Several factors influencing LED industry cycle fluctuation

Supply factors: inventory, the new production capacity, the industry reshuffle first quarter inventory pressure. At present, Taiwan, mainland enterprises inventory levels are at historic highs, from last year's three quarter earnings, on both sides of LED enterprise inventory close to or more than a single quarter revenue, thus it can be seen that the process to clear inventory will continue for at least a quarter of the first quarter of 2012, the supply industry will face greater pressure. Will start a new round of financing, or the birth of a new round of surge capacity. In order to meet the industry downturn, domestic enterprises have to seek a listing or refinancing, the first round of intensive listing period for the three quarter of 2010 to mid 2011, more than 10 enterprises in the industrial chain of LED IPO or additional; the current industry will usher in the second round of intensive market, as of now there are over 6 companies, the number of listed companies ready to refinance. A new round of financing will promote the production capacity, increased supply, the deterioration of the industry supply and demand situation in the short term, but in the long run may accelerate the industry reshuffle and small capacity exit. Industry reshuffle, the small factory exit will ease the supply pressure. Since 2011, the mainland, Taiwan, serious deterioration of the financial situation of enterprises, the steady growth in demand for lighting rather than the outbreak of the industry will determine the status of long-term overcapacity. Domestic LED industry concentration is low, the overall market share of small enterprises, the industry, such as entering the consolidation period will reduce the supply of a large number, to ease the pressure on production capacity. Demand factors: expected short-term uncertainty is higher, terminal manufacturers expected investment channels, the European market manufacturers export terminal manufacturers. At present, the downstream manufacturers of LED lighting are highly dispersed, and a large number of terminal lighting manufacturers are expected to have a direct impact on the short-term demand of the LED lighting market. By the end of 2011 so far, it is expected that the downstream manufacturers turn optimistic and support the price of the device. Due to the dispersion of downstream terminal manufacturers and their expected adjustment speed, the short-term fluctuations in the industry in 2012 caused a greater uncertainty. Traditional lighting first tier manufacturers investment. Compared to the highly dispersed terminal small plants, traditional lighting manufacturers to promote a stronger demand, and the implementation of the strategy has a strong consistency. At present, most of the first-line manufacturers have entered the field of LED, these manufacturers in 2012 and the time point of investment is still difficult to predict, with some uncertainty. The European market and the export channel. European lighting market acceptance of LED has been higher, the overall ban on incandescent light bulbs in 2012 to become the main catalyst for the full launch of LED lighting. However, the negative impact of the European debt crisis on the economy is uncertain market growth, domestic enterprises export channels to Europe also has a larger variable. Short term: trend clear, six factors influencing the short-term fluctuations we will influence factors in short-term industry supply and demand summary for the 6, which we think will release inventory first appeared, and the highest uncertainty. In the production capacity to maintain stability in the medium term, the trend of steady increase in demand, the 6 factors of different intensity and duration will affect the short-term fluctuations in the industry's profits.