2023 is expected to be a new starting point for the prosperity of the LED industry

The starting point of the long-term prosperity of the LED industry

In the short term, due to the impact of the new crown epidemic in 2022, the scale of the domestic LED market will decline. It is expected that with the recovery of economic activities, the LED market will also usher in a recovery. In the medium and long term, there will be strong new demand for XR virtual shooting and all-in-one conference machines. With the progress of Mini/Micro LED technology and the superimposition of the digital China construction environment, it is expected that the LED market will achieve continuous growth.

In 2022, there will be frequent epidemics, economic activities will be blocked, and market demand in real estate and consumer electronics will be sluggish, which will have different degrees of impact on the LED application market. details as follows: The growth rate has deteriorated quarter by quarter; the gross profit margin has stabilized and rebounded; the small-pitch segment has performed well. From 2023, the flexible LED display market will usher in a recovery. This is also one of our most optimistic LED application markets.

The LED industry is expected to enter the starting point of the medium and long-term boom

Different links in the LED industry are accumulating innovations, and quantitative changes lead to qualitative changes. We predict that major changes are taking place or are about to occur in the following aspects, which also give rise to investment opportunities.

(1)LED display: The XR virtual shooting market is growing rapidly, and the digital economy expands medium and long-term needs. According to TrendForce statistics, the global LED virtual shooting display market size will be approximately US$430 million in 2022, an increase of approximately 52% from 2021. The market is expected to grow by 40% in the next two years. The Chinese government is vigorously promoting the development of the digital economy, and LED displays will eventually benefit as a data display medium.

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(1)Mini backlight: whether it is TV, car display, etc., Mini LED backlight will significantly improve product performance, and the penetration rate of Mini LED backlight is rapidly increasing. According to the forecast of Yidu Data, it is estimated that the Mini LED backlight module market space will reach 125 billion yuan in 2026.

(2)LED packaging: COB has many advantages over SMD. Manufacturers' COB direct yield rate continues to increase, which promotes the rapid cost reduction of displays below P1.0, and further expands the application scenarios of small-pitch LEDs.

(3)LED chip: As the upstream core device, the LED chip will be the core beneficiary link when the Mini & mirco LED market is released in the future. The same as transparent LED screen. In the past two years, major changes have taken place in the LED chip industry, and TV manufacturers/panel manufacturers have deployed LED chips one after another, reflecting the importance of the LED chip link in the future display field.

LED application: Small pitch continues to grow, Mini/Micro LED changes from quantitative to qualitative

Small-pitch LEDs continue to expand application boundaries. Generally speaking, a display with a dot pitch of less than 2.5mm is called a small-pitch LED, which has the advantages of seamless splicing, high display brightness, and high color saturation, and its display effect is better than other display products. As the dot pitch continues to shrink and costs drop, the application scenarios of small-pitch LEDs are also expanding, gradually replacing products such as LCD splicing, DLP splicing, conference projection, and even large-size TVs.

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In the early stage, although the display effect of small-pitch LEDs is good, the cost is relatively high. First of all, it is used in the military, security and other fields, where the use effect is prioritized over the price. As the cost drops, small-pitch LEDs gradually enter the commercial application market, and sports, stage rental, and studios have become the first scenarios to be used. In the past two years, the penetration rate of small-pitch LEDs in conference halls, education and other scenes has increased rapidly, and new scenes such as XR virtual shooting have been derived; in the future, it is expected to enter the cinema and even the home market. 

Small-pitch LED products below P1.0 gradually make up for the lack of large pixel pitches. In government affairs applications, command and dispatch centers, smart city information centers and other scenarios that pursue high performance rather than cost advantages, P1.0 pitch LED screens have achieved experience advantages due to their advantages such as seamless splicing and high brightness. In the application of 150-250 inch conference large screen, small pitch below P1.0 has also become the first choice, and gradually entered the private home theater market. 

The growth of the small-pitch LED market is very resilient and sustainable. In the past three years, although part of the market demand has been affected by the epidemic, the rise of new demands such as teleconferencing and distance education has given rise to the demand for LED conference all-in-one machines. At the same time, XR virtual shooting has also become popular in the past two years. The sales of these two emerging markets in 2022 will be close to 4 billion, accounting for more than 10% of the total size of small spacing. It is precisely because of the continuous expansion of application boundaries that the growth of the small-pitch LED market is very resilient. And when the economic environment improves, various application fields will be more active in upgrading display equipment, and the small-pitch LED market will also show good growth flexibility. Therefore, small-pitch LED is a market with continuous growth. According to research, the global fine-pitch LED display market size will be US$4.2 billion in 2022, an increase of 12% from 2021. Benefiting from the obvious recovery of demand in European and American markets, among the applications of small-pitch LED displays, corporate conference and education space, retail and exhibition, entertainment and theater applications have the most obvious growth. The year-on-year growth in 2022 is expected to be 14%, 13% and 41% respectively. . XR virtual shooting has become the most growing emerging application in the small-pitch market in the past two years. The market size will reach 400 million US dollars in 2022, a year-on-year increase of more than 50%. 

It is estimated that the sales of China's small-pitch LED market will exceed 20 billion yuan in 2022, and the compound growth rate will be around 15% in the next four years. Although the domestic epidemic has an impact on the actual demand for small spacing, and actual sales have declined, the growth trend of the small spacing market has not changed.


Post time: Mar-20-2023

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