LED chip industry is a high margin of LED industry chain, the average gross profit margin is higher. Eastern Securities believes that the progress of chip technology can reduce costs and improve the penetration of LED in the existing application areas, such as lighting.
Profitability is expected to continue
LED chip industry is a high margin of LED industry chain, the industry average gross profit margin is higher, the future high profitability, probability will continue.
First of all, after the industry reshuffle, the low-end production can be eliminated, the domestic manufacturers of large-scale expansion of high-end production capacity, market share, industry trend of oligopoly, at the end of 2017 and three Huacan in the domestic market share is expected to increase to 40% and 30%, with capital, technology and large scale advantages will be widening the moat.
Secondly, the upstream MOCVD equipment links, domestic manufacturers such as micro semiconductor and mid Sheng Photoelectric has gradually broken the monopoly of foreign countries, in 2016 the two cities in the domestic market share has exceeded 10%, localization is expected to promote equipment cost reduction.
Finally, the chip maker to the upstream integration, sapphire material and substrate three Huacan have production capacity, raw material production to further improve profitability.
Technology drives industry growth
Technology development will lead the future trend of the industry, manufacturers with technical strength will stand out from the competition. On the one hand, the progress of technology can reduce costs, improve the penetration of LED in the existing application areas such as lighting; on the other hand, the progress of technology can open up new applications, such as MicroLED can be used in the display field, is expected to promote the demand for LED chip upgrade.
According to estimates, when Micro-LED in the consumer electronics terminal annual penetration rate of 50%, according to the equivalent of 2 pieces per piece of 200 yuan price calculation, Micro-LED chip market will reach 380 billion yuan, far exceeding the existing 45 billion yuan, the market development space is huge.