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Basic judgment on the development situation of China's LED industry in 2022

 

In 2021, China's LED industry had rebound and grow under the influence of the substitution effect of the COVID-19 epidemic, and the export of LED products including LED strip lights, RGB led strip light, LED neon strip light, linear lighting products reached a new high record. From the perspective of the industry, LED strip light equipment and material revenue had a big increase, but the LED chip substrate, packaging, and application profits are thinning, and they are still facing great competitive pressure.

Looking forward to 2022, it is expected that China's LED industry will continue to maintain double-digit growth under the influence of substitution transfer effect, and hot application fields will gradually turn to emerging application fields such as smart lighting, small-pitch display, and deep ultraviolet disinfection.

 

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I. Basic judgment of the situation in 2022

Substitution transfer effect continues, demand for China's manufacturing is strong

Affected by the impact of a new round of COVID-19, the recovery of global LED strip lights industry demand in 2021 brought rebound growth. The substitution effect of our country's LED industry continues, and exports in the first half of the year hit a record high.

On one hand, Europe and the United States and other countries have restarted their economies under the monetary easing policy, and the import demand for LED products has rebounded strongly. According to data from the China Lighting Association, in the first half of 2021, the export value of China's LED lighting products reached 20.988 billion US dollars, a year-on-year increase of 50.83%, setting a new record for exports in the same period, of which exports to Europe and the United States accounted for 61.2%, an increase of 11.9% year-on-year.

On the other hand, large-scale infections have occurred in many Asian countries except China, and market demand has reversed from strong growth in 2020 to a slight contraction. In terms of global market share, Southeast Asia decreased from 11.7% in the first half of 2020 to 9.7% in the first half of 2021, West Asia decreased from 9.1% to 7.7%, and East Asia decreased from 8.9% to 6.0%. As the epidemic further hit the LED manufacturing industry in Southeast Asia, countries were forced to close multiple industrial parks, which severely hindered the supply chain, and the substitution effect of my country's LED industry continued.

In the first half of 2021, China's LED industry effectively made up for the supply gap caused by the global epidemic, further highlighting the advantages of manufacturing centers and supply chain hubs.

Looking forward to 2022, it is expected that the market demand of the global LED industry will further increase under the influence of the "home economy", and the Chinese LED industry will benefit from the substitution transfer effect.

On the one hand, under the influence of the global epidemic, residents went out less, and the market demand for indoor lighting, LED display, etc. continued to increase, injecting new vitality into the LED industry.

On the other hand, Asian regions other than China have been forced to abandon virus clearance and adopt a virus coexistence policy due to large-scale infections, which may lead to the recurrence and deterioration of the epidemic situation and increase the uncertainty of resumption of work and production.

CCID think tank predicts that the substitution effect of China's LED industry will continue in 2022, and LED manufacturing and export demand will remain strong.

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Manufacturing profits continue to decline, and industry competition intensifies

In 2021, the profit margins of China's LED packaging and applications will shrink, and the industry competition will become more intense; the production capacity of chip substrate manufacturing, equipment, and materials will increase greatly, and profitability is expected to improve.CCID think tank statistics show that in 2021, the revenue of listed LED companies in China will reach 177.132 billion yuan, a year-on-year increase of 21.3%; it is expected to maintain double-digit growth in 2022, and the total output value will reach 214.84 billion yuan.

 

 

Investment in emerging applications is growing, and enthusiasm for industrial investment is high

In 2021, many emerging fields of the LED industry will enter the stage of rapid industrialization, and product performance will continue to be optimized.

Among them, the photoelectric conversion efficiency of UVC LED has exceeded 5.6%, and it has entered the large space air sterilization, dynamic water sterilization, and complex surface sterilization markets;

With the development of advanced technologies such as smart headlights, through-type taillights, HDR car displays, and ambient lights, the penetration rate of automotive LEDs continues to rise, and the growth of the automotive LED market is expected to exceed 10% in 2021;

The legalization of the cultivation of special economic crops in North America stimulates the popularization of LED plant lighting. The market expects that the annual growth rate of the LED plant lighting market will reach 30% in 2021.

At present, the small-pitch LED display technology has been recognized by mainstream machine manufacturers and has entered a rapid mass production development channel. On the one hand, complete machine manufacturers such as Apple, Samsung, and Huawei have expanded their Mini LED backlight product lines, and TV manufacturers such as TCL, LG, and Konka have intensively released high-end Mini LED backlight TVs.

On the other hand, active light-emitting Mini LED panels have also entered the stage of mass production. In May 2021, BOE announced the mass production of a new generation of glass-based active Mini LED panels, which have the advantages of ultra-high brightness, contrast, color gamut, and seamless splicing.

In 2021, leading companies and local governments are enthusiastic about investing in the LED industry. Among them, in the downstream terminal field, in May 2021, China has invested 6.5 billion yuan to build a Mini LED display industrial park, and the output value is expected to exceed 10 billion yuan after completion; in the midstream packaging field, in January 2021, China plans to invest 5.1 billion yuan to build 3500 A small-pitch LED production line, with an estimated annual output value of more than 10 billion yuan after reaching production. It is estimated that in 2021, the new investment in the whole Mini/Micro LED industry chain will exceed 50 billion yuan.

Looking forward to 2022, due to the decline in the profits of LED traditional lighting applications, it is expected that more companies will turn to LED display, automotive LED, UV LED and other application fields.

In 2022, the new investment in the LED industry is expected to maintain the current scale, but due to the preliminary formation of the competition pattern in the LED display field, it is expected that the new investment will decline to some extent.

II. Several issues that need attention

Overcapacity accelerates consolidation within the industry

The rapid growth of domestic LED output value has also brought about overcapacity in the industry as a whole. The overcapacity further accelerates the integration and de-capacity in the industry, and promotes the growth and development of the LED industry in the fluctuation.

In 2021, the global LED industry's willingness to invest will decline as a whole under the new crown pneumonia epidemic. Under the background of Sino-US trade friction and the appreciation of the RMB exchange rate, the automation process of LED enterprises has accelerated and the industry's intensive integration has become a new trend.

With the gradual emergence of overcapacity and thinning profits in the LED industry, international LED manufacturers have frequently integrated and withdrawn in recent years, and the survival pressure of my country's leading LED enterprises has further increased. Although my country's LED enterprises have recovered their exports due to the transfer substitution effect, in the long run, it is inevitable that my country's export substitution to other countries will weaken, and the domestic LED industry is still facing the dilemma of overcapacity.

 

Rising raw material prices lead to price fluctuations

In 2021, the prices of products in the LED industry will continue to rise. Relevant domestic and foreign companies such as GE Current, Universal Lighting Technologies (ULT), Leyard, Unilumin Technology, Mulinsen, etc. have raised product prices many times, with an average increase of about 5%, of which the price of very few products in short supply has increased by as much as 30%. The fundamental reason is that the price of LED products fluctuates due to rising raw material prices.

Whether it is lighting or display areas, the trend of rising prices will not subside in the short term. However, from the perspective of the long-term development of the industry, rising prices will help manufacturers optimize and upgrade their product structure and increase product value.

There are more repetitive investments in emerging fields

Due to the relatively scattered distribution of LED industry investment across the country, there is a problem of repetitive investment in emerging fields.

There is uncertainty about the influx of various types of social capital, guiding funds and industrial funds into this field. To solve these problems, not only professional investment is needed to lead and drive the linkage between upstream and downstream industries, but also key links are required. Make up for shortcomings.

III. Suggestions for countermeasures to be taken

Coordinate the development of industries in various regions and guide major projects

The National Development and Reform Commission, the Ministry of Industry and Information Technology and other management departments need to coordinate the development of the LED industry in various places, explore the "window guidance" mechanism for major LED projects, and promote the adjustment of the LED industry structure. Encourage the transformation of LED chip substrate manufacturing and packaging production lines, moderately reduce support for traditional LED lighting projects, and encourage the upgrading and localization of LED equipment and materials. Support domestic leading LED companies to carry out technical and talent cooperation with companies in advanced regions such as Europe and the United States, and encourage major production line projects to settle in major industrial clusters.

Encourage joint innovation and R&D to form advantages in emerging fields

Utilize existing funding channels to specially improve the supply chain construction in emerging areas of the LED industry. The chip substrate link focuses on improving the performance of ultra-high-definition Mini/Micro LED and deep UV LED chips; the packaging link focuses on improving advanced packaging processes such as vertical and flip-chip packaging and reducing manufacturing costs; the application link focuses on developing smart lighting, healthy lighting, plants Lighting and other market segments pilot demonstration projects to accelerate the formation of industry group standards; for materials and equipment, cooperate with integrated circuit companies to improve the localization level of high-end LED equipment and materials.

Strengthen industry price supervision and expand product export channels

Cooperate with integrated circuit companies to build a semiconductor chip price monitoring system, strengthen the supervision of the LED market, and speed up the investigation and punishment of illegal acts of driving up the prices of LED chips and materials according to the clues reported. Encourage the construction of domestic LED industry organizations, build a public service platform covering standards, testing, intellectual property rights, etc., concentrate superior resources, help enterprises strengthen international exchanges and cooperation, and expand export channels for products in overseas markets.


Post time: Feb-11-2022