In recent years, due to government policy support and R&D capital intensive investment in China, and accompanied by a large number of Chinese Taiwanese and South Korean LED industry technical experts and teams joining local companies, the average technical level of domestic LED epitaxial chip companies has made considerable progress and has achieved International advanced level.
Reducing the cost of epitaxy and chips is crucial for promoting LED applications. In recent years, researchers have started with new technologies, new structures, and new processes. Through technological innovation, they have continuously reduced the costs of epitaxy and chip production. The cost of white LED packaging will be reduced from US$25/klm in 2009 to US$0.7/klm in 2020, with the ultimate goal of LED cost being US$0.5/klm, and the average annual cost will drop by more than 30%.
In addition to luminous efficiency and unit cost, in LED display screens, backlights and other applications, the LED chip's light decay, brightness, color consistency and anti-static capabilities are also key technical indicators related to LED applications.
Although the expansion rate of several large manufacturers alone is surprising, the overall capacity expansion rate is relatively limited (145%). Considering that new machines such as Veeco's Red Bull, A7 micro- and A6 and some Axitron's R6 have become new machines. After the main model, K465i, CRUIS2 and earlier models gradually withdrew from the market, the overall market supply was more concentrated, and the capacity increase was also lower than expected.
In addition, subsidies for local government MOCVD equipment are relatively more concentrated. Differing from the pattern of early rain exposure, local governments are now more inclined to select companies with subsidies that have demonstrated good operational and management capabilities in the market economy.
The strength of the subsidy also needs to be determined according to the mode of one-on-one negotiation according to the company's strength and negotiating ability. Companies with advantageous industry status and good tax paying ability are in a more favorable position in bargaining with local governments.
From the supply structure point of view, because the expansion progress and margins of Sanan from 2017 to 2018 is only slightly higher than the expansion rate of the entire industry, compared to the fact that the absolute amount of expansion is not small, but it is relatively Huacan and Macao. In the ocean, the expansion operation appeared too conservative.
The supply structure of the LED chip industry has lost the opportunity to transform into a structure similar to that of the semiconductor foundry industry, and may gradually form a three-legged structure similar to the DRAM memory industry. In contrast, assuming that CR3 is equal, the three-legged structure lacks stability, and its competitive strength is higher than that of a super strong one and is also higher than that of a duopoly structure.
With an industry profit of nearly 75%, Sanan, an industry leader, has the power to sacrifice some of its profitability to operate its production deterrence strategy, forcing back potential entrants (Siu Chi) and compelling its competitors (Hua Chan, Aoyang Shunchang). ) More cautious expansion.
Although the big oligarchs in the LED chip industry will not be brazen enough to jointly allocate and allocate output in a formal agreement, the increasingly high industry concentration and the demand price elasticity of LED chips will force companies to It is also very easy to reach a tacit understanding and take the initiative to limit the production price.
In short, in the LED chip market of 2018, there will not be a monopoly-style monopoly pricing, so it is difficult to maintain ultra-high gross margin, but there is a high probability that the price will not collapse again as in 2015. The degree of understanding and cooperation between the three oligarchs will become the key factor in determining the price trend of LED chips in 2018. However, the three oligopolistic structures have natural instability, and new game models are still in formation.
