Huatai Securities: LED chip structural imbalance, the downstream demand

LED chip price spread from RGB to white light, structural imbalance between supply and demand

After the price of four yuan, 16Q3 LED chip stock Taiwan factory have increased four yuan LED capacity, January 2017 domestic LED chip leader Sanan optoelectronics issued price adjustment letter, increase the light product price 8%, LED chip price spread from RGB to white. On the one hand reflects the structural imbalance of the LED chip, which shows that the application and lighting applications for GaN blue green chip production capacity. On the other hand, also reflects the strong downstream demand for the chip industry, according to research feedback, the recent white LED chip, packaging, lighting orders in good condition, the industry boom up, corporate profitability gradually restored.

Supply side: price war extrusion effect is obvious, industry competition pattern improvement

According to LEDinside data, the continuous production of China, LED chip factory makes 2015 LED chip pile up in excess of requirement ratio up to 22%, from 15Q1 to 16Q1, the mainstream LED chip prices fell more than 30%, the price of the product packaging also generally showed a decline of more than 20%. According to China light industry network data, the first three quarters of 2015, the national lighting industry accumulated loss of 16.66%, compared to domestic enterprises operating conditions are better than foreign, Hong Kong, Macao and Taiwan investment enterprises. The survival of the fittest competition environment, after the LED lighting business Samsung in 2014 to withdraw from the market outside of South Korea all 2016 international well-known manufacturers, PHILPS, OSRAM, GE Chinese also gradually withdrew from the market, to provide a larger market space for the domestic LED industry, improve the industry competition pattern.

Supply side: Taiwan plant focus four yuan chip market, GaN LED industrial center to accelerate the transfer to the mainland

Due to the rise of small spacing, IR sensing applications, Taiwan four yuan LED vendors actively expand the production capacity of $four: crystal 16Q2 expansion of production from the implementation of the plan, on 2016, China will be concentrated in the production capacity of $four. At the same time, CREE crystal power, began to reduce GaN production capacity in 2016, the domestic manufacturers are in the beginning of this year GaN floor production line investment, considering the equipment purchase, commissioning period, the local chip maker MOCVD will invest about 135 units, about 125 units of account crystal electric equipment exit, the 2017 global new equipment limited domestic growth below 11%. On the one hand, due to the full-color display needs 2 times of blue green and red and yellow, production capacity, on the other hand, due to withdraw from international companies to provide more domestic alternative space for downstream lighting manufacturers, domestic manufacturers to undertake the transfer of GaN LED industry center to speed up the progress of.

Demand side: small spacing, Micro-LED, IR, the rise of the car market, lighting engineering welcome development opportunities

Demand structure in the domestic LED industry, in 2016 accounted for 47.6% of general lighting, landscape lighting accounted for more than 13.5%, backlight applications accounted for more than 12.1%, accounting for the proportion of the screen, car lighting accounted for more than 1.4%. According to the growth in recent years, the growth rate of 15%, assuming 2017 general lighting landscape lighting, small spacing and growth rate of 7% LED growth rate of 70%, the display (except small spacing) 4% cars with a growth rate of 6% growth, while domestic LED industry demand growth rate of about 10.44%, taking into account the impact of the 2015 LED product prices decline, demand growth should be higher than the output growth. With a good development opportunity for rise of the small spacing of LED, Micro-LED, IR, light market and fiscal expansion cycle under the lighting project, LED demand growth is accelerating in 2017, only a small spacing of LED will need to add about 26 sets of MOCVD equipment.

Demand side: to determine the need to fill inventory, consumer upgrades positive leading manufacturers

LED industry since 2012 to enter the inventory digestion stage, according to the SWS data from 15Q3, LED plate, industry inventory turnover days from 117.94 days to 102.92 days of the 16Q3, its lowest level in the history of 2009Q3, the future restocking demand will push up a new round of industry boom. In addition, Huatai Securities believes that good money expelled bad money is the demand side occurs. When the LED bulb price down to the consumer's "comfort zone", to benefit from the upgrading of consumption, some small and medium-sized manufacturers through the price difference to enhance the ability to purchase intention, puerile profit model challenged, small profits less sales phenomenon will increase some small manufacturer competition pressure from the demand side, accelerate the industry reshuffle, favorable leading manufacturers.

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