Lighting LED package prices slow down

The latest "2019 China LED Chip and Packaging Industry Market Report" pointed out that due to the global economic downturn and the Sino-US trade conflict, the growth rate of the global LED lighting market has slowed down significantly, which has affected the output value of LED packaging used in the lighting field. In 2018, the size of China's general lighting LED packaging market was 5.2 billion U.S. dollars, and the compound annual growth rate from 2018 to 2023 was only 3%, and the growth rate dropped significantly.

Due to the limited decline in the price of LED chips of first-tier brands, and the profit margins of LED package manufacturers are already very small, under the situation that costs cannot be reduced, most package manufacturers are unwilling to continue to grab market share by bargaining, and at the same time reduce the production rate , and reduce inventory pressure. Therefore, the overall package price of the Chinese market in June changed little, and the prices of some high-power and mid-power LED package products fell slightly. For high-power parts, the average price in June dropped by about 1%. In the mid-power segment, price changes mainly occurred in 5630 LEDs, 0.5W and 0.2W. The prices of 5630 LED products fell by 0.5% and 2.4%, respectively.

Lighting LED packaging business is difficult to profit, manufacturers actively enter the Mini LED display market

From the perspective of profitability, since the third quarter of 2018, the LED chip industry has shown a significant decline in gross profit margins. If the Chinese government subsidies are deducted, most LED chip companies are already losing money, so there is almost no room for price reduction for current chips.

The profitability of global LED package manufacturers is declining. Although the decline is not as large as that of chip makers, the profit margin of enterprises has also continued to be compressed. According to the recent financial information disclosed by Chinese packaging companies, the industry's average gross margin level is 20-25%, among which the gross margin of lighting LEDs is low, and it is between 10-15% for a long time. The profit margin of the lighting LED market is lower than Industry average.

Therefore, for most package manufacturers, the lighting LED business is no longer the main driver of profit contribution, and the decline in market size has led to the effect of exchanging low prices for orders is not obvious, because competitors will also maintain the market with price reductions. Accounting rate. Instead, most manufacturers are more willing to develop new businesses, such as the Mini LED display market. Many manufacturers including Hongli Zhihui and Zhaochi have taken this opportunity to enter the display field.