This article is an excerpt from Dr. Zhang Xiaofei, Chairman of Gaogong LED, at the 2014 High-Tech LED Annual Conference “On the Great Strategy of the Industryâ€. The topic is “Transformation, Upgrade, Future, Thinking on the Turning Point of Industryâ€.
Zhang Xiaofei:
Dear friends from the industry, I am very happy to meet with you at the end of the year to discuss the historical turning point of the entire LED industry entering an integrated deepwater area. Let’s think about how the middle and lower reaches of the industry and the channels can cope with changes. This change has been in the past few years, but the profound changes that are going to happen in the entire industry, I think is the theme of today.
It is the time of great change. How can we have a bigger strategy to guide enterprises to survive and develop? This is the beginning of the year, and it must be brewing in the future, especially in the future. Whether it is technology, talent, products, marketing, etc., it is a comprehensive embodiment.
Today, all the tables on the table have company names and contact names. Here, on behalf of the LED team, I would like to express my sincere gratitude to all of you.
The topic to be discussed today is mainly the thinking and appeal at the turning point.
The industry needs to transform, upgrade, and even all products must start to transform and upgrade. This upgrade has many meanings. Whether it is done with cost performance or high quality, we must make a transformation. First of all, we should think about it. Transformation.
Today's speech and thinking are divided into three parts:
The first part is the overall size of China's LED industry in 2014.
The second is the change under the scale, what will be more obvious in the end.
The third is the trend of reorganization and reorganization of the entire industry.
In 2014, the overall output value of China's LED industry reached 344.5 billion, a little more than 30% year-on-year. But this growth is not maintained at every speed. According to the high-tech LED analysis, the whole distribution is very scattered. Some enterprises are down or even running or failing down; some enterprises are growing, and the top is more than 100% growth. This distribution is very fragmented, which is also reflected in the industry's upper, middle and lower reaches. The difference.
The number of enterprises in the entire industry chain is similar to that of last year, but there are several entrants in several sub-sectors. For example, power supply and power supply have been transferred from various power supplies and adapters to LEDs in 2014. .
We believe that in the next three years, it is a very important industry prime time, but this golden time means that the competition in the whole industry is not only fierce, but even more fierce.
The proportion of epitaxial chips and package operations has grown slightly faster. The scale of the entire chip business is more than 12 billion yuan. Especially the size of listed companies will exceed 1 billion yuan. We can see the value of some listed companies. The scale of the chip industry has grown very well in 2014, probably by 43%. On the one hand, capacity has begun, but the overall capacity is beyond everyone's imagination. The overall capacity is not as high as imagined, probably 60%. . But big companies are basically full of production, especially at the end of the year.
Although there are no bankruptcies in the epitaxial chip companies, there are about ten companies in the enterprise that are on the verge of bankruptcy or in the state of “vegetariansâ€. Some are selling equipment, but know that the current equipment price is only 60% of the previous. This old equipment is very difficult to sell. There were even 1 or 2 fold discounts in the previous period, so the old equipment was very difficult to sell.
Overall, the proportion of local companies is very high, with 10 billion local companies and 2 billion Taiwanese companies. This change is the fastest.
Gross profit, the gross profit margin of the chip industry is actually from negative to positive, which is very different. More than 50% of the gross profit has been lost, and individual small businesses are relatively higher, but some corporate gross margins are reduced.
Sanan Optoelectronics recently showed a relatively high gross profit, which also illustrates a problem, especially for large companies that are very focused, and the current gross profit is very good.
Now everyone is very cautious about chip manufacturers. In fact, it is also very cheap now. The problem is that the content used, the rate of all operations is not reduced, the machine is cheap, but the various expenses required are still high. Therefore, the number of machines actually introduced is not much, and basically maintains a ratio of more than 10% in these years.
From the substrate point of view, the proportion of 4 inches of sapphire has increased, but there is no such thing as the previous two years from 4 inches or even 6 inches, which is relatively conservative in China. On the one hand, 2 inches is more familiar. Of course, the price of 2 inches and the price of 4 inches are now larger, and the gap will be smaller.
Flip chip is not yet produced on a large scale. This is a lot of discussion. Flip chip is the future trend.
From the perspective of transformation and upgrading, I think it is very difficult and difficult to transform the entire upstream chip. No matter the technical level, but also the funds, etc., it is difficult for upstream enterprises to get the money, because the confidence of the investment community has already been met. A big blow, when I thought that the output was very fast, I found it very difficult now.
What are the conditions for survival? Mergers and acquisitions I think is a very good choice, because the scale of the machine still has a big problem.
Of course, technically, domestic leading enterprises and international companies are basically due to talents, exchanges, and even the application of the enterprise to the operation, basically the technical difference within one year.
MOCVD is still enjoying subsidies. It is basically an old contract. The new one will be a bit difficult. The future market is divided into echelons. Basically, the capacity output value will be the biggest in China in the future. Of course, it cannot be said to be a strong country because we are two. Thirty families add up, compared with others, our single company is still small.
Zhang Xiaofei:
Dear friends from the industry, I am very happy to meet with you at the end of the year to discuss the historical turning point of the entire LED industry entering an integrated deepwater area. Let’s think about how the middle and lower reaches of the industry and the channels can cope with changes. This change has been in the past few years, but the profound changes that are going to happen in the entire industry, I think is the theme of today.
It is the time of great change. How can we have a bigger strategy to guide enterprises to survive and develop? This is the beginning of the year, and it must be brewing in the future, especially in the future. Whether it is technology, talent, products, marketing, etc., it is a comprehensive embodiment.
Today, all the tables on the table have company names and contact names. Here, on behalf of the LED team, I would like to express my sincere gratitude to all of you.
The topic to be discussed today is mainly the thinking and appeal at the turning point.
The industry needs to transform, upgrade, and even all products must start to transform and upgrade. This upgrade has many meanings. Whether it is done with cost performance or high quality, we must make a transformation. First of all, we should think about it. Transformation.
Today's speech and thinking are divided into three parts:
The first part is the overall size of China's LED industry in 2014.
The second is the change under the scale, what will be more obvious in the end.
The third is the trend of reorganization and reorganization of the entire industry.
In 2014, the overall output value of China's LED industry reached 344.5 billion, a little more than 30% year-on-year. But this growth is not maintained at every speed. According to the high-tech LED analysis, the whole distribution is very scattered. Some enterprises are down or even running or failing down; some enterprises are growing, and the top is more than 100% growth. This distribution is very fragmented, which is also reflected in the industry's upper, middle and lower reaches. The difference.
The number of enterprises in the entire industry chain is similar to that of last year, but there are several entrants in several sub-sectors. For example, power supply and power supply have been transferred from various power supplies and adapters to LEDs in 2014. .
We believe that in the next three years, it is a very important industry prime time, but this golden time means that the competition in the whole industry is not only fierce, but even more fierce.
The proportion of epitaxial chips and package operations has grown slightly faster. The scale of the entire chip business is more than 12 billion yuan. Especially the size of listed companies will exceed 1 billion yuan. We can see the value of some listed companies. The scale of the chip industry has grown very well in 2014, probably by 43%. On the one hand, capacity has begun, but the overall capacity is beyond everyone's imagination. The overall capacity is not as high as imagined, probably 60%. . But big companies are basically full of production, especially at the end of the year.
Although there are no bankruptcies in the epitaxial chip companies, there are about ten companies in the enterprise that are on the verge of bankruptcy or in the state of “vegetariansâ€. Some are selling equipment, but know that the current equipment price is only 60% of the previous. This old equipment is very difficult to sell. There were even 1 or 2 fold discounts in the previous period, so the old equipment was very difficult to sell.
Overall, the proportion of local companies is very high, with 10 billion local companies and 2 billion Taiwanese companies. This change is the fastest.
Gross profit, the gross profit margin of the chip industry is actually from negative to positive, which is very different. More than 50% of the gross profit has been lost, and individual small businesses are relatively higher, but some corporate gross margins are reduced.
Sanan Optoelectronics recently showed a relatively high gross profit, which also illustrates a problem, especially for large companies that are very focused, and the current gross profit is very good.
Now everyone is very cautious about chip manufacturers. In fact, it is also very cheap now. The problem is that the content used, the rate of all operations is not reduced, the machine is cheap, but the various expenses required are still high. Therefore, the number of machines actually introduced is not much, and basically maintains a ratio of more than 10% in these years.
From the substrate point of view, the proportion of 4 inches of sapphire has increased, but there is no such thing as the previous two years from 4 inches or even 6 inches, which is relatively conservative in China. On the one hand, 2 inches is more familiar. Of course, the price of 2 inches and the price of 4 inches are now larger, and the gap will be smaller.
Flip chip is not yet produced on a large scale. This is a lot of discussion. Flip chip is the future trend.
From the perspective of transformation and upgrading, I think it is very difficult and difficult to transform the entire upstream chip. No matter the technical level, but also the funds, etc., it is difficult for upstream enterprises to get the money, because the confidence of the investment community has already been met. A big blow, when I thought that the output was very fast, I found it very difficult now.
What are the conditions for survival? Mergers and acquisitions I think is a very good choice, because the scale of the machine still has a big problem.
Of course, technically, domestic leading enterprises and international companies are basically due to talents, exchanges, and even the application of the enterprise to the operation, basically the technical difference within one year.
MOCVD is still enjoying subsidies. It is basically an old contract. The new one will be a bit difficult. The future market is divided into echelons. Basically, the capacity output value will be the biggest in China in the future. Of course, it cannot be said to be a strong country because we are two. Thirty families add up, compared with others, our single company is still small.
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