Chip production capacity will remain optimistic about the future development of the industry

2011 production capacity surplus, but we are still optimistic about the future development of the industry.

Analysis logic: we do not consider the supply and demand situation of the industry before 2009, and after 2010 and beyond, we compared the new demand and supply.

New supply analysis: we believe that effective new capacity and MOCVD delivery quantity. We expect in 2010 and in 2011 the world's new 500 units, respectively, 700 MOCVD, quarter by quarter delivery. Delivery of equipment to production needs a period of time, in addition, each quarter production equipment for annual production capacity contribution rate of different. Therefore, the effective production capacity and MOCVD delivery quantity. According to our estimates, 2010, 2011 equivalent number of new MOCVD was added to the number of units and 555 units, respectively, 291. The new demand decomposition: we expect 2010 2011 increased demand for 42 MOCVD of about 334 or 426 stations, including LED LCD TV respectively in 203 Taiwan, 183 Taiwan, Taiwan notebook computer respectively in 16 and 6, respectively in 21 desktop monitors or 21 stations, general lighting need 79, 197 respectively. Taiwan, display respectively in 11 or 14 stations.

2010 tight supply, oversupply in 2011: overcapacity in spite of the probability of the event in 2011, but does not change our view of the LED industry continues to be optimistic. Excess capacity can cause a sharp decline in chip prices, help accelerate the start of the general lighting market. Once the outbreak of the lighting market, LED industry will usher in the second wave of growth. Different from the first wave, the second wave of growth continues longer, and the impact on the industry will be even greater.

Investment logic: we believe that, in the context of oversupply of LED chips, LED chip prices will decline significantly, the integration of the industry will accelerate. We are more optimistic about the lower reaches of the industry chain, it is recommended to choose the rapid growth of downstream applications, is expected to stabilize, good customer reputation of the company. We are very optimistic about the general lighting market in the future, LED lights as the third generation light source, the prospects are very bright, will lead the second wave of wave of growth of the LED industry, the specific situation please pay attention to the follow-up of our industry depth report. In addition, we are also optimistic about the downstream integration company, their stronger ability to resist risks, such as Cree, Samsung, arias.