Issues To Pay Attention To in 2022 LED Lighting Industry

1. Overcapacity accelerates consolidation within the industry

In LED epitaxial chip field, leading enterprises are under increasing pressure of destocking, and excess capacity is transferred to middle and low-end products, resulting in fierce competition in the general LED chip market and continuous price decline.  Small and medium-sized LED chip enterprises have compressed capacity or even shut down the phenomenon, and indirectly reduce the LED front-end equipment market demand.  In the field of packaging, affected by the continuous release of LED packaging capacity and shrinking profits, the packaging price of small and medium power products has dropped significantly, and the price of high-power devices has also shown a slight downward trend. The living space of small and medium low-end LED packaging enterprises has been squeezed, and they are forced to develop in the direction of customized light source characteristics.  In the field of LED application, the profits of traditional general lighting continue to decrease. Large enterprises with strong design ability, channel resources and brand advantages are also affected and forced to switch to emerging fields such as LED display, and the survival of small and medium-sized enterprises is increasingly difficult.  

2. Price fluctuations caused by rising prices of raw materials  

 In 2021, product prices in the LED industry will continue to rise.  Related enterprises at home and abroad, such as GE Current, Universal Lighting Technologies (ULT), Leard, Zuming Technology, Mullinson and so on, have raised the prices of their products for many times, with an average increase of around 5%, among which the prices of a few products in shortage have increased as much as 30%.  The fundamental reason lies in the price fluctuation of LED products caused by the rising price of raw materials.  First, due to the COVID-19 pandemic, the supply chain circulation of the global LED industry has been disrupted, resulting in higher raw material prices.  Due to the tight supply and demand situation of raw materials, upstream and downstream manufacturers of the industrial chain have increased the price of raw materials to varying degrees, including LED display driver IC, RGB packaging devices, PCB board and other upstream and downstream raw materials.  Secondly, due to the trade friction between China and the United States, the phenomenon of "core shortage" is spreading in China. Many relevant manufacturers have increased r&d investment in AI, 5G and other fields, which has reduced the capacity of the original LED industry, which will further lead to the rise in raw material prices.  Finally, due to the increase of logistics and transportation costs, the cost of raw materials also increases.  Whether in lighting or display, the trend of rising prices will not abate in the near future.  However, from the perspective of the long-term development of the industry, the price increase will be conducive to promoting manufacturers to optimize and upgrade the product structure and improve the product value.  

3.There are many repetitive investments in emerging sectors  

 Due to the scattered distribution of LED industry investment in the country, there is a problem of repetitive investment in emerging fields.  For example, Mini/Micro LED display technology has high brightness, high integration, high refresh, flexible display and other excellent characteristics, and has become a new generation of display technology recognized by the industry after OLED and LCD.  Mini/Micro LED display products are in the stage of demand explosion, the broad market prospect makes Mini/Micro LED become a hot investment.  For example, Ruifeng Optoelectronics raised about 700 million yuan for Mini/Micro LED technology research and development projects, Hucan Optoelectronics is expected to invest 1.5 billion yuan for Mini/Micro LED research and development and manufacturing projects, Leard, Jingyuan Optoelectronics, Li Jing Microelectronics jointly launched the first domestic Micro LED research institute.  Although Mini/Micro LED new production line projects have been launched, but at present, a large amount of transfer and repair, drive and color conversion and other technical difficulties have not been effectively solved, key materials and equipment are still facing the "neck" problem.  The future of all kinds of social capital, guide funds and industrial funds pouring into this field is uncertain. To solve these problems, professional investment is not only needed to lead and drive the linkage of upstream and downstream industries, but also to make up for weaknesses in key links