“The enterprises that master core technologies and manufacturing such as epitaxial wafers and chips account for 70% of the profits of the entire chain.†On August 26, Tang Guoqing, director of the Semiconductor Lighting Professional Committee of the China Lighting Association, outlined to reporters the profitability of the LED industry. Atlas, "even though 20% of the remaining 30% of profits are obtained by chip package companies, only 10% is left to the terminal application."
However, terminal applications are the areas where most domestic LED companies gather.
According to the statistics of the LED industry research institutes, as of the end of 2009, there were more than 1,300 companies engaged in LED midstream and downstream operations in the Pearl River Delta alone, including over 900 in Shenzhen. More than 90% of local LED companies are fighting for each other in this 10% profit.
Another identity of Tang Guoqing is the general manager of Cree (Nasdaq: Cree) China. Sharp, one of the four largest LED chip giants in Japan and Japan, OSRAM and Philips, is one of the vested interests in this “70% profitâ€. Cree's just-released annual report estimates for the year ended June 30, 2010 show that its fiscal 2010 revenue reached $850 million, an increase of 53% year-on-year; net profit increased 402% to $152.3 million.
Foreign LED China Feast "China's LED Lighting market is an important factor for Cree's revenue growth." On August 26, Christopher M. James, VP of Global Strategic and Business Development at Cree, emphasized to reporters that Cree has planned to focus on the LED industry. Moving to China, the vast majority of the company’s 2010 investment program of approximately US$167 million will be used in China.
In November last year, Cree invested 2 billion yuan to establish a chip production base in Huizhou, Guangdong. The production line is expected to start mass production in December of this year, and the daily production capacity will reach 1.5 million.
Christopher M.James believes that Cree's rapid sales growth in China and the reason for its excess profits can be attributed to the following factors: First, Cree has a complete LED industry chain layout covering everything from materials to epitaxial wafers, chips, and packages. The entire industry process of lighting solutions; and second, Cree continues to increase investment in China, and it also has a tax advantage while being close to the market and customers. China Customs currently imposes an import tariff of 20% on each LED chip.
The Correo financial report shows that in fiscal year 2010, Asian market revenue accounted for about 2/3 of its total revenue, and its revenue growth in mainland China and Hong Kong was as high as 100%.
Tang Guoqing pointed out that even in the upstream epitaxial wafers and chip manufacturing industries, not all companies can enjoy high profit margins. At present, the core technology of global LED patents is mainly in the hands of the four giants mentioned above. The monopolistic advantages of these technologies enable these core companies to obtain excess profits. Looking at the mainland of China, there are only 62 companies that have LED chip production capabilities. Even if they count companies that have large-scale packaging capabilities, there are only a few hundred in the upper reaches of the industrial chain.
"90% of LED companies are somewhat exaggerated losses. Recently, several representative LED companies in the domestic capital market have reported good profit margins." Tang Guoqing believes that the domestic LED industry's loss status still needs to be laid out from the industrial chain. Finding solutions to problems in strategic planning.
For domestic enterprises with LED upstream, Tang Guoqing pointed out that, for example, Sanan Optoelectronics Co., Ltd. has a low profit margin for red-yellow light products, and its profit margins for adjusting blue-green light and automotive front-view products are significantly increased. Another example is Silan Micro (600460, shares it), Wuhan Huacan, previously only the chip production line, epitaxial wafers need outsourcing, reducing product profitability. The two companies have all started financing and expansion at the beginning of the year, and they have the manufacturing advantages of epitaxial wafers and chip industrial chains, and their profit margins are naturally good.
"For the domestic chip packaging companies, it should be said that 90% of all make money, but the production yield rate determines the level of profit margin differences." Tang Guoqing said that the so-called 90% of the concept of corporate losses should be concentrated in the LED industry The end of the chain of application market.
The 150 billion yuan market “whether it is the earliest application of ambient light lighting, or the rapidly growing automotive lighting and LED TV display light sources, China has undoubtedly become the world's largest LED lighting application market.†Zhang Xiaofei, director of the LED industry research center, said that LED full-color screen, LED traffic lights, solar LED lights and LED landscape lighting output, China is currently the world's first.
It is estimated that by 2010 China's LED sales will exceed 150 billion yuan, which is double the figure in 2008, and will increase at a rapid rate of 30% per year.
"The 2010 Shanghai World Expo is becoming the world's largest LED show. The Expo Site is also becoming the world's largest LED demonstration area." On the evening of August 25th, the Shanghai World Expo Park invited the park's landscape lighting chief planner and chief designer. Professor Hao Luoxi, School of Architecture of Tongji University, led the news media to visit the Expo.
Hao Luoxi said that currently the Expo Park uses 1.05 billion LED chips. About 80% of the indoor lighting sources in the Expo venues use LED green light sources, which is about 90% less than ordinary incandescent lamps. The centralized demonstration shows how extensive the application of LEDs in the future urban construction is, and how great the market potential is."
“In terms of industrial scale and market application, China is undoubtedly a big LED country.†Christopher M.James praised the huge Chinese market, but also pointed out that China's LED companies are still technically different from Europe, the United States and Japan top companies have 3-5 years gap This directly led to the fact that it is still difficult for domestic companies to obtain excess profits from high-end projects such as the Olympic Games and the Expo.
Christopher M.James said that outdoor landscape lighting is highly demanding for upstream investment, technology, talents, and patents. It is not simply a matter of spelling out low-cost bids and constructing fashions in the early stages. The technology will not be up to standard, but quality will not be met. , The late maintenance service is a big problem, which is why many domestic lighting companies lose money in this market.
"As far as China's LED industry is concerned, in the face of temptations from policies, markets, capital, etc., there are not many companies willing to invest in technology and management talents," said Gu Wenjun, senior analyst at semiconductor industry at iSuppli, one or two companies. Not investing in research and development can be said to be a source of survival. The entire industry lacks a reserve of technical talent and is sad.
He believes that China's LED Light source started late and the technology is immature, so many LED lighting companies have to import foreign light sources in order to keep their own "quality", which is bound to form a technology dependence, "it will take away that 70% The profits."
The subsidy model explored "In the country's low-carbon policy, government financial subsidies, development zone-oriented performance, the domestic LED did not go first, large-scale outdoor lighting street lights, landscape lights, in fact, this direction is wrong." Tang Guoqing believes that Any company's development is to follow the laws of the market, domestic LED companies start late, less accumulated, limited investment, the current products are mainly concentrated in the low-power low-end areas, and street lighting landscape lighting is high-power areas and involves the natural environment , current surges, stability decay, and many other issues, the current domestic companies rarely have the ability to fully meet.
Christopher M. James also agreed with this view. He believes that Chinese companies should give priority to interior lighting such as commercial and hotel rooms with relatively low technology and fitness requirements and a certain market demand.
"Choose a good chip, do a good job with the light before they have a way out, on the basis of cheap, quick success and profit fight the market a dead end." Tang Guoqing said, "Fighting prices is not a way out, and then cheaper but also low but not fluorescent, selling the price of LED quality but off, natural products No one wants."
Tang Guoqing also agreed that domestic enterprises should turn their attention to the commercial lighting market because relative to the outdoor lighting such as street lamp landscapes, indoor lighting and other industrial applications have relatively low technical difficulty, and performance, stability and other requirements are relatively mature, such as in shopping malls, hotels and In some small indoor landscape lighting and other application fields, the existing technology and talent accumulation of domestic enterprises is enough to provide a very cost-effective product for such markets.
“To promote LED in the field of lighting needs to be gradual, in particular, should choose to use LED lighting technology to match the current lighting applications.†Ren Yuanhui, the honorary director of the China Lighting Institute's indoor lighting professional committee, said that the LED lighting technology has not yet been fully implemented in road lighting. Mature, so it can be tried and promoted on some roads and community roads. Don't start with them.
In addition, Tang Guoqing pointed out that the government’s industrial support policy can refer to the detailed implementation rules of Japan and other countries and give companies that use LED business licenses a cash allowance after carbon credits. This can use economic leverage to promote business in the market environment. The company first applied LED lighting on a large scale to promote domestic LED lighting companies to obtain a reasonable profit and continue to increase the input of independent technology production.
However, terminal applications are the areas where most domestic LED companies gather.
According to the statistics of the LED industry research institutes, as of the end of 2009, there were more than 1,300 companies engaged in LED midstream and downstream operations in the Pearl River Delta alone, including over 900 in Shenzhen. More than 90% of local LED companies are fighting for each other in this 10% profit.
Another identity of Tang Guoqing is the general manager of Cree (Nasdaq: Cree) China. Sharp, one of the four largest LED chip giants in Japan and Japan, OSRAM and Philips, is one of the vested interests in this “70% profitâ€. Cree's just-released annual report estimates for the year ended June 30, 2010 show that its fiscal 2010 revenue reached $850 million, an increase of 53% year-on-year; net profit increased 402% to $152.3 million.
Foreign LED China Feast "China's LED Lighting market is an important factor for Cree's revenue growth." On August 26, Christopher M. James, VP of Global Strategic and Business Development at Cree, emphasized to reporters that Cree has planned to focus on the LED industry. Moving to China, the vast majority of the company’s 2010 investment program of approximately US$167 million will be used in China.
In November last year, Cree invested 2 billion yuan to establish a chip production base in Huizhou, Guangdong. The production line is expected to start mass production in December of this year, and the daily production capacity will reach 1.5 million.
Christopher M.James believes that Cree's rapid sales growth in China and the reason for its excess profits can be attributed to the following factors: First, Cree has a complete LED industry chain layout covering everything from materials to epitaxial wafers, chips, and packages. The entire industry process of lighting solutions; and second, Cree continues to increase investment in China, and it also has a tax advantage while being close to the market and customers. China Customs currently imposes an import tariff of 20% on each LED chip.
The Correo financial report shows that in fiscal year 2010, Asian market revenue accounted for about 2/3 of its total revenue, and its revenue growth in mainland China and Hong Kong was as high as 100%.
Tang Guoqing pointed out that even in the upstream epitaxial wafers and chip manufacturing industries, not all companies can enjoy high profit margins. At present, the core technology of global LED patents is mainly in the hands of the four giants mentioned above. The monopolistic advantages of these technologies enable these core companies to obtain excess profits. Looking at the mainland of China, there are only 62 companies that have LED chip production capabilities. Even if they count companies that have large-scale packaging capabilities, there are only a few hundred in the upper reaches of the industrial chain.
"90% of LED companies are somewhat exaggerated losses. Recently, several representative LED companies in the domestic capital market have reported good profit margins." Tang Guoqing believes that the domestic LED industry's loss status still needs to be laid out from the industrial chain. Finding solutions to problems in strategic planning.
For domestic enterprises with LED upstream, Tang Guoqing pointed out that, for example, Sanan Optoelectronics Co., Ltd. has a low profit margin for red-yellow light products, and its profit margins for adjusting blue-green light and automotive front-view products are significantly increased. Another example is Silan Micro (600460, shares it), Wuhan Huacan, previously only the chip production line, epitaxial wafers need outsourcing, reducing product profitability. The two companies have all started financing and expansion at the beginning of the year, and they have the manufacturing advantages of epitaxial wafers and chip industrial chains, and their profit margins are naturally good.
"For the domestic chip packaging companies, it should be said that 90% of all make money, but the production yield rate determines the level of profit margin differences." Tang Guoqing said that the so-called 90% of the concept of corporate losses should be concentrated in the LED industry The end of the chain of application market.
The 150 billion yuan market “whether it is the earliest application of ambient light lighting, or the rapidly growing automotive lighting and LED TV display light sources, China has undoubtedly become the world's largest LED lighting application market.†Zhang Xiaofei, director of the LED industry research center, said that LED full-color screen, LED traffic lights, solar LED lights and LED landscape lighting output, China is currently the world's first.
It is estimated that by 2010 China's LED sales will exceed 150 billion yuan, which is double the figure in 2008, and will increase at a rapid rate of 30% per year.
"The 2010 Shanghai World Expo is becoming the world's largest LED show. The Expo Site is also becoming the world's largest LED demonstration area." On the evening of August 25th, the Shanghai World Expo Park invited the park's landscape lighting chief planner and chief designer. Professor Hao Luoxi, School of Architecture of Tongji University, led the news media to visit the Expo.
Hao Luoxi said that currently the Expo Park uses 1.05 billion LED chips. About 80% of the indoor lighting sources in the Expo venues use LED green light sources, which is about 90% less than ordinary incandescent lamps. The centralized demonstration shows how extensive the application of LEDs in the future urban construction is, and how great the market potential is."
“In terms of industrial scale and market application, China is undoubtedly a big LED country.†Christopher M.James praised the huge Chinese market, but also pointed out that China's LED companies are still technically different from Europe, the United States and Japan top companies have 3-5 years gap This directly led to the fact that it is still difficult for domestic companies to obtain excess profits from high-end projects such as the Olympic Games and the Expo.
Christopher M.James said that outdoor landscape lighting is highly demanding for upstream investment, technology, talents, and patents. It is not simply a matter of spelling out low-cost bids and constructing fashions in the early stages. The technology will not be up to standard, but quality will not be met. , The late maintenance service is a big problem, which is why many domestic lighting companies lose money in this market.
"As far as China's LED industry is concerned, in the face of temptations from policies, markets, capital, etc., there are not many companies willing to invest in technology and management talents," said Gu Wenjun, senior analyst at semiconductor industry at iSuppli, one or two companies. Not investing in research and development can be said to be a source of survival. The entire industry lacks a reserve of technical talent and is sad.
He believes that China's LED Light source started late and the technology is immature, so many LED lighting companies have to import foreign light sources in order to keep their own "quality", which is bound to form a technology dependence, "it will take away that 70% The profits."
The subsidy model explored "In the country's low-carbon policy, government financial subsidies, development zone-oriented performance, the domestic LED did not go first, large-scale outdoor lighting street lights, landscape lights, in fact, this direction is wrong." Tang Guoqing believes that Any company's development is to follow the laws of the market, domestic LED companies start late, less accumulated, limited investment, the current products are mainly concentrated in the low-power low-end areas, and street lighting landscape lighting is high-power areas and involves the natural environment , current surges, stability decay, and many other issues, the current domestic companies rarely have the ability to fully meet.
Christopher M. James also agreed with this view. He believes that Chinese companies should give priority to interior lighting such as commercial and hotel rooms with relatively low technology and fitness requirements and a certain market demand.
"Choose a good chip, do a good job with the light before they have a way out, on the basis of cheap, quick success and profit fight the market a dead end." Tang Guoqing said, "Fighting prices is not a way out, and then cheaper but also low but not fluorescent, selling the price of LED quality but off, natural products No one wants."
Tang Guoqing also agreed that domestic enterprises should turn their attention to the commercial lighting market because relative to the outdoor lighting such as street lamp landscapes, indoor lighting and other industrial applications have relatively low technical difficulty, and performance, stability and other requirements are relatively mature, such as in shopping malls, hotels and In some small indoor landscape lighting and other application fields, the existing technology and talent accumulation of domestic enterprises is enough to provide a very cost-effective product for such markets.
“To promote LED in the field of lighting needs to be gradual, in particular, should choose to use LED lighting technology to match the current lighting applications.†Ren Yuanhui, the honorary director of the China Lighting Institute's indoor lighting professional committee, said that the LED lighting technology has not yet been fully implemented in road lighting. Mature, so it can be tried and promoted on some roads and community roads. Don't start with them.
In addition, Tang Guoqing pointed out that the government’s industrial support policy can refer to the detailed implementation rules of Japan and other countries and give companies that use LED business licenses a cash allowance after carbon credits. This can use economic leverage to promote business in the market environment. The company first applied LED lighting on a large scale to promote domestic LED lighting companies to obtain a reasonable profit and continue to increase the input of independent technology production.
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