IDG assists, hucan opto will become the second largest LED chip manufacturer in the world

Production capacity from 700 thousand to 1 million 800 thousand tablets, the company's planned capacity release, the hucan Au Optronics Co (hereinafter referred to as "hucan opto") will become the world's second largest LED chip production enterprises.

"The company will also invest 10 billion 800 million yuan in the construction of advanced semiconductor and device projects, which can give full play to the company's advantages of scale and research and development." A few days ago, the chairman of hucan optoelectronic and the Secretary of the board of directors of the board of directors, Yu Xinhua, said at the Hua can photoelectric performance briefing.

External merger and internal expansion make hucan optoelectronic scale expansion. Since the listing, the company has acquired Yunnan blue crystal technology and American new semiconductor company, and expanded the industrial chain from henceforth LED epitaxial chips to sensors and semiconductors. This is also the quality change of hucan optoelectronic after the shareholders of the IDG company. The effect of such institutional assists and mergers and acquisitions was revealed in hucan optoelectronic, and the company's revenue and net profit increased significantly in 2017.

High performance growth

The annual report of hucan opto in 2017 showed that the operating income of the company was 2 billion 629 million yuan, up 66.21% from the same period, and the net profit was 502 million yuan, 87.92%, and the net profit was 273 million yuan, up to 970.30% over the same period.

This performance continues to be magnified in the first quarter of this year. In 2018, a quarterly report showed that the company's revenue reached 709 million yuan in the period, up 40.17% from the same period, 142 million yuan to the net profit of the mother, 76.84% in the same period, and 69 million 759 thousand and 800 yuan to the net profit of the mother, and a 57.49% increase over the same period.

"In the first quarter of this year, the company's inventory has been improved by only 100 million yuan. The operating cash flow amounted to 150 million yuan, which was higher than the net profit of the return to mother. " The eastern securities Quine Peng team pointed out in the research report.

The main reasons for the change of performance are the scale expansion of the company and the improvement of the customer structure.

Since 2016, China's LED industry ushered in a boom cycle. The first main product of hucan optoelectronic is LED epitaxial film and chip, with only nearly 100 MOCVD before the market, capacity can not keep up with the market demand.

The company's performance inflection point appeared in the fourth quarter of 2016, from a previous negative growth to an increase of 171%. At this time, the company has begun to expand production plans and successfully implemented, the production base from Wuhan, Zhangjiagang to Zhejiang Yiwu. By the end of last year, the company's LED epitaxial film had 257 MOCVD units (converted to 2 inch 54 pieces), and all imported 4 inch production technology, and the comprehensive good rate of the epitaxial film increased from 98.5% to 99%. The production of 4 inch substrate is 4 million 890 thousand tablets per year, the utilization rate of production capacity has reached 98%, and the production capacity is still 7 million tablets per year.

In 2015, under the leadership of IDG, hucan optoelectronic bought the Yunnan blue crystal to cut into the sapphire substrate field. In 2017, Yunnan's blue crystal produced 13 million slices of 2 inch substrate (about 3 million 250 thousand slices of 4 inches) to make its production capacity. The company's LED blue light chip production reached 270899 kk/ years, and the productivity utilization rate reached 93.41%. The output of LED green light chip reached 170713 kk/ years, and the utilization rate of production capacity reached 94.84%. As the upstream product of LED epitaxy, the Yunnan blue crystal products are 90% self - used and 10% for export.

The company's product structure has also improved significantly in 2017. Hua can optoelectronic LED blue light chip operating income of 1 billion 592 million yuan, an increase of 77%, the gross interest rate of 33.1%. The substrate was 403 million yuan, an increase of 74.40% and a gross margin of 40.64%.

On the one hand, hucan optoelectronic improves the overall price of the product by raising the high light efficiency products, on the other hand, eliminating the old equipment, improving the yield and reducing the cost of production efficiency. At the same time, the blue crystal LED sapphire substrate is also extended synchronously, and the synergistic effect is used to improve the gross profit level.

In view of the previous low gross margin of Wuhan base products, the company has embarked on the integration of production lines. In this case, Jiang Ruixiang, the chief financial officer of the company, said that, at present, the company's line integration has been completed and the impact on the performance has been fully proposed in 2017. In view of the further increase in the price of raw materials or the concern of the gross interest rate, Jiang Ruixiang said that this year will carry out a 6 inch production import plan for substrate and chip production. In addition, the company has formed a strategic supplier procurement cooperation mechanism, which will continue to improve the good rate, especially the new yield, and will plan the expansion of the sapphire substrate to further reduce the cost of the main material.

The test of overcapacity

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

Han Hongling, an independent director of Hua can optoelectronic, also said that this year, with the expansion of last year's large factory capacity, the second line plant caused pressure. The LED industry may supply oversupply in the local market, which is a structural overcapacity, that is, the surplus of low-end lighting products in the second line enterprises. But the strong technical strength and firm base of the customer base are still in a healthy condition. Through adequate R & D investment and higher scale cost advantages, first line enterprises can undertake international orders in the middle and high-end market areas to ensure adequate productivity utilization and good sales gross interest rate.

From the perspective of industry prosperity, LED is a growth industry, with technological progress and cost decline will continue to open new markets, but high growth does not mean that it will not fluctuate, with the gradual stability of the competition pattern, the growth of the industry will also be slowed down. China's LED production has grown from less than 1 million in 2010, up to now 10 times, and the growth of the industry in the next two or three years is about 10%, with an average of about 15%.

Yu Xinhua said that the earliest equipment in the industry this year did not start a partial delivery until the three quarter of 2018, one or two quarters later than expected, and a partial capacity in the three quarter of 2019. This part of the production capacity would not have a special impact on the industry leading.

Because of the long period of expansion, it takes time from the epitaxial to the chip technology to reach the present brightness, including the time for the new product to be certified to the customer, so the real mass production may be in the three quarter of 2019.

Industrial chain extension

In April this year, hucan optoelectronic completed its acquisition of MEMSIC (new semiconductor) and extended its business range from LED to MEMS sensors under the leadership of IDG. At the same time, in the internal independent expansion, the company has signed an investment framework agreement with the Zhejiang Yiwu information optoelectronic High-tech Industrial Park Management Committee, which will invest 10 billion 800 million yuan in the layout of advanced semiconductor and device projects.

"There are many advantages to invest in this project." Yu Xinhua said that in the field of compound semiconductor devices, hucan optoelectronic has formed a leading international advantage in R & D and manufacturing, and has a natural advantage in the development and manufacturing of other related devices in the material system. In addition, in the field of MEMS sensor, the company has the capability of scale production and independent development of the international leading device. In addition, the company has a factory in Yiwu with LED epitaxial film, and the enterprise has further developed the strong support from the local government.

The American new semiconductor is the world's leading MEMS sensor manufacturer. The main products are acceleration sensors and geomagnetic sensors, and customers are all over the field of consumer electronics and automotive electronics. In 2016, it ranked fourth in the world's global acceleration sensor market and ranked third in the global position of geomagnetic sensors.

"These changes are done under the guidance of IDG." A person who paid attention to the company pointed out that in the history of the development of hucan optoelectronic, IDG can not be done, from the initial investment to the two mergers and acquisitions after the investment, so that hucan optoelectronic realized the huge change in scale and the extension of the business chain, which appeared rapidly in 2017, and gradually withdrew with the original team of hucan optoelectronic. The operation capacity of the company and IDG is magnified, and the discourse power of IDG in hucan optoelectronic is getting higher and higher. "The daily management and management of the equipment have gradually stepped in deeper."

Source: twenty-first Century Economic Report

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