LED domestic demand will drop 10% this year
The new coronavirus pneumonia epidemic will reduce domestic demand for LEDs by more than 10% year-on-year in 2020. At the same time, UV LED lamps with certain sterilization functions and display screens that can be used for online meetings may become opportunities for the LED industry.
A number of LED companies have resumed work on February 10th. While taking preventive measures, they have reduced unnecessary expenditures, adopted more three-dimensional marketing methods, adjusted internal production capacity, and seized market segments such as display screens to become a common choice to deal with the epidemic for LED companies.
Automotive lighting industry suffers greater impact
The impact of the epidemic on the supply side of the LED industry is reflected in three aspects: chips, packaging, and applications. From the upstream chip factory, Wang Fei believes that, as a whole, the LED industry chip industry is far away from the core epidemic areas of Wuhan and Hubei, so the impact is not as severe as LCD (liquid crystal) panel, semiconductor, optoelectronic communication, automobile and other industries. In addition, the LED chip industry is in a state of high inventory, and short-term failure to resume work will not affect chip supply.
HC Semitek (300323.SZ) has a relatively high proportion of employees from Wuhan. Some employees are affected by the lockdown of Wuhan after returning to Wuhan during the Spring Festival. It is difficult to return to work in the short term, which may cause a certain degree of impact. However, the Wuhan factory has already withdrawn its production capacity, and its production bases are mainly in Yiwu and Zhangjiagang. The current production capacity is temporarily not affected by the epidemic, and further observation is needed in the future.
San'an Optoelectronics (600703.SH)'s main production bases are located in Fujian and Anhui provinces, which are relatively less affected. However, its new Micro/Mini LED chip project in Ezhou, Hubei Province is expected to be affected by the epidemic and its progress will be delayed. Other Chinese LED chip factories are far away from the epidemic area and will not be affected for the time being.
From the perspective of midstream packaging factories, the LED packaging industry chain is mainly distributed in the Pearl River Delta, and Jiangxi Province, where some Pearl River Delta enterprises have moved inward. At present, these two regions are not the epicenters of the epidemic and are expected to be less affected. The follow-up will depend on whether Guangdong and Jiangxi can effectively control the epidemic.
From the perspective of downstream applications, Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu and other provinces and cities where the LED lighting industry is concentrated are currently affected by the epidemic, but the situation is still under control. The LED backlight industry chain is mainly located in Guangdong and Jiangsu, with little overall impact. However, since Wuhan is an important town in the LCD (liquid crystal) panel industry, demand will be affected to a certain extent. In terms of automotive use, Hubei Province is an important cluster of the automotive industry, and Wuhan is also an important city in China's automotive industry. Therefore, the overall automotive industry will be affected more deeply, and the automotive lighting market will be greatly affected. The display industry chain is mainly located around Shenzhen and is expected to be less affected.