Abstract: Looking forward to 2022, it is expected that China's commercial display LED industry will maintain a double-digit high-speed growth under the influence of substitution transfer effect, and hot application fields will gradually turn to emerging application fields such as smart lighting, small-pitch display, and deep ultraviolet disinfection.
In 2021, China's commercial LED industry will rebound and grow under the influence of the substitution effect of the new crown pneumonia epidemic, and the export of LED products will reach a record high. From the perspective of the industry, LED equipment and material revenue has seen a big increase, but the LED chip substrate, packaging, and application profits are thinning, and they are still facing greater competitive pressure.
Looking forward to 2022, it is expected that China's commercial display LED industry will maintain a double-digit high-speed growth under the influence of the substitution transfer effect, and the hot application fields will gradually turn to emerging application fields such as smart lighting, small-pitch display, and deep ultraviolet disinfection.
Basic judgment of the situation in 2022
01 Substitution transfer effect continues, China's manufacturing demand is strong
Affected by the impact of a new round of COVID-19, the recovery of global commercial display LED industry demand in 2021 will bring rebound growth. The substitution effect of my country's commercial display LED industry continues, and exports in the first half of the year hit a record high.
On the one hand, Europe and the United States and other countries restarted their economies under the monetary easing policy, and the import demand for LED products rebounded strongly. According to data from the China Lighting Association, in the first half of 2021, the export value of China's LED lighting products reached 20.988 billion US dollars, a year-on-year increase of 50.83%, setting a new historical export record for the same period. Among them, exports to Europe and the United States accounted for 61.2%, an increase of 11.9% year-on-year.
On the other hand, large-scale infections have occurred in many Asian countries except China, and market demand has reversed from strong growth in 2020 to a slight contraction. In terms of global market share, Southeast Asia decreased from 11.7% in the first half of 2020 to 9.7% in the first half of 2021, West Asia decreased from 9.1% to 7.7%, and East Asia decreased from 8.9% to 6.0%. As the epidemic further hit the LED manufacturing industry in Southeast Asia, countries were forced to close multiple industrial parks, which severely hindered the supply chain, and the substitution effect of my country's LED industry continued.
In the first half of 2021, China's commercial display LED industry effectively made up for the supply gap caused by the global epidemic, further highlighting the advantages of manufacturing centers and supply chain hubs.
Looking forward to 2022, it is expected that the global commercial display LED industry will further increase the market demand under the influence of the "home economy", and the Chinese commercial display LED industry will benefit from the substitution transfer effect.
On the one hand, under the influence of the global epidemic, residents went out less, and the market demand for indoor lighting, LED display, etc. continued to increase, injecting new vitality into the LED industry.
On the other hand, Asian regions other than China have been forced to abandon virus clearance and adopt a virus coexistence policy due to large-scale infections, which may lead to the recurrence and deterioration of the epidemic, and increase the uncertainty of resumption of work and production.
Research institutions predict that in 2022, the substitution effect of China's commercial display LED industry will continue, and LED manufacturing and export demand will remain strong.
02 Manufacturing profits continued to decline, and industry competition became more intense
In 2021, the profit margins of China's commercial display LED packaging and applications will shrink, and the industry competition will become more intense; the production capacity of chip substrate manufacturing, equipment, and materials will increase greatly, and profitability is expected to improve.
In terms of LED chips and substrates, the revenue of 8 domestic listed companies in 2021 is expected to reach 16.84 billion yuan, a year-on-year increase of 43.2%. Although the average net profit of some leading companies has dropped to 0.96% in 2020, thanks to the improved efficiency of large-scale production, it is expected that the net profit of LED chip and substrate companies will increase to some extent in 2021, and the gross profit margin of Sanan Optoelectronics’ LED business is expected to increase. Correct.
In the LED packaging segment, the revenue of 10 domestic listed companies in 2021 is expected to reach 38.64 billion yuan, an increase of 11.0% year-on-year. In 2021, the gross profit margin of LED packaging is expected to continue the overall downward trend in 2020, but thanks to the faster growth in production, it is expected that the net profit of domestic LED packaging companies will increase slightly by about 5% in 2021.
In the LED application segment, the revenue of 43 domestic listed companies (mainly LED lighting) is expected to reach 97.12 billion yuan in 2021, a year-on-year increase of 18.5%; 10 of them will have negative net profits in 2020. Since the growth of LED lighting business cannot offset the increase in cost, the LED application segment (especially lighting application) will shrink greatly in 2021, and a larger number of enterprises will be forced to reduce or transform traditional businesses.
In terms of LED materials, the revenue of five domestic listed companies is expected to reach 4.91 billion yuan in 2021, a year-on-year increase of 46.7%. In terms of LED equipment, the revenue of six domestic listed companies is expected to reach 19.63 billion yuan in 2021, a year-on-year increase of 38.7%.
Looking forward to 2022, the rigid increase in manufacturing costs will squeeze the living space of most LED packaging and application companies in China, and some leading companies have an obvious trend of shutting down and turning around. However, thanks to the increase in market demand, LED equipment and material companies have benefited significantly, and the status quo of LED chip substrate companies has remained basically unchanged.
According to the statistics of research institutions, the revenue of listed companies of China Commercial Display LED will reach 177.132 billion yuan in 2021, a year-on-year increase of 21.3%; it is expected to maintain a double-digit rapid growth in 2022, and the total output value will reach 214.84 billion yuan.
03 Investment in emerging applications grows, and enthusiasm for industrial investment is high
In 2021, many emerging fields of the commercial display LED industry will enter the stage of rapid industrialization, and product performance will continue to be optimized.
Among them, the photoelectric conversion efficiency of UVC LED has exceeded 5.6%, and it has entered the large space air sterilization, dynamic water sterilization, and complex surface sterilization markets;
With the development of advanced technologies such as smart headlights, through-type taillights, HDR car displays, and ambient lights, the penetration rate of automotive LEDs continues to rise, and the growth of the automotive LED market is expected to exceed 10% in 2021;
The legalization of special economic crop cultivation in North America has stimulated the popularization of LED plant lighting. The market expects that the annual growth rate of the LED plant lighting market will reach 30% in 2021.
At present, the small-pitch LED display technology has been recognized by mainstream machine manufacturers and has entered a rapid mass production development channel. On the one hand, complete machine manufacturers such as Apple, Samsung, and Huawei have expanded their Mini LED backlight product lines, and TV manufacturers such as TCL, LG, and Konka have intensively released high-end Mini LED backlight TVs.
On the other hand, active light-emitting Mini LED panels have also entered the mass production stage. In May 2021, BOE announced the mass production of a new generation of glass-based active Mini LED panels, which have the advantages of ultra-high brightness, contrast, color gamut, and seamless splicing.
In 2021, leading companies and local governments are enthusiastic about investing in the LED industry. Among them, in the downstream terminal field, in May 2021, China has invested 6.5 billion yuan to build the Mini LED display industrial park, and the output value is expected to exceed 10 billion yuan after completion; in the midstream packaging field, in January 2021, China plans to invest 5.1 billion yuan to build 3500 A small-pitch LED production line, with an estimated annual output value of more than 10 billion yuan after reaching production. It is estimated that in 2021, the new investment in the whole Mini/Micro LED industry chain will exceed 50 billion yuan.
Looking forward to 2022, due to the decline in the profits of traditional LED lighting applications, it is expected that more companies will turn to LED display, automotive LED, UV LED and other application fields.
In 2022, the new investment in the commercial display LED industry is expected to maintain the current scale, but due to the preliminary formation of the competition pattern in the LED display field, it is expected that the new investment will decline to some extent.
Several issues that need attention
01 Overcapacity accelerates industry consolidation
The rapid growth of domestic commercial LED output value has also brought about overcapacity in the industry as a whole. The overcapacity further accelerates the integration and de-capacity in the industry, and promotes the growth and development of the LED industry in the fluctuation.
In the field of LED epitaxial chips, the pressure of destocking of leading enterprises is increasing, and the excess capacity is transferred to low-end products, resulting in fierce competition in the general-purpose LED chip market and continuous decline in prices. Small and medium-sized LED chip companies have compressed production capacity or even shut down, which indirectly reduces the market demand for LED front-end equipment.
In the packaging field, affected by the continuous release of LED packaging capacity and the continuous reduction of profits, the packaging prices of small and medium-power products have fallen significantly, and the prices of high-power devices have also shown a slight downward trend. It is forced to develop in the direction of customized light source characteristics.
In the field of LED application, the profits of traditional general lighting continue to shrink, and large enterprises with strong design capabilities, master channel resources, and brand advantages are also affected and forced to turn to emerging fields such as LED display. Small and medium-sized enterprises are increasingly difficult to survive.
In 2021, the global commercial display LED industry's willingness to invest has declined as a whole under the new crown pneumonia epidemic. Under the background of Sino-US trade friction and the appreciation of the RMB exchange rate, the automation process of LED enterprises has accelerated and the industry's intensive integration has become a new trend.
With the gradual emergence of overcapacity and thinning of profits in the LED industry, international LED manufacturers have frequently integrated and withdrawn in recent years, and the survival pressure of my country's leading LED enterprises has further increased. Although my country's LED enterprises have recovered their exports due to the transfer substitution effect, in the long run, it is inevitable that my country's export substitution to other countries will weaken, and the domestic LED industry is still facing the dilemma of overcapacity.
02 Rising raw material prices cause price fluctuations
In 2021, the prices of products in the commercial display LED industry will continue to rise. Relevant domestic and foreign companies such as GE Current, Universal Lighting Technologies (ULT), Leyard, Unilumin Technology, Mulinsen, etc. have raised product prices many times, with an average increase of about 5%, of which the price of very few products in short supply has increased by as much as 30%. The fundamental reason is that the price of LED products fluctuates due to rising raw material prices.
First of all, due to the impact of the new crown pneumonia epidemic, the supply chain cycle of the global LED industry has been blocked, resulting in rising raw material prices.
Due to the tension between supply and demand of raw materials, upstream and downstream manufacturers in the industry chain have adjusted the prices of raw materials to varying degrees, including LED display driver ICs, RGB packaging devices, PCB boards and other upstream and downstream raw materials.
Secondly, affected by the Sino-US trade friction, the phenomenon of "lack of core" has spread in China, and many related manufacturers have increased their investment in research and development of products in the fields of AI and 5G, which has compressed the original production capacity of the LED industry, which will further lead to rising raw material prices. .
Finally, due to the increase in logistics and transportation costs, the cost of raw materials has also increased.
Whether it is lighting or display fields, the trend of rising prices will not subside in the short term. However, from the perspective of the long-term development of the industry, rising prices will help manufacturers optimize and upgrade their product structure and increase product value.
03 There are more repetitive investments in emerging fields
Since the commercial display LED industry investment is relatively scattered across the country, there is a problem of repeated investment in emerging fields.
For example, Mini/Micro LED display technology has excellent characteristics such as high brightness, high integration, high refresh, and flexible display, and has become a new generation of display technology recognized by the industry after OLED and LCD. Mini/Micro LED display products are in the stage of explosive demand, and the broad market prospect makes Mini/Micro LED a hot investment.
For example, Ruifeng Optoelectronics raised about 700 million yuan for Mini/Micro LED technology research and development projects, Huacan Optoelectronics is expected to invest 1.5 billion yuan for Mini/Micro LED research and development and manufacturing projects, Leyard, Epistar, Lijingwei Electronics jointly launched the first Micro LED Research Institute in China. Although new production line projects for Mini/Micro LED have been launched, many technical difficulties such as mass transfer and repair, driving and color conversion have not been effectively solved, and key materials and equipment are still facing the problem of "stuck neck".
There is uncertainty about the influx of various types of social capital, guiding funds and industrial funds into this field. To solve these problems, not only professional investment is needed to lead and drive the linkage between upstream and downstream industries, but also key links are required. Make up for shortcomings.
Suggestions for countermeasures to be taken
01 Coordinate the development of industries in various regions and guide major projects
The National Development and Reform Commission, the Ministry of Industry and Information Technology and other management departments need to coordinate the development of the commercial LED industry in various places, explore the "window guidance" mechanism for major LED projects, and promote the adjustment of the LED industry structure. Encourage the transformation of LED chip substrate manufacturing and packaging production lines, moderately reduce support for traditional LED lighting projects, and encourage the upgrading and localization of LED equipment and materials. Support domestic leading LED companies to carry out technical and talent cooperation with companies in advanced regions such as Europe and the United States, and encourage major production line projects to settle in major industrial clusters.
02 Encourage joint innovation and R&D to form advantages in emerging fields
Utilize existing funding channels to specially improve the supply chain construction in emerging areas of the LED industry. The chip substrate link focuses on improving the performance of ultra-high-definition Mini/Micro LED and deep UV LED chips; the packaging link focuses on improving advanced packaging processes such as vertical and flip-chip packaging and reducing manufacturing costs; the application link focuses on developing smart lighting, healthy lighting, plants Lighting and other market segments pilot demonstration projects to accelerate the formation of industry group standards; for materials and equipment, cooperate with integrated circuit companies to improve the localization level of high-end LED equipment and materials.
03 Strengthen industry price supervision and expand product export channels
Cooperate with integrated circuit companies to build a semiconductor chip price monitoring system, strengthen the supervision of the LED market, and speed up the investigation and punishment of illegal acts of driving up the prices of LED chips and materials according to reporting clues. Encourage the construction of domestic LED industry organizations, build a public service platform covering standards, testing, intellectual property rights, etc., concentrate superior resources, help enterprises strengthen international exchanges and cooperation, and expand export channels for products in overseas markets.
Post time: Jan-21-2022