LED domestic demand will drop by 10% this year
Wang Fei, the research director of the research area of LED inside in China, said in an interview with China Business News on February 13 that the new coronavirus infection pneumonia epidemic will reduce the domestic demand for LEDs by more than 10% year-on-year in 2020. UV LED lights with certain sterilization functions and displays 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 doing epidemic prevention measures, they have reduced unnecessary expenses, adopted more diversified marketing methods, adjusted internal production capacity, and seized market opportunities such as display screens to become LED companies. Common choices in response to an outbreak.
The automotive lighting industry has been greatly affected
The impact of the epidemic on the supply side of the LED industry is reflected in three aspects: chips, packaging, and applications. From the perspective of upstream chip factories, Wang Fei believes that the overall chip industry of the LED industry is far from the core epidemic areas in Wuhan and Hubei, so it is not affected as much as LCD (liquid crystal) panel, semiconductor, optoelectronic communication, automotive and other industries. In addition, the LED chip industry is in a state of high inventory, and short-term resumption of work will not affect chip supply.
Wu Huacan Optoelectronics (300323.SZ) has a relatively high proportion of employees in Wuhan. Some employees are affected by the closure of Wuhan after returning to the Spring Festival in Wuhan. It is difficult to return to work in the short term, which may cause a certain degree of impact. However, the Wuhan plant has withdrawn its production capacity and its production bases are mainly located in Yiwu and Zhangjiagang. At present, the production capacity is not affected by the epidemic situation for the time being, and further observation is needed in the future.
Sanan 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 progress will be delayed. Other Chinese LED chip factories are far from the epidemic area and will not be affected for the time being.
From the perspective of the middle-end packaging factory, the LED packaging industry chain is mainly distributed in the Pearl River Delta, and some of the Pearl River Delta enterprises are inwardly moved to Jiangxi Province. At present, these two areas are not epidemic centers, and the impact is expected to be minor. Follow-up depends 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 with concentrated LED lighting industries 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, and the overall impact is not large, but because Wuhan is the major LCD (liquid crystal) panel industry, demand will be affected to some extent. In terms of vehicle use, Hubei Province is an important cluster of the automotive industry, and Wuhan is also a major town in the Chinese automotive industry. Therefore, the overall automotive industry will be deeply affected, and the automotive lighting market will be greatly affected. The display industry chain is mainly around Shenzhen and is expected to be less affected.
Big opportunities for UV lamps and displays
For the demand side, Wang Fei believes that the epidemic has brought about a one-time drop in demand, so demand will decline sharply in a single quarter. The epidemic situation has also brought changes in lifestyles and working methods, and is expected to affect some LED industries. Overall, it is expected that the LED demand in the Chinese market will decline by more than 10%.
Among them, the one-time demand shock will have an impact on general lighting and car lights, which will accelerate the clearance of the general lighting and car lights industries that are already in oversupply. Some small and medium-sized enterprises may withdraw permanently.
In addition, the decline in demand will be indirectly reflected in the segmented application market of non-essential products such as outdoor displays and landscape lighting. These industries are highly dependent on government purchases. It is expected that government budget investment in related fields will be significantly reduced this year, and they will mainly spend on epidemic prevention, medical care, social security, public safety and other fields.
At the same time, Wang Fei predicts that “the sub-sectors that this epidemic may bring are favorable including UV LED (ultraviolet LED light) and conference display system”. Ultraviolet lamps can kill bacteria and viruses, so during the epidemic, the sales of traditional ultraviolet lamps have skyrocketed, and there has been a shortage of quartz lamps and brackets. Although there is still a gap between the effective sterilization dose of UVLED, the price of UV lamps has risen, and the rising price of UV lamps has stimulated the speed of commercialization of related industrial chains.
In addition, due to the impact of the epidemic, online conferences and online education have become the preferred working methods for enterprises, governments and schools. Therefore, the demand for large-screen display equipment has increased, and the conference display industry will benefit indirectly.
Many LED companies have resumed work
ENELTEC began to resume peak work and flexible office on February 10. NVC Lighting CEO Wang Donglei said that this epidemic is a huge sudden challenge for most companies, especially the offline retail industry, but the opportunity is in the challenge. NVC's commercial lighting business may be more difficult in the first quarter, but the projects obtained will only be delayed a bit; NVC's market share in the segmented lighting market is still small, and there is still room for development; offline retail teams use more three-dimensional, online and offline interactive marketing methods. NVC will cut off all unnecessary costs, support the front line to the greatest extent, and deal with any future uncertainty with its own maximum certainty.
Juhuacan Optoelectronics' factories in Zhangjiagang and Yiwu have been fully resumed, saying that the epidemic has not caused any substantial impact on the company's production and operation. Guoxing Optoelectronics resumed work on February 10, and issued employee notices on personal protection, dining, and accommodation. Zhaochi's factories in Guangdong and Jiangxi also resumed work on February 10. It plans to adjust internal production capacity to make up for lost sales in the first quarter in the second and third quarters.