"We are now full of production. As far as I know, the major manufacturers in the industry are now full of production. There is a certain shortage of supply in the short term. There is also a general demand for price increases in the industrial chain. It is expected that the supply and demand situation will be in the second and third quarters. More nervous." Recently, Huacan Optoelectronics held the annual general meeting of shareholders, the company's president Liu Wei said in an interview with the reporter.
Huacan Optoelectronics is the second largest LED chip manufacturer in China. It has a monthly production capacity of 700,000 pieces and a Yiwu base with a capacity of 1 million pieces per month. It will be gradually put into production in July this year. In the field of multi-display applications, Huacan Optoelectronics' LED chips account for more than one-third of the domestic market.
Industry supply and demand pattern improved, who can seize the opportunity again
In 2016, LED chips, packaging, and lighting increased prices. The industry's “big boss†Sanan Optoelectronics has taken the lead in price increases in January this year because of the rapid increase in raw material prices, which led to a rapid increase in costs. The package leader Mulinsen started the price increase and issued a gun, highlighting the improvement of the supply and demand pattern of the LED industry.
"The price increase of some products is normal, maybe 5%, or 10%, but the overall price increase is not obvious." Liu Wei said that in response to changes in the market situation, each company will adopt a different strategy, Huacan Optoelectronics The main practice is to adjust the product structure and concentrate the production capacity on products with higher gross profit margins.
In 2016, the global LED lighting market has a penetration rate of only US$34.6 billion, which is only 31%. In 2017, the global LED lighting market penetration rate is expected to exceed 36%, with a growth rate of over 20%. Smart lighting continues to stimulate the overall demand of the industry. In 2017, the growth rate of the small-pitch LED display market exceeded 50%, and the overall supply and demand continued.
Liu Wei believes that the supply and demand tension in the industry is mainly related to two factors:
First, the continuous growth of downstream demand, especially the explosive growth of the consumer goods industry such as lighting;
The second is the adjustment of the industry itself. In the past two or three years, there has been almost no expansion. Huacan Optoelectronics is almost the only company that has expanded its production.
Affected by the serious oversupply of the industry supply, the LED industry has suffered serious losses in the past few years. This has not only restricted the further investment of the industry, but some enterprises that have already invested have also opted out, leaving a small market space.
Liu Wei pointed out that after a deep adjustment, the entire LED industry is expected to maintain a relatively stable development situation, which is also the basis for the company's recent equity incentive plan.
"We still have confidence. First, the base is low. In 2016, the net profit after deduction was only 25.51 million. By 2020, it will reach 500 million (after deduction). We think there is still an opportunity. Second, the company is currently at a high speed. The growth stage.†Liu Wei said that in 2016, the company's operating income increased by 65%. With the release of the company's production capacity, as long as the overall environment of the industry is stable, it should be able to maintain this year.
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