LED chip companies are now polarized SME prospects are different

CCID think tank news, mergers and acquisitions to become the fastest means of integration of resources, through acquisitions or shares of the way to achieve optimal allocation of resources and maximize benefits. Especially in the field of semiconductors, from integrated circuits to LED, with the rapid growth of the industry, large and small mergers and acquisitions frequent events. According to statistics, since the beginning of 2015 so far, LED integration of mergers and acquisitions in the field has been close to 30, the scale of funds for the acquisition of nearly ten billion yuan, covering all aspects of the industry chain, mergers and acquisitions in the form of diversification. However, in the middle and lower reaches of the LED in the context of mergers and acquisitions, the upstream chip chip companies are rarely involved. Chip link in the LED industry smile curve on the top, with heavy assets, high investment, high technology content of the characteristics, in the face of big rival development trend, the future direction of the LED chip industry concern.

LED chip companies appear to increase the concentration of polarization capacity

In the first half of 2015, China's LED chip industry scale of nearly 8 billion yuan, an increase of 15%, showing a steady growth trend. As of 2014, the number of domestic MOCVD equipment to 1172 units, in 2014 to buy MOCVD150 units, an increase of 36%, for the past 4 years to become the world's largest number of MOCVD equipment purchase area. It is expected that in 2015, China continued to purchase nearly 200 MOCVD, equipment is expected to increase to 1372 units. However, the number of upstream epitaxial chip companies plummeted from more than and 60 in 2009 to less than 20, and according to the current statistics of the actual operation of the enterprise is only about 15. At the same time, the chip industry leading enterprises to further enhance the degree of market concentration, the top 5 chip companies market share increased from 64% in 2013 to 67% in 2014, accounting for nearly 70% of the national total production capacity, gradually formed oligopoly situation.

Chip market concentration further enhance for three main reasons: first, the purchase of equipment to create a new chip manufacturing line requires high sustained investment. Early because of government subsidies, many LED enterprises purchase MOCVD equipment, construction plant, large area launched LED chip project, the formation of three, Elec-Tech and a number of industry leaders. With the gradual withdrawal of government subsidies, the new entrants will be difficult to meet the need to compete with the industry leading equipment spending. At the same time in order to expand the scale, need continued investment expansion funds or improve equipment performance, buy 4 inches and above more expensive equipment, some of the poor economic performance of small LED chip enterprises because of the lack of cash flow is difficult to carry out follow-up investment, will also be out of the market in the loss of subsidies.

Two is to improve the competitiveness of the product requires a lot of R & D investment. LED industry is in the stage of rapid development, the rapid development of LED technology, domestic and international technical equipment and production technology is constantly updated, the chip light effect has risen every quarter. In order to reduce the cost of production in a short period of time to occupy the market, companies need to invest a lot of manpower and material resources for product development and technology investment, resulting in a smaller company production and operation pressure.

Three chip price decline is difficult to profit. With the domestic chip production capacity further release, increasing chip market competition, prices fell too fast, a lot of enterprise's profit margins are squeezed, the further compression of the LED epitaxial chip the profits of enterprises, for SMEs, it is difficult to bear. Leading enterprises with stable customer and bargaining power, and further strengthen the ability of industry control, thereby establishing a stable pattern of competition in the industry.

Faced with competitive pressures small LED chip business prospects are different

The domestic LED enterprises can be divided into three categories: one is a private enterprise, by domestic and foreign investment, private capital investment was established; two is a group company, or by the Group Corporation, set up a subsidiary; three is owned by the state capital to participate in the establishment of the company.

For the first class of small and medium LED chip companies, in the case of poor operating conditions, the acquisition of mergers and acquisitions to become an important way out. But this kind of enterprises are small scale production, aging equipment, technology ability is insufficient, because of the characteristics of the chip industry heavy assets, integration is difficult to achieve and acquiring company; at the same time, SMEs are generally for the non-listed company, is not convenient for the price. These factors lead to high cost of mergers and acquisitions, mergers and acquisitions is not strong, few large companies are willing to buy, such small and medium enterprises can only bankrupt, the rapid exit from the market competition.

For the second types of subsidiaries of the group, in the face of operating pressure, due to the back of the group's big tree, in financial support to maintain the existing scale of operation for some time. In the long run, the group will develop different development strategies according to the market situation, the semiconductor industry group company uses channel advantage, through mergers and acquisitions or buy way power LED chip subsidiary to expand upstream and downstream, the extended LED chip market. Dabble in a number of business areas of the group company, in the case of limited profit in the field of LED, will reduce its investment, limited funds to maintain the existing scale of operation, to be improved after the market demand to expand investment.

Third types of Companies in a difficult position, because it involves state-owned capital, shareholders for their own interests are not willing to apply for bankruptcy liquidation reasons, coupled with the old equipment, and local government relations complex makes it difficult to be acquired, we can only become a very small production or no production of "zombie" enterprises.

Leveraging national strategy LED chip companies looking for the future

Under the pressure of large enterprise products, brands and capital advantages, small and medium LED chip companies should be combined