IDG assists, HC semitek will become the world's second largest producers of LED chips

Production capacity from 700 thousand up to 1 million 800 thousand pieces, the company planning the release of production capacity, Huacan Au Optronics Co (hereinafter referred to as "Huacan photoelectric") will become the world's second largest LED chip production enterprises.

The company will invest 10 billion 800 million yuan for the construction of advanced semiconductor devices and projects, this company can play the advantages of scale and development advantages." The day before, in the HC semitek results briefing, HC semitek, chairman of the Board Secretary Yu Xinhua said.

The external and internal expansion of mergers and acquisitions let HC semitek achieve scale expansion, since the listing, the company has acquired Yunnan langene technology and America MEMSIC semiconductor company, the chain from LED epitaxial chip before manufacturing expand to the sensor and semiconductor field. This is also a shareholder IDG featuring the company, HC semitek change. The mechanism and effects of mergers and acquisitions in assists Huacan photoelectric exposed body, the company in 2017 revenue and net profit growth.

The performance of high growth

HC semitek 2017 report shows that during the period the company operating income of 2 billion 629 million yuan, an increase of 66.21%; owned by the parent net profit of 502 million yuan, an increase of 87.92%, after deduction of non owned parent net profit of 273 million yuan, up 970.30%.

This performance in the first quarter of this year to continue to enlarge. 2018 a quarterly period, revenue reached 709 million yuan, an increase of 40.17%, owned by the parent net profit of 142 million yuan, an increase of 76.84%, after deduction of non owned parent net profit of 69 million 759 thousand and 800 yuan, an increase of 57.49%.

"The first quarter of this year, the company inventory increase is only 100 million yuan. Operating cash flow of 150 million yuan, net profit is higher than that of female owned." Orient Securities Peng Quine team said in a research report.

The main reason is to improve the performance of the company scale expansion and customer structure.

Since 2016, China's LED industry ushered in a wave cycle, HC semitek first is the main product of LED wafer and chip, previously only nearly 100 MOCVD, capacity to keep up with the market demand.

The company performance inflection point in the fourth quarter of 2016, from the previous negative growth into an increase of 171%. At this time, the company has launched the expansion plan and the smooth implementation of production base from Wuhan, Zhangjiagang to Zhejiang Yiwu expansion. By the end of last year, the company has 257 sets of MOCVD LED epitaxial wafers (converted into 2 inch 54 machine), and all 4 inch tablet into the production process, the comprehensive yield of epitaxial films increased from 99% to 98.5%. 4 inch wafer production reached 4 million 890 thousand per year, the capacity utilization rate has reached 98%, and annual production capacity under construction 7 million.

In 2015, under the leadership of IDG, HC semitek acquired Yunnan langene, thereby starting the sapphire substrate field. In 2017, Yunnan langene annual output of 13 million 2 inches of substrate (equivalent to an annual output of 3 million 250 thousand 4 inches of chip production capacity contribution). The company in LED blue chip production reached 270899 kk/, the capacity utilization rate of 93.41%. LED green chip production reached 170713 kk/, the capacity utilization rate of 94.84%. As the LED epitaxial wafer of upstream products, Yunnan langene products 90% - 10% for export.

The structure of the company's products have sharply improved in 2017. HC semitek LED blue chip operating income 1 billion 592 million yuan, an increase of 77%, gross margin reached 33.1%. The substrate sheet 403 million yuan, an increase of 74.40%, gross margin reached 40.64%.

United States Securities research report pointed out that on the one hand, HC semitek high efficiency products accounted for through ascension, so as to enhance the overall price of products; on the other hand, the elimination of old equipment, improve product yield and production efficiency and reduce production cost. At the same time, LED also simultaneously Aquamarine sapphire substrate expansion, play a synergistic effect to enhance the overall gross profit level.

For the previous Wuhan base product gross margin low situation, the company has started production line integration, in this regard, the company's financial director Jiang Ruixiang said that at present, the company production line to complete the integration, the impact on the performance in 2017 has been fully accrued. According to the raw material prices or further affect the gross profit margin concerns, Jiang Ruixiang said that this year will be on the substrate and the chip production of 6 inch production import plan. In addition, the company has formed a strategic supplier cooperation mechanism, will continue to enhance the yield especially new yield, and the expansion planning sapphire substrate further reduce the cost of materials.

Excess capacity test

With the industry boom index rebound, enterprises have accelerated the expansion of production capacity.

HC semitek independent director Han Hongling also said that this year with the expansion of production capacity last year, Dachang has put pressure on the second factory. LED industry may pile up in excess of requirement in the local market, structural overcapacity, the second tier enterprise where the excess low-end lighting products. But the strong technical strength, solid line factory boom is still the health status of customers. A line of enterprise through and higher cost advantages of scale sufficient investment in R & D, can undertake international orders in the high-end market, adequate capacity utilization and good sales margin.

From the industry boom of view, LED is a growth industry, with the progress of technology and cost reduction will continue to open up new markets, but rapid growth does not mean no fluctuation, with the competition pattern gradually stable, the industry growth rate will slow. China LED production by 2010 to 1 million, now increased by nearly 10 times, the next two or three years, the industry growth rate of about 10% at the end, the average can be maintained at around 15%.

Yu Xinhua said that this year the industry's first device to the three quarter of 2018 was started batch delivery later than expected one or two quarter to the three quarter of 2019 to form part of the production capacity, this part of the production capacity has a great influence on the industry leader will not.

Due to the expansion of the cycle is very long, from the end to the epitaxial chip technology are also time to reach the current brightness, including new products to the customer authentication takes time, so the real mass production may be to the three quarter of 2019.

The extension of industrial chain

In April this year, the completion of the MEMSIC HC semitek (MEMSIC semiconductor acquisition) in IDG under the leadership of the business scope extends from the LED to MEMS sensor. At the same time, the internal self expansion, the company has with the Zhejiang province Yiwu optoelectronic information tech Industrial Park Management Committee signed the investment framework agreement, will invest 10 billion 800 million yuan of advanced semiconductor devices and project layout.

"The project has many advantages." Yu Xinhua said that in the field of compound semiconductor device, HC semitek has formed an international leading R & D and manufacturing scale advantages, and extends to the material system of other related devices development and manufacturing industry has a natural advantage. In addition, in the field of MEMS sensor, the company has a leading international capability of independent development of the scale of production. In addition, the company has a LED wafer factory in Yiwu, the further development of enterprises supported by the local government.

MEMSIC semiconductor is MEMS sensor manufacturers leading, the main products for the accelerometer and magnetic sensor, customers in the consumer electronics and automotive electronics. In 2016, ranking fourth in the global new global acceleration sensor market, ranking third in the world in the geomagnetic sensor.

"These changes are completed in IDG under the guidance of." A concern of the company pointed out that the development of history in HC semitek on IDG contributed from the initial investment, to two m after the vote, let HC semitek achieve an extension on the scale of change and the business chain, which assists rapid effect appeared in 2017, with Huacan photoelectric original team gradually withdraw Amplification and IDG operation ability, IDG in HC semitek voice is more and more high, "the daily management and management have been gradually equipped with deeper involvement."

Source: twenty-first Century Economic Report

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