Behind the LED lighting hot market: lowering the profit margin and speeding up the reshuffle

The reporter learned from the interview at the 2013 (3rd) High-tech LED Lighting Exhibition held in Guangzhou recently that the LED industry continued the hot trend in the first half of the year, and the market continued to warm up. It is predicted that the annual output value will increase exponentially compared with last year. . But behind the industry's fiery, companies are mixed. The price war and channel construction and the reduction of government subsidies have made the low-margin situation difficult to change in the short term, and many enterprises are facing the dilemma of increasing income.

LED continues hot market

Since the first quarter of this year, the LED lighting industry has begun to shake off the situation of last year's applause, and market demand continues to heat up. Until June of this year, the domestic LED lighting industry leader Qin Shang Optoelectronics also revealed to the Yangcheng Evening News reporter that the order was placed two months later. Yesterday, Zhu Bingzhong, vice president of Qinshang Optoelectronics, said in an interview with Yangcheng Evening News: "The current enterprise orders are still very good." Sanxiong Aurora, which has switched from traditional lighting to LED lighting, said: "Since the second half of the year, the company's LED sales have increased. More than 30%."

The recovery of downstream demand has also boosted the capacity utilization of middle and upper reaches. Although the industry has not yet emerged from the overcapacity situation, Wang Lianghai, vice president of Tongji, an upstream chip company, believes that: “The price war will start from 2012 and will be basically stable this year. Chip companies will not raise prices, but there will not be too much price cuts. Space. It’s about to enter an era of product performance competition."

In the case of the industry's recovery, the output value of the LED lighting industry has further improved. According to the report released by the High-tech LED Research Institute, the overall output value of the LED industry will increase by about 20% in the fourth quarter of this year, while the annual output value of LED indoor lighting will increase by 110% year-on-year. It is expected that by next year, the growth rate of output value will remain at around 60%.

Reduced profit margins, accelerated shuffling

Although the LED lighting market is developing rapidly, the entire industry is in a situation of increasing revenues without increasing profits. The performance of several major LED listed companies in China is particularly obvious. The third quarter report of Qinshang Optoelectronics showed that the company's third-quarter revenue growth was close to 50%, but the net profit was 33 million, down nearly 29% year-on-year. DeHao Runda's revenue in the third quarter increased by 27%, and it remained at a loss in the third quarter. The net profit in the first three quarters fell by more than 56% year-on-year. The common reason for the decline in net profit of the two major companies is the substantial reduction in government subsidies and the high expenditure on channel construction.

At the same time, there is still a fierce price war that affects the profits of the entire industry. According to the report of the High-Tech LED Research Institute (GLII), the price of LED indoor lighting products has dropped by more than 20% annually during the three years from 2010 to 2013; some products have achieved a price decline of more than 30% in the first half of this year. Sanxiong Aurora insiders believe: "Because LED lighting technology and product form are still changing, so the price changes are also very fast. Some new products become old products in less than three months, in order to deal with inventory, companies have to cut prices."

The continuous decline in profit margins is also accelerating the industry's reshuffle. Zhang Xiaofei, director of the High-tech LED Research Institute, said in an interview with the Yangcheng Evening News: "The industry price war will continue for some time, and most companies with a turnover of less than 10 million in the next five years will have little chance of survival."

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