Market "Qian Jing" seductive car LED industry chain encounter dilemma

[Source: LED Engineering's "LED Research Review" magazine May issue of reporter / Zhao Hui] April 19, Xingyu shares (SH.601799) issued on investment, "an annual output of 500,000 sets of LED lights and supporting the project." Announcement. According to the announcement, the company plans to use 589 million yuan to invest 500,000 sets of LED lights and supporting projects. The project is expected to be built for two years. The estimated annual profit is 187 million yuan and the financial internal rate of return is 20.67%.

Xingyu shares said that LED is a new type of light source that has been widely used in automobile lights in recent years. LED lights have the advantages of small size, light weight, long life, high efficiency, low energy consumption, earthquake resistance, environmental protection, etc. As the fourth generation of automobile lights, it is the development trend of the lamp industry. In recent years, more and more car manufacturers have adopted LED lights, and the market demand is increasing day by day. Therefore, this project has a good market prospect and competitiveness.

In the past 2012, the development of the mainland LED industry was in trouble. The upstream epitaxial chip capacity utilization rate was less than 50%, and the packaging enterprise's gross profit fell to the bottom. The huge downstream application market space has not yet opened.

The 2012 annual report released by major LED companies recently showed that the performance was generally low last year. In 2012, many LED companies showed a significant decline in both revenue and net profit. According to industry insiders, the structural overcapacity of the LED industry will continue in 2013, and related companies will continue to digest inventory and seize market share through price cuts.

The overcapacity and rapid decline in prices have prompted LED companies to develop products with high profit margins and strong demand in the application field. Automotive LED products have attracted many companies to enter with their high gross profit.

"Qian Jing" is attractive

According to the statistics of the China Association of Automobile Manufacturers, the production and sales of automobiles in mainland China in 2012 were 19.27 million and 19.3064 million respectively, up 4.6% and 4.3% respectively year-on-year. It is the world's largest automobile production and consumption country. As the production and sales of automobiles have increased year by year, the market for auto parts, including automotive lighting and display screens, has continued to grow.

“Guangli Foda’s main business of LED lighting products last year, Guangzhou Foda’s signal revenue reached more than 46 million yuan, and the gross profit of automotive LED products was as high as 41%.” G20-LED Summit member company Hongli Optoelectronics (SZ.300219 Deputy General Manager and Secretary-General Deng Shoutie told the "High-tech LED" reporter that with the advantages of Hongli Optoelectronics in terms of technology and cost, Guangzhou Foda seized market opportunities, adjusted product structure, and vigorously explored the overseas automotive lighting market. Revenue from LED products increased by 65.20% compared with 2011.

Deng Shoutie said that automotive LEDs are currently a high-growth business. Foda has been focusing on the development of LED automotive lighting products since 2012. It has successfully entered the front-loading market of some automobile manufacturers. It is expected that automotive headlamps will produce certain results this year. Sales revenue, gradually mass production in 2014. In the face of the growing scale of the domestic automotive LED market, coupled with an average gross margin of more than 30%, automotive LED has become a new blue ocean for LED manufacturers to compete.

According to industry insiders, the current LED products are mainly backlights for 5-10 inch LCD panels used in car dashboards, portable DVD drives and car navigation systems, interior lighting, automotive headlights and taillights.

The shareholder of the G20-LED Summit, Ruifeng Optoelectronics (SZ.300241), is also growing in the market for small and medium-sized LED backlights such as car dashboards, stereos, and car DVDs. The financial report shows that Ruifeng Optoelectronics' LED application revenue in the first half of 2012 was 4,372,300 yuan, and the gross profit margin reached an astonishing 65.55%.

“Last year, the sales of our automotive LED packaging devices reached tens of millions of yuan. This market used to be a monopoly of foreign companies. In recent years, domestic LED companies have only begun to get involved, but the current share is still very small.” G20- Gong Wen, general manager of Shenzhen Jingtai Optoelectronics, a member of LED Summit, said that the gross profit of automotive LED products is three to five times that of general LED products. In the current situation that the average gross profit of the LED industry is continuously falling, this market segment has attracted More and more companies are entering. In the future, Jingtai Optoelectronics will increase its investment and take automotive LED products as a major development direction.

It is understood that in July 2011, Jingtai Optoelectronics passed the SO/TS16949:2009 certification issued by the International Automobile Industry Association, and has a passport to enter the automotive industry supply chain. At present, Jingtai Optoelectronics has become a direct or indirect supplier of LEDs for vehicles such as BYD and Yutong, and is conducting product testing with several car manufacturers.

In the past few years, Dominant and Osram have occupied an absolute monopoly market share in the automotive LED product market. In recent years, companies in mainland China and Taiwan have also begun to compete in this segment.

In 2010, Feile Audio (SH.600651) acquired Shengyi Industrial, which is mainly engaged in automotive LED lighting products. Since then, it has increased its shareholding in Shengyi Industrial.

In April 2010, the domestic LED chip manufacturer - Xiamen Sanan Optoelectronics and the car manufacturer - Chery jointly established Wuhu Anrui Photoelectric Co., Ltd., the main business is positioned in automotive lighting. Sanan Optoelectronics has adopted a vertically integrated industrial chain and a strategy of “borrowing the ship to the sea” to quickly enter the LED headlight market.

Encounter the dilemma

As the domestic auto industry enters a stage of steady growth, multinational auto parts companies have increased their investment in China and the pace of building factories. Seizing the domestic auto parts market has become the main strategy of multinational auto parts companies in China. The market is no exception.

In 2012, foreign-owned lamp companies including Hella and Valeo, and LED companies such as Osram and Samsung increased their investment in China, further squeezing the living space of mainland car LED manufacturers.

According to a person from the Xingyu Stock Market Department, the current automotive lighting industry in mainland China presents a competitive landscape of “one super and many strong”. “One Super” refers to Shanghai Xiaoyu, which is mainly used for large-scale vehicle manufacturing enterprises such as Shanghai Volkswagen, Shanghai GM and FAW Toyota, with a market share of over 40%. “Multi-strong” refers to foreign-invested enterprises such as Stanley Electric, Changchun Haila, and Hubei Valeo and representative domestic-funded enterprises.

According to the statistics of the High-tech LED Property Research Institute (GLII), LEDs are more mature in the application of vehicle dashboards, backlight switches, and automotive interior lighting. The backlight of the instrument panel has been 100% LED. In the interior of the car, combined taillights, brake lights and other parts of the high penetration rate, but in the headlights part of the performance requirements, LED is still in its infancy.

It is understood that there are only a few mid- to high-end models in the mainland that use LED lighting. According to industry insiders, the cost of LED lights is two or three times that of traditional lights. Low-end models are facing huge cost pressures. It is basically impossible to use LED lights and other products in the current situation.

“At present, LED is more of a marketing highlight for the automotive industry.” A person in charge of a joint-venture brand 4S store said that models equipped with LED lights and interior lighting will give consumers a more upscale feeling. .

The automotive LED product industry chain is long, from upstream LED chip design and production, to automotive LED light source, LED lamp products, etc., and finally to the vehicle assembly. Domestic automotive LED companies are restricted by chip manufacturers in the upstream, and are constrained by the procurement of assembly manufacturers and automobile manufacturers in the downstream. The current development is not optimistic, especially in the field of high headlights with high technical threshold.

According to industry insiders, LED lights have high technical requirements for shock, heat dissipation, stability, and consistency. At present, few domestic enterprises can meet such standards. At present, there are no fewer than one thousand LED lamp suppliers in mainland China, but almost all of them are component manufacturers. The products include LED lamp bulbs and decorative strips for LED cars. They are mainly low-end products, which are difficult to meet the high expectations of automakers. Claim.

In addition, foreign brands and joint venture brands are more inclined to use international brand products that have been cooperating for many years due to strict quality control and purchasing habits over the years.

For example, the headlights of Guangzhou Honda Automobile are produced by Guangzhou Stanley Electric Co., Ltd., and the headlights of Beijing Hyundai Motor are produced by Beijing Hyundai Sanli Auto Lamp Co., Ltd. The headlights of Chunfeng Yueda Kia Motors are zero by Jiangsu MOBIS Auto. The headlight factory of Parts Co., Ltd. is produced, and Shanghai Volkswagen and Shanghai GM are supplied by Shanghai Xiaohao Auto Lamp Co., Ltd.

It is quite difficult for domestic companies to enter the supporting supply chain of these auto manufacturers.

“The new car supporting market has high barriers to entry and requires strict certification. It takes 2-3 years from the start of certification to volume supply.” Gong Wen said that Jingtai has developed the samples to obtain the certification of the International Automobile Industry Association. It took a lot of time to get into the supporting system of the car manufacturer.

According to industry insiders, if mainland companies want to expand their share in the auto market, they must first make breakthroughs in technology. In marketing, you can cut into the aftermarket where 4S shops, auto parts, and auto repairs are not too competitive.

According to the research report of the High-tech LED Industry Research Institute (GLII), the LED application market in mainland China reached 159 billion yuan in 2012, a year-on-year increase of 37%. LED applications have become the fastest growing segment of the upstream, midstream and downstream industries. LEDs are also maturing in indoor and outdoor functional lighting, special lighting, automotive lighting and other applications. GLII expects that China's LED industry competition will be more intense in 2013, and automotive LED products and other segments will usher in opportunities.

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