LED industry can be described as stable this year. The hottest is the upstream equipment, raw material suppliers, and mid-stream LED CHIP makers can be China's larger manufacturer of led chips. LED LAMP factory was working overtime to produce led chips, and risk investment institutions also kept coming to the forefront in order to participate in shares.
Now the market is still in short supply although led
chip prices is stable.This rise in chip prices is somewhat unconventional. Actually the price of LED chips has fallen more than once, and the average annual decline has reached 20%; while the second quarter is usually the traditional off-season, the possibility of led price increases should have been even smaller. In this unexpectedly rapid price increase, China's major led chip giants ushered in a period of high profit growth. The gross margin of its LED chips was 20% in the fourth quarter of 2019, and its gross profit has been increased to 10% by the second quarter of 2020. Although the prices of LED chips and epitaxial wafers are rising, the market is still in short supply.
Who is the driving force behind the rise in chip prices? Who pushed up the global chip price? Faced with a huge supply gap and rising prices, why are LED chips and epitaxial wafer makers not rapidly expanding production? According to the reporter's understanding, LED chips and wafer manufacturers are in a defensive position, because the upstream equipment and raw materials are monopolized by giants from overseas and fall into a serious shortage, which tightly hampers the pace of expansion of Chinese companies. .
First, MOCVD equipment which is the main equipment for producing LED chips, is seriously out of stock. it had to be waited six months to arrive. At present, the global market for MOCVD equipment is monopolized by Aixtron in Germany and Veeco in the United States.
Second, sapphire substrate, organic metal (MO) gas and other materials, which are important raw materials, have declined in price. Since the end of last year, the two-inch sapphire substrate has risen from a minimum of $8/piece to about $30/piece. The current rally has yet to show signs of stagnation. Recently, Rubico, the global leader in sapphire single crystal leading plants in Illinois, decided to continue raising the price of sapphire substrates in the fourth quarter. Rubicon's price hikes can be described as fearless, because manufacturers such as China and South Korea's large-scale expansion of MOCVD equipment has resulted in a sapphire substrate supply gap of up to 10% to 30%. Rubicon's downstream customers can only passively accept price increases. There may still be a shortage of sapphire substrates in the next two years.
Developed countries hold the right to speak on LED chip technology, and 80% of domestic high-end chips rely on imports. In addition, the lack of uniform production standards and test methods for
LED LAMPS also greatly limits the development of China's LED lighting industry. MOCVD equipment, sapphire substrate and so on account for a large proportion of the total cost. Among them, the sapphire substrate accounts for about 12% of the total cost. Therefore, the shortage of these important upstream equipment and the rise in raw material prices have directly pushed up the cost of LED chips and epitaxial wafers. Even if MOCVD and sapphire substrates arrive, it does not mean that they can reach production immediately. It takes at least 3 months to 6 months for installation, commissioning and trial production. Only a handful of companies can reach production within two months. This “rising up” situation in the upper reaches of the country is exposing the shortcomings of China’s LED industry. China has not yet formed a complete LED industry chain.
