In 2017, the global LED industry experienced a strong recovery, with stable product prices bringing new hope to the sector. Industry activity saw a significant increase compared to previous years, with upstream chip manufacturers growing rapidly, midstream packaging companies developing steadily, and downstream applications witnessing continued growth.
According to data from the High-tech Research Institute's LED Research Institute (GGII), the total scale of China’s LED industry reached 636.8 billion yuan in 2017, marking a year-on-year increase of 21%. This growth reflected the industry's overall health and stability.
As the new year began in 2018, many listed LED companies released their performance forecasts for 2017. Overall, the results were mostly positive, with more companies reporting growth than losses. Gaogong LED analyzed 25 LED-listed companies, finding that only 5 experienced declines, 2 reported losses, while the remaining 18 maintained varying degrees of growth.
**Upstream Segment**
The upstream segment, particularly the LED chip market, showed mixed performances. Seven chip companies, including Dehao Runda and Guangdong Ganhua, reported losses, while others like Sanan Optoelectronics, Huacan Optoelectronics, Ganzhao Optoelectronics, Jucan Optoelectronics, and Silan Micro showed significant growth.
From a quality and capacity perspective, the domestic LED chip market is clearly segmented. Sanan Optoelectronics leads in both scale and production capacity. Huacan Optoelectronics has made strides through technological innovation, narrowing the gap with Sanan. Ganzhao Optoelectronics focused on its core business, expanding in blue-green light technology and achieving a competitive edge. Jucan Optoelectronics, as a newly listed company, used capital to expand production and strengthen its position. Dehao Runda concentrated on flip-chip technology, aiming to lead in the CSP field. Guangdong Ganhua faced challenges, selling its subsidiary LED lighting business for 300 million yuan.
GGII analysis suggested that in 2018, with falling chip prices and increased production capacity, small and medium-sized chip companies would face major challenges. Production capacity is expected to concentrate among leading firms like Sanan, Huacan, and Ganzhao.
Zhang Xiaofei, chairman of Gaogong LED, advised that chip companies should focus on general-purpose products, build monopolies, and compete globally by aggressively targeting foreign markets.
**Midstream Segment**
Gaogong LED evaluated 10 midstream LED companies, with only Xiamen Xinda showing a decline in performance. 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 midstream packaging industry is becoming more consolidated, with a "one super and many strong" structure. Mu Linsen leads, followed by Guoxing Optoelectronics and Hongli Zhihui. However, the concentration level is still low, and further consolidation is expected in 2018.
Dr. Zhang Xiaofei recommended that midstream enterprises should improve product performance without lowering prices, gradually replacing imported products, and expanding into international markets. They should also enhance their brand value and soft power.
**Downstream Segment**
Gaogong LED analyzed four LED lighting companies. Opto Lighting, Tailong Lighting, and Jinlaite all showed steady growth, while Sanxiong Aurora faced challenges due to rising raw material costs, which reduced its gross margin. The screen business segment had less favorable results.
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: increased LED lighting penetration, the rise of small-pitch LED displays, and the expansion of niche markets such as automotive lighting, smart lighting, and plant lighting, all of which grew by over 20%.
Dr. Zhang Xiaofei advised that future LED lighting companies should not only focus on scale but also on quality and brand value.
**Other Companies**
Netac Smart and Overclocking III also shared their 2017 performance forecasts. Overclocking III reported a slight decline, citing increased costs from expanded market development and R&D investments, as well as the impact of factory relocations on production efficiency.
With ongoing developments and strategic shifts, the LED industry continues to evolve, presenting both challenges and opportunities for companies across all segments.
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