In 2017, the global LED industry experienced a strong recovery, with stable product prices bringing renewed hope to the sector. Industry activity significantly increased compared to previous years, with the upstream chip sector growing rapidly, the midstream packaging segment developing steadily, and downstream applications continuing to expand at a fast pace.
According to data from the High-tech Research Institute's LED Research Institute (GGII), China’s overall LED industry reached a scale of 636.8 billion yuan in 2017, marking a year-on-year growth of 21%. This upward trend was reflected across the board, as many listed LED companies released their 2017 performance forecasts at the start of 2018. Overall, the results were mostly positive, with more companies reporting growth than losses.
Gaogong LED analyzed the performance of 25 LED-listed companies, finding that only five reported declines, two suffered losses, while the remaining 18 showed varying degrees of growth. This indicated a generally optimistic outlook for the industry during the year.
**Upstream Segment**
The upstream LED chip market saw mixed results. Among the seven major chip companies, including Dehao Runda and Guangdong Ganhua, some faced losses, while others like Sanan Optoelectronics, Huacan Optoelectronics, Ganzhao Optoelectronics, Jucan Optoelectronics, and Silan Micro achieved significant growth.
Sanan Optoelectronics remained the leader in both capacity and scale, while Huacan Optoelectronics made strides through production expansion and technological innovation, narrowing the gap. Ganzhao Optoelectronics focused on its core business, achieving a leading position in blue-green light technology. Jucan Optoelectronics, a newly listed company, used capital to expand its production, strengthening its position. Dehao Runda concentrated on flip-chip technology, aiming to lead in the CSP field. Meanwhile, Guangdong Ganhua struggled, selling its subsidiary LED lighting business for 300 million yuan.
With the decline in chip prices and the expansion of manufacturers in 2018, small and medium-sized chip companies faced increasing challenges. GGII analysts predicted that production capacity would consolidate around leading players like Sanan, Huacan, and Ganzhao.
Zhang Xiaofei, chairman of Gaogong LED, suggested that chip companies should focus on general-purpose products, build a monopoly advantage, and aggressively compete with foreign firms.
**Midstream Segment**
Gaogong LED reviewed 10 midstream LED companies, with only Xiamen Xinda showing a performance decline. Others, such as Hongli Zhihui, Ruifeng Optoelectronics, Changfang Group, and Dongshan Precision, saw double-digit growth. Mulinsen, Guoxing Optoelectronics, and Zhaochi also grew by over 50%.
The packaging industry is becoming more consolidated, with a "one super and many strong" structure. Mu Linsen leads the market, followed closely by Guoxing Optoelectronics and Hongli Zhihui. However, the concentration level remains low, and further consolidation is expected in 2018.
Dr. Zhang Xiaofei advised midstream enterprises to improve product quality without lowering prices, gradually replace imported products, and expand into international markets. Enhancing brand value and soft power was also emphasized.
**Downstream Segment**
Gaogong LED analyzed four LED lighting companies, including Opto Lighting, Tailong Lighting, and Jinlaite, which all showed steady growth. Sanxiong Aurora faced challenges due to rising raw material costs, resulting in a slight decline in gross margin. The screen business sector, however, did not perform as well.
Overall, the LED lighting market continued to grow steadily. According to GGII, the output value of China’s downstream LED applications reached 531 billion yuan in 2017, up 22% year-on-year. This growth was driven by three main factors: the rapid adoption of LED lighting, the breakout of small-pitch LED displays, and the rise of niche markets like automotive lighting, smart lighting, and plant lighting—each growing by over 20%.
Dr. Zhang Xiaofei recommended that downstream companies should not just focus on scale but also on quality and brand value.
**Other Developments**
Netac Smart and Overclocking III provided performance forecasts for 2017. Overclocking III reported a slight decline, citing increased costs from expanded market development and R&D efforts, as well as the impact of factory relocations on production efficiency.
As the LED industry continues to evolve, the emphasis on innovation, quality, and brand building will be crucial for long-term success.
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