Half of the most popular LED chip manufacturers in

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Half of China's LED chip manufacturers will go bankrupt

recently, it was reported in the morning that with the decline of TV prices, a large number of Chinese companies producing LED chips for Samsung and sharp are facing difficulties. Analysts pointed out that this oversupply problem will lead half of the enterprises to bankruptcy, while only large-scale companies with government support can continue to survive

small companies may go bankrupt

the decline in global TV and computer sales may further affect the price of LED chips, which will be reduced by up to 20%. For China's small LED chip companies, integration or bankruptcy will be the only option

however, analysts pointed out that San'an optoelectronics and Guangdong Dehao Runda, with a market value of $2.8 billion, will be the few companies that can continue to survive because they have received subsidies or incentives from the Chinese government. Anne Lee, an analyst at Nomura Securities, said: "this is China's strategy. They want the largest company to survive the industry restructuring."

for most LED chip companies in China, the government's support should explain in a special or eye-catching way that their use conditions are gradually withdrawing. These support include tax relief, free land use, and more than $1.6 billion for the purchase of LED chip production equipment. These measures have supported the development of this industry in China over the past three years

Proview Shenzhen, which has a trademark dispute with apple, is also affected by the decline in the price of LED chips and the increasingly fierce market competition. Other affected companies include Hangzhou Shilan microelectronics and Foshan Guoxing optoelectronics. In the past year, the shares of Shilan microelectronics and Guoxing optoelectronics both fell by more than 30%

industry observers pointed out that the factory operating rate of many LED chip companies is only 50%. From 2009 to 2010, about half of the 700 or so production lines purchased through government subsidies are currently idle. According to analysts, over the past year, the problem of overcapacity led to the closure of hundreds of small LED manufacturing enterprises in China -- deputy factory directors

baoenzhong, Deputy Secretary General of Shenzhen LED Industry Federation, said: "China's financial policies do not give sufficient support to small and medium-sized enterprises. We will see more enterprises close down."

large enterprises receive high subsidies

due to government support, Chinese manufacturers' share in the global packaging LED component market reached 6% in 2011, higher than 2% in 2010. San'an optoelectronics said that in 2011, the company's net profit doubled year-on-year to 936million yuan, and the company received about 1.9 billion yuan of government subsidies in 2011. The net profit of Dehao Runda in 2011 also increased significantly to 392.3 million yuan

analysts pointed out that these large led enterprises hold a total of nearly 2billion yuan in cash, so they can continue to expand production capacity in the case of slowing market growth, so as to gain a greater share in government supported led projects

UBS said in a report that dehourunda has added 50 metal organic chemical vapor deposition (MOVCD) equipment for the production of LED chips, and will add 100 this year. Sanan optoelectronics also plans to increase the number of such equipment

the Ministry of science and technology of China previously said that it planned to expand the scale of China's LED industry to 500billion yuan by 2015. Analysts pointed out that in 2011, the scale of this industry in China was 31billion yuan, and industry integration has become a top priority

the collapse of weaker companies will be conducive to the development of large-scale led companies supported by the government, and make these companies gain certain advantages in international competition. Other major led companies in Asia include Taiwan Jingyuan optoelectronics and South Korea LG Innotek

the trend of next year is still difficult to be optimistic

the cyclical decline in the market demand for LED chips and the obvious overcapacity have affected the price of LED chips and the profit margin of related enterprises in 2018. Although the market demand for LED chips showed seasonal growth earlier this year, the market fundamentals remained weak

according to UBS' report, the revenue growth rate of led companies in Taiwan dropped to 3% in April, lower than the 12% in March. These companies account for about 19% of the global LED chip packaging market

Jerry Tsai, an analyst at HSBC, said: "with the improvement of backlight technology, the LED used in TV sets and monitors will be reduced, and we will see the real demand problem. If the product price falls by another 20% this year, the industry will face greater difficulties next year."

(source: Shanghai Nonferrous Metals in the experimental machine industry)

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