China's LED chip inventory hit a record high
It is reported that due to weak demand and capacity expansion, the comprehensive inventory of China's six major LED chip manufacturers has increased from 6.52 billion RMB ($943 million) at the end of 2018 to 6.77 billion RMB at the end of March 2019, a record high.
The six LED chip manufacturers include Sanan Optoelectronics, Huai'an Aoyang Shunchang Photoelectric Technology Co., Ltd., Dehao Runda, Huacan Optoelectronics, Ganzhao Optoelectronics and Jucan Optoelectronics.
As of the end of March 2019, Sanan Optoelectronics' inventory value reached 2.958 billion RMB, an increase of 10.37% compared with the end of 2018; Jucan Optoelectronics increased 19.62% during the January-March period to reach 250 million RMB; Huacan Photovoltaic Stock value also reached 1.554 billion RMB, a year-on-year increase of 96.96%.
As the inventory value increases, the inventory turnover rate also begins to decline. Among them, the average inventory turnover rate of Sanan Optoelectronics increased from 174 days at the end of 2018 to 232 days at the end of March 2019, Huacan Optoelectronics increased from 205 days to 241 days, and dry photo photoelectrics increased from 178 days to 278 days.
Dehao Runda continued to achieve losses in 2018. The net profit of the other five producers declined in 2018: Sanan, Huacan and Jucan's 2018 net profit fell 10.56%, 51.43% and 81.48% respectively.
According to industry sources, the demand for LED chips in China is estimated at 8.6 million in 2018, and the total annual production capacity in 2018 is about 10 million. At the same time, as demand is unlikely to increase significantly, the overcapacity trend will continue, which will cause China's smaller LED chip manufacturers to be forced to withdraw from the market, but some major manufacturers may continue to expand production capacity.