LED package capacity expansion is the one behind the hidden hand

At present, whether it is LED upstream chip field, midstream package or downstream application field, it faces arduous and fierce market competition form. Combining technology, product, market, capital and other aspects, all major enterprises will always have their own choice. Strategy and way out. However, in the field of LED packaging, most of the LED packaging manufacturers in this year have made it difficult to make choices. It seems that they do not have too many choices. The use of online buzzwords is: Do you choose to expand production capacity, or expand What about capacity?

Yes, it is a single item: capacity expansion.

In recent years, LED packaging companies with a little capital strength have planned or expanded their production lines, and those listed large group packaging companies have expanded their plans and opened production bases in various places in the mainland in an effort to further enhance their production. Scale.

Some analysts believe that the reason why the packaging industry concentrated on expanding production capacity this year is because of the high stimulation of lighting market last year, so from the second half of last year, China's LED packaging field has witnessed a peak period of expansion. That is to say, this year's major packaging companies accelerated the expansion of production capacity, not in response to market competition pressure, the means to seek breakthrough, is entirely due to the overestimation of the market this year.

This kind of analysis now seems a bit reasonable. This year, affected by the price war of LED lighting products, the living space of LED packaging enterprises is further squeezed, and the market is once again in a state of “incremental increase without profit”. The sharp decline in prices directly led to the overall decline in the LED packaging market. Most of the profits of the companies did not increase with the increase in shipments, and some even fell. Although the market size still maintains rapid growth, corporate earnings performance remains sluggish. According to relevant data, in the first half of 2015, the price of most products of domestic LED packaging devices fell by more than 50%, and the prices of international LED packaging manufacturers also fell by more than 20%. In 2014, hundreds of packaging companies have been eliminated, and this phase of elimination is expected to further expand this year.

We can foresee that in the case of a sharp drop in prices, packaging companies are competing to expand their production capacity, making the market, which is already fiercely competitive, even worse. For those small and medium-sized enterprises that lack the competitiveness of capital, technology and channels, they are facing even greater The operational difficulties and risks, even serious, may be closed due to the break of the capital chain.

Therefore, can we say that this kind of “except for expansion or expansion” is not appropriate? Obviously, it is not necessarily. The trend of the entire LED industry is to accelerate integration and increase industry concentration. Encapsulating large factories to expand production scale strength, in fact, is also to promote the industry to accelerate the elimination and reshuffle, large enterprises from which to accelerate the integration of resources, expand the strength, for the future market development to make advance layout.

Because of the competition in the field of packaging, in addition to technical processes, market development, etc., it is often the key to the success of the enterprise whether it has specific cost advantages and advanced and efficient production scale strength. Most of the major packaging companies are planning to expand production and expansion, which is actually explaining this. Although the price decline leads to “incremental increase,” it is believed that after a period of adjustment, the price of the product will necessarily stabilize or rise.

Of course, it is also very likely that the problem of structural overcapacity in the industry is more prominent as the packaging companies compete for large capacity. If the problem of overcapacity intensifies, the vicious circle of “incremental increase without profit” will continue.

In this way, it seems that there are traps everywhere. Companies are more confused about how to choose: the price of packaged products is falling, and companies are naturally unable to fight and continue to fight price wars. Exploring emerging markets or developing new technology products will undoubtedly require greater Whether the capital and other inputs can be paid is full of unknowns. Then, as an LED packaging company, how to break through and find a way out? And whether to continue to adhere to the "enterprise expansion" road? This is a problem worthy of attention at present.

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