Data interpretation LED chip industry growth behind the thrust"

LED Consulting Research Center (LEDinside) data show that in 2016 China's LED chip market reached 13 billion 900 million yuan, after the 2015 -7% recession, the chip industry in 2016 ushered in 9% growth. Is the growth of the chip industry motivated by downstream application side requirements? Not really. First look at a set of data.

Figure 1: China's LED lighting exports (million U.S. dollars)

Data source: China Customs, LEDinside finishing

This is the data of China's LED lighting exports, taken from China customs. As can be seen from the diagram, in 2016, LED lighting exports grew by only 2%. As the biggest application field of LED, the market demand of lighting has been increasing rapidly in the past few years. However, in 2016, the growth momentum has become a little insufficient, and the lighting industry has entered a mature stage.

While the backlight area, although the average size of TV has increased, but with the promotion of technology, the unit area required LED particles decreased, the backlight industry has entered a recession.

To say that there is no end market driven, nor is it entirely correct. In 2016, the small spacing display market continue to maintain rapid growth, the LED chip market demand has a positive role, but the small spacing display market size is relatively small, the impetus for the chip industry co..

The field of automotive lighting market and technology are mainly concentrated in the hands of international manufacturers, and the driving force of China's chip industry is not obvious. Other plants, lighting, medical lighting and other emerging areas are still in the initial stage, basically negligible.

So, what is the main driving force for the growth of China's LED chip industry? Let's take a look at the next set of data.

Figure 2: China LED chip market supply

Data source: LEDinside

The figure reflects the availability of the LED chip market in china.

China's LED chip market has three main supply camps, namely, Chinese mainland manufacturers, Chinese Taiwan manufacturers and international manufacturers. The international manufacturers mainly to sales of LED devices, so the international manufacturers sales in Chinese chip market, basically negligible, the Chinese LED chip market has become China between manufacturers and manufacturers in Taiwan, China contest.

LEDinside data show that Taiwan manufacturers in the Chinese market share declined year by year, in 2016 the city accounted for only 22%, while mainland China manufacturers increased to 76%. Taiwan manufacturers are basically left a crystalline electric, other manufacturers can basically ignore, while the market share of crystal power in the Chinese market is also declining.

Figure 3: imports of LED chip market in China

Data source: LEDinside

From the beginning of 2010, in support of the government, the mainland LED chip manufacturers Chinese massive expansion, three, Huacan and other manufacturers, increasing MOCVD. In view of China, Taiwan and international factories, expanding production is more cautious, in recent years more, but Chinese mainland manufacturers in recent years still continue to expand production capacity, and in the next few years will continue to expand production capacity. With the gradual transparency of technology, the competitiveness of mainland Chinese manufacturers will continue to strengthen.

Take a look at the situation of Chinese mainland manufacturers in 2016, LEDinside data show that in 2016, Chinese mainland manufacturers LED chip output value of 11 billion 400 million yuan, an increase of 13%.

Figure 4: output value of LED chip manufacturers in mainland China

Data source: LEDinside

It can be seen that the output growth rate of mainland manufacturers is 13%, higher than the growth rate of the market scale of 9%, because some products have been sold to China, Taiwan and the international market. As can be seen from the figure, LED chip export rate in 2016 is very obvious, the LED, Sanan optoelectronics manufacturers gradually enter the international market such as Taiwan and South Korea China.

Figure 5: export of LED chips in mainland China

Data source: LEDinside

The above data can show the comprehensive competitiveness of the mainland LED chip manufacturers, constantly strengthen, and in the China market, with the industry reshuffle, industry concentration increased rapidly, the market competition has eased, chip prices steady rise, enterprise gross margin improved significantly.

Figure 6: China LED chip market industry concentration

Data source: LEDinside

LEDinside data show that in 2016, the top ten LED chip manufacturers market share has risen to 77%, the top three manufacturers accounted for 50% of the city. Industrial concentration will continue to improve, because the expansion plans of the future, are mainly three, Dachang Huacan, then small manufacturers market will gradually be eliminated or marginalized.

Market concentration improved, market competition eased, chip prices bottomed out, part of the chip prices. And whether the chip prices will rebound in large, in terms of technical upgrading and the impact of scale advantages, chip price stability has been conducive to chip manufacturers to enhance profitability.

Figure 7:LED chip factory gross margin

Data sources: public data, LEDinside collation

The second half of 2016, three, Huacan and changelight gross margin improved significantly, LED chip prices rebound caused by profitability gradually reflected, 4Q16 three manufacturers average gross margin reached 40% 1Q17, gross profit margin also has greatly improved, this is a sign of the LED chip industry usher in a turning point of the.

To sum up, LEDinside believes that the main driving force for the growth of China's LED chip industry is the upgrading of the competitiveness of China's chip industry. It is a relaxation of market competition after the severe reshuffle of the Chinese chip industry