Recently, all kinds of old and new media, large and small, have been shielded by authorities. The interpretation and guidance of the authoritative people on the Chinese economy is undoubtedly an important indicator of our policy on China. What can we learn from the LED industry?
One of the most important, than the economic L-shaped trend of judgment.
The first quarter of this year, because of credit easing, the economy began to show signs of pick up, and the LED industry has begun to show signs of improvement, which of course is a good sign. However, pundits think it is hard to describe them in simple concepts such as "good start" and "small spring" because these are all lever-driven and unsustainable. Although they have eased the momentum of the economic downturn, they are ultimately not a healthy cycle.
However, the LED industry is stimulated by this spring, but also set off a new round of capacity expansion competition.
Huacan Optoelectronics plans to build an LED extension, chip and chain extension project in Yiwu Industrial Park with an estimated total investment of about 6 billion yuan and a land area of about 350 mu. It plans to reach production within 5 years after obtaining a construction permit.
According to LEDinside research, Sanan Optoelectronics is expected to add 60 MOCVD machines in 2016. Australia Yang Shunchang, Opto-Electronics also have plans in 2016 to expand the wafer and chip production capacity, to cope with the current tight supply of the chip market situation.
However, the market is really so hot yet? In fact, according to LEDinside analysis, LED industry has gradually entered a mature period of steady development, it is difficult to reproduce the miracle of rapid growth in the long run. In the LED industry, several major downstream estuaries: 1. The sharp decline in backlight LED demand, but also driven by the VR technology, the OLED has been the tide of alternative tide, no later than 2017, a large number of backlight LED demand will disappear ; 2. Lighting LED demand growth has gradually stabilized, it is difficult to achieve explosive growth; 3. Small spacing display demand growth is one of the biggest bright spots, however, with the disappearance of technology dividends, a large number of new competitors , But also gradually erode profits, affecting the future development of space, it should not be too high expectations.
In fact the LED chip industry has plunged into a cycle of pig cycle. The so-called pig cycle is an economic phenomenon, refers to the "high price of the injured, the price is cheap and hurt the peasants," the cyclical changes in the price of pork. The cyclical "cycle" of the pig cycle is generally: higher flesh prices - a surge in sow stocks - an increase in hog supply - a drop in flesh prices - a massive slaughter of sows - a reduction in hog supply - a rise in meat prices. The rise of pork price stimulates the enthusiasm of peasants to increase supply, the increase of supply leads to the drop of meat price, the decrease of meat price has hit the enthusiasm of peasants and causes the shortage of supply. The shortage of supply leads to the increase of meat price.
And the LED chip industry is similar, the chip prices (meat prices) rise - Manufacturers buy MOCVD (sow population) - Chip (pig) increase in supply - Chip prices (meat prices) decline - manufacturers bankrupt MOCVD equipment idle Sow) - Chips (hogs) Reduced supply - Chips (flesh price) go up. Pig raising to pig slaughter is also about two years, two years after the slaughter of pigs began to decline in value and then to eliminate sows to 1 year, and then to another 1 year price increase of pork, because MOCVD release from production to release about two years, And then from the oversupply to the elimination of production capacity another two years, LED chip industry cycle and the pig cycle are almost 4 years.
Fluctuations in pork prices and LED chip prices are highly similar fluctuations.
In the past few years, LED chips downstream demand can continue to increase, so each MOCVD equipment out of the process has not seemed so painful, LED industry is equivalent to a period of growth in pork demand (similar to China's reform and opening up, per capita meat Product consumption continued to increase). However, if the explosive growth of downstream demand can not be reflected in the future, once the chip price plunges again, the new capacity will face huge profit-making risks.
The authority has given guidance already, the future of China's economy will be L-shaped, not U-shaped, this time also to gamble big reversal, it is fierce.