LED industry giants, Hengda pattern will set prices, competition, return to reason

Autumn September, the news of raw material prices in the LED industry rumors. From the largest domestic chip companies to Xiamen Sanan optoelectronics XinDa, and even packaging giant chip packaging manufacturers, Linsen came up signal products. The reason for the price adjustment given by manufacturers is without exception because of the bottom price of raw materials and the increase of labor costs. In fact, since May across the Strait EPISTAR announced this year prices, the major domestic manufacturers had to try. For chip and packaging materials prices, the industry has applauded, and want to follow up. More professionals said that the rise in prices is due to normal market rules, indicating that the LED market competition is gradually returning to reason. , chip packaging manufacturers collective price in May this year, the price of the chips EPISTAR fired the first shot, the blue LED prices will raise 15%. Then, three Huacan, other chip manufacturers have also conducted a price adjustment. By the end of August, LED chip, packaging enterprise is collective price, Xiamen three part of small and medium size product prices go up 10%, started in August 25th; amp photoelectric, photoelectric XinDa and Linsen RGB beads have increased 5% price, since the beginning of September 1st implementation. Three optical price adjustment letter shows that raw material prices bottomed out, of which gold (up more than 27% year), the substrate (compared to June rose 30% above); at the same time because of the small power small chip size, the BEOL consumes a large amount of sorting and testing capacity, unit labour cost increases, resulting in back end a sharp decline in output process. For some small and medium-sized products prices are up 10%, and in August 25th began to implement. In the Linsen price adjustment notice, due to changes in the market, resulting in product costs continue to rise, in order to collaborative production development of both sides and maintain good business relationship, according to the actual situation of raw materials prices. The principle of mutual benefit, is scheduled for September 1, 2016 RGB display lamp price raised 5%. XinDa photoelectric price adjustment letter shows that by the upstream chip and support prices rose sharply (generally above 10%), plus labor costs continued to rise, especially on the company's production of RGB lamp in the price increase 5% basis at present. The price adjustment has been implemented since September 1st. The price adjustment, including Fujian, XinDa, Guangdong, XinDa, An Puguang, Xiamen, XinDa and other four subsidiaries of the company, and the price range is 5%. The main reason of price adjustment manufacturers given is due to the recent various raw materials and labor costs, the price has exceeded the cost accounting, in order to raise prices and profits remain. From the manufacturers issued a price adjustment letter can also see, in recent years, applied to LED raw materials sapphire substrate, aluminum substrate, gold and so on, have varying degrees of price increases. Sorting through the major manufacturers issued price information is not difficult to find, at present the price of products are LED display chip and package products, especially small pitch products. LEDinside senior analyst Wang Fei believes that the small spacing LED display has entered the market growth period, the market size is rapidly expanding. Downstream robust demand and technological advances will drive small space packaging and chip consumption to grow rapidly. He believes that the display and backlight packaging products will be driven by small distance display demand, prices will have some room for improvement, and lighting package will be facing upstream and downstream extrusion." Prices decline, profits bottomed in fact, LED chip, package and other product prices in recent years all the way down. In an recently held 2016 Strategiesin Light (SIL) and LEDShow conference, senior analyst Stephanie Pruitt said that the incredible price decline has led to a decline in revenue from the packaged LED market. Pruitt pointed out that the second half of 2015, the power LED prices dropped by 30% to 40%. High power LED was less affected, but still decreased by 20% to 30%. Pruitt believes that a significant drop in prices for lighting and backlight applications is the main culprit, as shipments of LED continue to climb. This is also reflected in the semi annual report released in recent major enterprises. In August 20th, poly photoelectric released 2016 semi annual report. A mixed blessing is that the company's revenue in the first half of this year, a substantial increase of 57.32% to 655 million yuan, while net profit fell 12.56% to 59 million 414 thousand and 400 yuan. In constitute the main business table, Jufei LED lighting product gross margin particularly interesting, the product revenue was 74 million 109 thousand and 600 yuan, 67 million 141 thousand and 200 yuan operating costs, gross profit margin of only 9.4%. Excessive competition is fierce, is already a hot trend in LED industry norm, "injured" not only Jufei a package, leading LED application (including 2015 Linsen lighting and other products) of the gross profit margin of only 7.17%. But this year our semi annual report has not been disclosed, the current gross margin to also can make nothing of it. In addition to the implementation of double main industry of Lehman photoelectric, the first half of 2016 the company achieved operating income of 250 million yuan, an increase of 49.41% over the previous year; the sports resources to achieve sales revenue 25 million 820 thousand yuan, an increase of 77.15%. But it is worth noting that the Lehman photoelectric main business LED, and related packaging products, lighting products and display products, although they all have different rate of growth in revenues, but gross margin fell. To LED business, for example, the first half of 2016 revenue of 220 million yuan, 29.25% gross margin, down 4.06 percentage points over the same period last year. The same is true in the upstream chip industry. According to the three optical semi annual report