LED chip and packaging industry will usher in deterministic growth

First of all, from domestic and foreign as well as the supply to Taiwan‘s point of view, the industry shrink more obvious in the field of LED chips.

For example, Taiwan crystal electronics cumulatively reduced 25% from 2015 to 2016. Its MOCVD has dropped from 500 to less than 400 units. The decline is more obvious. From the factory’s perspective, the company announced the closure of each plant in Taiwan and mainland. Production capacity shrinks more obviously. In addition, CREE's announcement shows that the company's high-power chips cut 25% of production.

When it comes to domestic, the enterprise's exit is also more obvious. On the one hand, due to price cuts and environmental storms, a large number of small and medium enterprises withdraw. According to LED inside statistics, at the end of 2016, a large number of LED companies in Guangdong were shut down and rectified. On the other hand, the domestic leading enterprises increase the ability of mergers and acquisitions. Whether inside or outside of the industrial chain, the entire acquisition are in the acceleration.

In addition, from the demand point of view, it is expected that the effective LED chip production capacity will be less than 85 million in 2017 while the demand will be more than 93 million. There are about 8 million supply gap, and the overall chip is in short supply.

Second, from the packaging point of view, the number of enterprises on the shrinkage is more obvious. Engineering data show that by 2020, the packaging business will be left only about 500. Packaging business shrinkage will be more obvious than the chip companies. During the process of enterprises number contraction in these two areas, industry concentration is in the upgrade.

In the level of chip enterprise, the top 10 chip companies in 2012 market share is about 60%, and has now increased to 78% . The increase of share is more obvious in this process, and many small and medium enterprises may gradually withdraw from the market.

As far as mergers and acquisitions are concerned, mergers and acquisitions within the industrial chain, such as Sanan, Forest Lighting and other companies, can be seen as the process of integration of the industrial chain, the overall layout of the industry chain is accelerating.

From the demand point of view, the penetration rate still has room for improvement. From the subdivision point of view, a small pitch as well as car lighting grow faster. According to statistics, last year, small pitch LED grew 29%. Based on LED inside, it is expected that small-distance LED consumption will grow with 46% annual compound rate. For automotive lighting, due to the headlights of Mercedes-Benz, BMW and other advanced models, more and more producers use LED lamps. There is still a good room for growth.

In addition, during the thirteenth Five-Year Plan, what LED industry needs to resolve is the equipment and materials localization. By 2020, it can layout the whole industry chain on the whole. LED products will enter the tens of thousands of households, and the penetration rate will have a very substantial increase. The scale of China's general lighting market forecasts that the market scale will still maintain a certain degree of growth.