LED giants frequently integrate industry concentration

Royal Philips Electronics of the Netherlands announced on June 30 that the company's Lumileds LEDs component division and the automotive lighting division merged to form a new company, which sold $1.9 billion in 2013. On the same day, China's Taiwan LED chip leader Jingyuan Optoelectronics acquired the company through the share swap, making the latter a subsidiary of Jingyuan Optoelectronics.

Analysts pointed out that in the context of increasingly fierce competition in the LED industry, the giants frequently launch industry integration, which will help bring about many effects such as industry capacity increase, cost management, product integration, etc., and expect the LED industry integration acceleration trend will be It is becoming more and more obvious this year.

Upstream concentration improvement

On June 30, after Philips announced the integration of its LED business unit, Philips and Cree's shares rose 4% and 3.4% respectively. US media commented that Philips' move may lead Philips to its LED division and division. Sharp merger, which will help to improve the upstream concentration of the LED industry.

As a global LED chip giant, Cree has shown strong profitability in the upstream of LED. According to the financial report, in 2013, Cree's LED products revenue reached US$801.5 million, gross profit was US$344.6 million, and gross profit margin was 40%. Its LED products mainly include LED lamp beads, chips and SIC materials.

On the same day, China Taiwan Jingyuan Optoelectronics acquired and purchased Yuanyuan Optoelectronics through share conversion. According to industry insiders, this will help alleviate the overall price reduction pressure in the LED chip market. LEDinside researchers pointed out that the acquisition has enabled the installation of MOCVD machines of Jingyuan Optoelectronics to be significantly increased to 436 units, and the production capacity has increased significantly. Through this acquisition, in terms of management, Jingyuan Optoelectronics will have a more optimized economies of scale and the ability to negotiate the purchase of upstream raw materials, which will help strengthen the overall concentration of the upstream industry.

In fact, the LED industry performed well in the second quarter of this year. Regardless of the upstream chip companies, downstream packaging companies have experienced a shortage of production capacity. The data shows that the operating income of many LED companies in Taiwan in China has shown an upward trend. In the middle of last month, LED manufacturers in Taiwan announced the revenue data for May. Statistics show that China's Taiwan LED manufacturers' revenue in May totaled 10.067 billion Taiwan dollars. Among them, 8 LED chip companies in Taiwan totaled NT$5.02 billion, up 19.6% year-on-year and 7.8% quarter-on-quarter; 9 LED packaging companies combined revenues of NT$5.947 billion, up 9.4% year-on-year and 0.15% quarter-on-quarter.

Industry boom is expected to accelerate

The industry generally expects that LED market demand is expected to maintain rapid growth within three years. CITIC Securities Research believes that the LED industry will accelerate in the third quarter of this year, and the industry gross margin will rise again.

The report pointed out that the event that pushed up the LED boom in the second half of the year is Apple's new product. Although the overall growth of the Apple industry chain is currently being challenged due to the penetration of smartphone penetration, the eventual and structural opportunities it conveys are still worthy of attention. In the second half of this year, Apple’s iWatch and iPhone6 ​​will be released for the industry. Future developments find opportunities.

LEDinside's latest global sapphire substrate market report for 2014 states that iWatch's sapphire cover will account for 6% of the global sapphire market demand in 2014, if the 2015 sales figure reaches the market's objective estimate of 60 million, 2015 It will account for 27% of the global sapphire consumption, while the total consumption of the overall sapphire substrate will more than double that of 2014.

This year will be an optimistic year for the Chinese LED market. As China's policies on LED lighting are introduced one after another, many export-oriented enterprises will begin to switch to the Chinese domestic market, and traditional lighting companies will also transform LED lighting.

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