[Integrated report of high-tech LED]
Nowadays, no matter in the field of upstream chip, middle package or downstream application of LED, they are facing arduous and fierce market competition. Combined with technology, product, market, capital and other aspects, major enterprises will always have their own strategies and outlets. However, in the field of LED packaging, the choice of most large LED packaging factories this year is puzzling. It seems that they do not have too many choices. To apply the popular network phrase, "Do you choose to expand capacity or expand capacity?"
Yes, it's a single item: capacity expansion.
In recent years, some LD packaging enterprises with a little capital strength have planned or already carried out expansion of production lines, and those listed large group packaging enterprises have also made a large-scale expansion of the territory, opening production bases in all parts of the Mainland, in an attempt to further enhance the scale of enterprise production.
Some people think that the reason why the packaging industry concentrates on expanding production capacity this year is that stimulated by the soaring lighting market last year, so from the second half of last year, there has been a peak period of expansion in the field of LED packaging in China. That is to say, the accelerated expansion of production capacity of major packaging enterprises this year is not a means to break through the market competition pressure, but the result of overestimating the market price this year.
This kind of analysis seems reasonable now. This year, affected by the price war of LED lighting products, the survival space of LED packaging enterprises has been further squeezed, and the market has once again fallen into the state of "incremental increase in profits". The sharp decline in prices directly led to the overall LED packaging market is not as expected, most of the profits of enterprises did not grow with the growth of shipments, and some even declined. Although the market size is still growing at a high speed, the profitability of enterprises is still low. According to relevant data, in the first half of 2015, the price of most domestic LED packaging devices dropped by more than 50%, and the price of international LED packaging plants also fell by more than 20%. Hundreds of packaging enterprises have been eliminated in 2014, and this phase-out situation is expected to expand further this year.
We can foresee that in the case of sharp price decline, packaging enterprises compete to expand production capacity, making the already very competitive market worse. For those small and medium-sized enterprises that lack the competitive strength of capital, technology, channels, etc., they are facing greater operational difficulties and risks, and even will collapse due to the breakdown of the capital chain.
Therefore, can we say that this "in addition to expansion, or expansion" is inappropriate? Obviously not necessarily, the trend of the entire LED industry is to accelerate integration, industry concentration is rising. Encapsulation large factories to expand production scale strength, in fact, is to promote the industry to accelerate the elimination and shuffling, large enterprises to accelerate the integration of resources, strengthen their strength, for the future market development ahead of schedule layout.
Because in the field of packaging, in addition to technological process, market development and other aspects, whether the enterprise has specific cost advantages and advanced and efficient production scale strength is the key to success. The vast majority of packaging plants are planning to expand their production, which is also illustrated in fact. Although falling prices lead to "incremental increase in profits", it is believed that after a period of adjustment, product prices will inevitably tend to stabilize or rise.
Of course, as packaging enterprises compete to expand their capacity, the problem of structural overcapacity in the industry becomes more prominent, which is also very possible. If the problem of excess capacity is aggravated, the vicious circle of "incremental increase in profits" will continue.
Thus, it seems that there are traps everywhere, and enterprises are more confused about how to choose: the price of packaging products has fallen so much that enterprises are unable to fight for price war; the development of emerging markets or new technology products will undoubtedly require more capital and other investment, and whether they can get a return is full of uncertainties. So as an LED packaging enterprise, how to break through the encirclement and find a way out? And whether to continue to adhere to the road of "enterprise expansion"? These are all issues worthy of attention at present.