the internal chain has been unable to converge, and downstream applications is the existence of supply and demand differences. With the advent of intelligent lighting, small space display technology and automotive LED bring incremental demand, LED lighting penetration is still the main theme, in 2017 the chip demand of 87 million 150 thousand. Changjiang Securities LED chip prices are expected to determine.

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