LED chip market demand is booming among vendors

[Text|High-tech LED reporter Zhao Hui] Since the first half of this year, with the start of the downstream application market, the demand for chips in the midstream packaging enterprises has soared. The capacity utilization rate of the domestic chip industry, which has remained depressed for two years, is almost full, but it still cannot be satisfied. demand. Chip companies seem to usher in the spring.

Although the chip market is in short supply, the price has not rebounded, but the price cuts have slowed down, and the phenomenon that the chip market does not increase profits continues.

With the first-mover advantage of capacity and technology, the first-line chip makers continue to smash the market space of second- and third-line chip companies. Taking Sanan Optoelectronics as an example, the company has signed many domestic packaging companies since the second half of last year. The cooperation agreement, on the one hand, finds a good sales channel for the huge production capacity in advance, and also attempts to cut off the hope of other chip companies to enter these packaging manufacturers.

The second and third-line chip companies, such as Huacan Optoelectronics, Ganzhao Optoelectronics, and Aoyang Shunchang, are not willing to maintain the status quo. They are constantly expanding their production through mergers and acquisitions, and contending with the extrusion of large factories. There are also some companies that are beginning to extend to the middle and lower reaches, with the intention of enhancing their ability to withstand risks through integrated vertical integration, while at the same time improving corporate profitability.

According to "High-tech LED" reporters, some small, unlisted chip companies have begun to seek mergers and acquisitions and cooperation, and even more have been discontinued, ready to withdraw from this field. And some listed chip companies or companies with strong financial strength are negotiating mergers and acquisitions.

"In the field of LED chips, the pace of centralization has already started. Maybe within two years, it will be born and died." Ye Guoguang, director of sales and marketing of Guangdong Deli Optoelectronics, judges that there will be a scale of one or two Chinese chip companies in the future. More and more, the overall pattern should be a small one.

Integrated tide
The termination of the acquisition and restructuring, so that the domestic red and yellow optical epitaxial chip leader dry photo photoelectric (300102.SZ) into the blue-green optical chip field prospects have more variables. In desperation, Ganzhao Optoelectronics announced that it will start another stove in Xiamen and purchase MOCVD to produce blue-green optical epitaxial chips.

Due to major asset restructuring and suspension of trading for nearly three months, Ganzhao Optoelectronics announced on June 9 that the company will cooperate with the intermediary agencies to obtain preliminary results of the due diligence of the target company and conduct active consultations with relevant parties. After in-depth discussion and communication, it was still unable to reach an agreement on the relevant important transaction terms. Taking into account the implementation costs and potential risks of the issue of assets purchased by the company, the company decided to terminate the implementation of the matter from the perspective of protecting the interests of the company and all shareholders.

In the announcement, Ganzhao Optoelectronics admitted that under the premise of grasping the development trend of the LED industry, the company has decided to implement the development strategy of entering the LED blue-green optical chip field. While actively planning its own LED blue-green optical chip project, the company decided to actively adopt mergers and acquisitions to achieve epitaxial growth. This time, we plan to reorganize major assets, which is to find a company with certain technical strength, customer base and competitive strength in the field of LED blue-green optical chips, and hope to have synergy with the company.

Although the intended acquisition target was not disclosed, the acquisition target is undoubtedly the blue-green optical epitaxial chip enterprise.

At the same time as the announcement of the termination of the acquisition and restructuring, Ganzhao Optoelectronics also announced that it plans to change part of the use of raised funds and investment in new projects. The proposed fund-raising project is “High-bright Quaternary (AlGaInP) LED Epitaxial Wafer and Chip Project (Xiamen)” and part of the changed investment project is “Efficient Three-junction Arsenide Solar Cell Epitaxial Film Project (Xiamen) )".

Most notably, the company said that it plans to invest all of the proceeds of the project “High-bright Quaternary LED Epitaxial Film and Chip Project (Xiamen)”, which has not been used, of RMB 87,763,700 and interest into the new project “Blue”. Construction of green LED epitaxial wafers and chips.

In addition, the plant raised by the original project and the raised funds used for supporting construction have been 73.116 million yuan. The company plans to replace it with its own funds, and the above funds will be replaced by the original raised funds. In addition, considering the construction needs of the new project "blue, green LED epitaxial wafers and chips", the company plans to fully invest 73,116,300 yuan in the construction of the new project "blue, green LED epitaxial wafers and chips".

The proposed new investment project is the first phase of blue and green LED epitaxial wafer and chip industrialization project. The construction site is located in Xiamen Torch High-tech Zone (Xiang'an) Industrial Zone. The construction period of the project is 1 year, and then enters the operation period. The total investment of the project is 599.956 million yuan, including fixed assets investment of 545.946 million yuan, intangible assets of 3 million yuan, and initial working capital of 51.01 million yuan.

“The company plans to invest a total of 539.956 million yuan in blue-green LED chip projects, of which 512 are mainly invested in production process equipment, of which 5 Vecco C-four MOCVD epitaxial furnaces are planned to be introduced. The company plans to start trial production early next year. On June 13, after the announcement of the termination of the acquisition, Lin Xiaohui said this when answering the investor's question.

The choice of Xiamen and Xiamen began to increase efforts to support the LED industry this year. It is understood that Xiamen City has given high subsidies and corresponding street lamp orders to Sanan Optoelectronics and Ganzhao Optoelectronics' chip projects in Xiamen.

At the 2014 LED chip company CEO round table summit held recently, most of the second and third-line chip companies participating in the conference said that the number of companies in the chip industry is relatively large, and the overall profitability is not optimistic. It is necessary to strengthen the strength of the enterprise through industry consolidation.

"The current LED chip market is still in the primary competition stage, chip prices are falling too fast, profit margins are squeezed, and investment in research and development is large, which further reduces the profits of enterprises. Therefore, it is reasonable for companies not to make money now. Who can stand up, who will stay." Shi Zhongming core general manager Jiang Zhongyong pointed out that shuffling is inevitable.

Liang Xudong, chairman of Yuanrong Optoelectronics, which acquired Ruineng Technology, said that since 2012, the Maanshan plant's original production capacity is far from meeting the orders received, and the company began to seek to acquire epitaxial chip projects. And Ruineng Technology has certain epitaxial chip production conditions, which can form capacity as soon as possible. The only thing lacking is management, technology and market.

Dr. Zhang Xiaofei, CEO of Gaogong LED, believes that the future expansion or integration is also necessary to see the future market.

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