The LED industry is currently in a recovery phase, and as demand rises, LED chips are beginning to face supply shortages. Huacan Optoelectronics has significantly expanded its production capacity in this area, focusing on high-end products that have seen remarkable improvements in performance and quality. This has greatly enhanced the company's competitiveness, positioning it to enter the top tier of global LED chip manufacturers.
Between 2016 and 2017, the LED chip market experienced a boom due to tight supply. In response, Huacan Optoelectronics expanded its production capabilities by increasing its epitaxial wafer production from 700,000 pieces per month at its Wuhan and Zhangjiagang facilities. The company also established a new production base in Yiwu, Zhejiang. The first phase of this project was completed by late 2017 and early 2018, boosting the total production capacity to 1.8 million pieces per month—more than a 150% increase. At the same time, the company expanded its sapphire substrate production to ensure self-sufficiency in raw materials.
In December 2017, the second phase of the Yiwu production base commenced. From 2018 to 2020, the company planned to complete the second phase of the Yiwu facility and the fourth phase of the Zhangjiagang expansion. These projects would bring the monthly epitaxial wafer production capacity to 3 million units, making Huacan one of the largest LED chip manufacturers globally.
Through independent research and development, Huacan Optoelectronics has significantly improved product performance—such as light efficiency and reliability—as well as production efficiency. Its products have gained recognition from major international customers, enabling faster penetration into the mid-to-high-end markets. The proportion of high-margin products has now reached 60%, reflecting the company's growing strength and its ability to move away from the fiercely competitive low-end market while maintaining a stable gross profit margin.
Huacan Optoelectronics is also developing next-generation display technology, specifically MicroLED, which is expected to revolutionize the TV and mobile phone panel industries. This emerging market is significantly larger than the current LED chip market. With the gradual adoption of MiniLED and MicroLED technologies, the company is well-positioned for continued rapid growth.
Additionally, Huacan is working towards acquiring MEMSIC, a leading manufacturer of MEMS sensors. MEMSIC specializes in accelerometers and geomagnetic sensors, with key customers in the consumer electronics and automotive sectors. The global MEMS market was valued at around $12 billion in 2016 and is projected to reach $20 billion by 2020, growing at a CAGR of 12%. MEMSIC ranked fourth in the global acceleration sensor market and third in the geomagnetic sensor market, behind only Asahi Kasei and Yamaha. This acquisition would allow Huacan to diversify into the sensor field, further strengthening its technological and market position.
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