LED industry statistics in the first half are mixed

In the first half of 2012, the global macro economy continued to be weak, which had a negative impact on the development of the LED industry. Morgan Stanley, after researching Korean LED-related companies, believes that although the trend is slow but the LED industry is still starting to grow, major leaders in the industry will benefit from this wave of growth because these companies have leading technologies and Patent and solid user base. The next round of LED general lighting driving will require manufacturers to customize products for customers and further reduce costs, which are conducive to leading companies to strengthen their position.

The survey results show that Seoul Semiconductor's revenue for the second quarter of 2012 was in line with expectations of early-stage observers. It is estimated that the sales season has increased by 18% from the previous quarter and operating margin has increased by 4.7%. LG's LED revenue will remain stable as general lighting growth exceeds expectations, growing more than 35% quarter-on-quarter, ahead of the overall growth of the LED industry. Lumens' quarter-on-quarter increase of 40% was mainly due to the strong sales of 30-inch low-end direct-input LED TV backlight modules.

Positive Signal 1: Price Elasticity Drives Growth in General Lighting Demand for General Lighting remains strong, although the macro picture looks uncertain and will continue to press for demand. The economic situation in Europe is still looking very slow at present, and the outlook for Q3Q4 is not optimistic. However, the demand from the United States and Japan is still relatively firm. The domestic projects of South Korean LED manufacturers are also performing very well. Seoul Semiconductor's new product Acrich 2 seems to have been accepted by customers. About 20% of users plan to use this new chip to mass produce lighting products.

Positive Signal 2: Wafer Production Replacing Larger Sizes Due to increasing pressure on wafer prices, LG has adjusted most of its production lines to 6-inch wafer production lines. Seoul Semiconductor still maintains a 2-inch production line. However, the proportion of 4-inch products has risen from less than 10% at the beginning of the year to about 50%. This migration to large size will reduce the cost of wafer products by 20 to 25%. A further decline in the terminal prices of LED products will play a positive role.

Negative Signal 1: Short-term Downside Risk The growth of TV backlight module is lower than expected. This year's demand for TV is somewhat weak. It can be seen from the sales situation of May Day in the domestic market. Seoul Semiconductor is expected to lose a portion of its market share in the second half of 2012. In 2011, market observers predicted that chip and package manufacturers would be in a relatively unfavorable position because they did not have monopoly status. It seems that this is indeed the case. However, due to the market's originally expected TV demand is not high, so if the macro economy will not be bad, there is not much room for downward adjustment. The TV market is expected to grow by 7% this year to reach 227 million units.

Negative signal 2: Upstream industry recovery needs time Due to the expected high sapphire shortage in 2010~2011, a large number of manufacturers have overheated into this area, causing serious overcapacity. Currently, the profits of sapphire ingot/wafer makers are still decreasing, and Sapphire Tech's operating profit margin has dropped from 60% in 2010 to 20% now. Judging from Taiwan’s data in July, the price of sapphire has stabilized, but demand has not increased, and the situation of overcapacity will persist for a long time. Future manufacturers will conduct further industry alliances and control their own supply. The top few manufacturers will create more profits and continue to rule.