Polarization is more obvious LED industry from price war to value war

Author:Shenzhen Topmost Lighting Technology Co.,Ltd. Click: Time:2018-03-05 12:48:57

       In the city full of "price boom" today, we should jump out of price increases, if the LED companies are busy paying attention to price or price, then who care about the quality of the product? If the company’s products depend only on the cost of raw materials, where is the “value” of the product? Since 2016, with the rising costs of raw materials in the manufacturing industry, "price hikes" have become hot words in various industries, and LED is no exception. Especially since the second half of the year, with the continuous soaring of circuit boards, gold wires and other raw materials, as well as the increase of labor cost and rent, the LED packaging and downstream applications usher in an unprecedented "price surge". At the start of the last month of 2016, the collective price increases of several major packaging factories including Hongli, Guoxing, Smarty, Siu Chi and Asahi became the focus of the industry. One side is rising raw materials and labor costs, on the other side is the increasingly competitive market in the Red Sea, under the dual pressures of cost and competition, the price has become the most helpless but most pressing LED enterprise choice. Is it the initiative or the industry? In fact, from the beginning of May this year, LED set off a "wave of price increases," but the first round of price increases from the beginning of the chip field, starting from the first shot of crystal electricity prices began, as of now LED industry Four rounds of price increases have been initiated. Price range includes upstream chips, brackets, lamp beads, wafers, packaging materials, aluminum plates and other raw materials, the middle reaches of the packaging business and the downstream display or even part of the lighting business, the price range concentrated in more than 5% -15% between. However, the first three price increases are limited to the chip and display RGB areas. I still remember when many people in the industry at that time predicted that price hikes could not affect the field of lighting, and now, with the end of this wave of fierce price hikes, LED industry have been involved in the "price boom", the original micro Bo's profits have been completely eroded by rising raw material prices. Price announcements issued by various companies, given the reasons are also without exception are due to rising raw material and labor costs. But is the price increase really the last straw for the company? Wang Yang, vice president of Hongli Zhihui on the price increase event, said that "for the healthy development of enterprises, reasonable profit margins are a necessary condition, the raw material prices, we mainly through two paths to maintain the normal operation of enterprises, the first , Internal digestion, through continuous upgrading of technology, technology, efficiency, to strengthen the output ratio, even with the same proportion of materials under the premise of more industry-standard product output; second, external help. "Throughout LED development in the past few decades, such a wide range of "price boom" is undoubtedly the first time. Si Maode Zhang, director of semiconductor marketing, believes that for the packaging business, this round of price increases both due to industry caused by, but also a business initiative to attack a strategy. On the one hand, raw material prices have exceeded the manufacturers can afford the scope of enterprises need to price means to ensure product quality; the other hand, the industry needs to return to the level of rational competition, and the initiative is undoubtedly a good price beginning. "We have been informed a lot of material price increases in the second half of this year, December is an explosion point.We have been committed to reducing costs through the management of the supply chain to achieve the purpose of the device does not raise prices.But the product is business survival The fundamental, we must guarantee the good quality of the products. "Zhang Luhua expresses. However, the analyst Chu Yu pointed out that this wave of rising LED prices is only a response to the rising prices of raw materials companies to help the real profit-making companies to help limited, so most LED manufacturers are actively thinking about transformation strategies to accelerate the transition Market. Polarization becomes even more apparent When faced with rising costs, large companies are still unbearable, let alone small businesses. Today, the LED industry has matured, competition has also changed from the initial simple price competition to scale and technology contest. According to data from relevant research institutes, the prices of chips and package devices will still have room to rise in the short term in 2017, but there is not much room for upside as the cost performance of products is further enhanced. It is expected that the growth rate of the global LED industry market will decrease from around 10% in 2016 to less than 5% in 2020. The slowdown in market growth will also accelerate the industry's reshuffle. This year, LED industry polarization has become increasingly evident. On the one hand, the market for general lighting and conventional products has become more centralized with large enterprises, while the number of small and medium-sized enterprises has been declining. On the other hand, more and more small and medium-sized enterprises have started to seize the high-margin market in order to differentiate themselves from large enterprises. In response, Lin Jilun, general manager of Mu Linsen also said that the LED upstream and midstream output growth is not a big chance, but the market share will be relatively concentrated, some companies should be cautious when expanding. From the published report of the third quarter, we can see that the performances of Chinese enterprises, represented by San'an Optoelectronics and Huacan Optoelectronics, still maintained a steady growth in the LED epitaxial chip segment. The LED packaging segment, with Mulinsen, Hongli Zhihui, As the representative of State-owned optical packaging giant, the first three quarters have shown a situation of increasing income and increasing profits.

       At the lighting application end, domestic giants such as Sunshine Lighting and Foshan Lighting have not been affected by market competition. Through automated production line introduction, supply chain and management cost control, they have seen a two-way increase in both revenue and net profit. trend.

Zheng Haibin, deputy general manager of Shenzhen Siu Chi energy-saving lighting Co., Ltd. believes that the LED industry is gradually returning to the rational, it is time for businesses to do practical work. "Whether it is price or price cuts are caused by the law of market development, which is a necessary stage for any industry." Faced with the upsurge of "rising tide," Zheng Haibin so. However, Rui Feng photoelectric CTO Pei Xiaoming seems from a technical point of view, no matter how the current price of a single product, but the overall price of the future will continue to decline. This is because the survival of the future must be large-scale enterprises, with the expansion of enterprises and technological advances, the product must be more and more cost-effective, which also determines the overall product prices will continue to decline. From the price war to the value of war Indeed, LED industry to today, the industry has been the basic shape of the pattern. In the city full of "price boom" today, we should jump out of price increases, if the LED companies are busy paying attention to price or price, then who care about the quality of the product? What is the original intention of the enterprise? At the 2016 China Semiconductor Industry Development Conference held on December 9, Liang Zechun, Marketing Director of OSRAM Opto Semiconductors (China) Co., Ltd., said in a straightforward manner that price hikes will not increase the profits of the company. If the company’s products depend only on the cost of raw materials, where is the “value” of the product? Liang Zechun put forward that enterprises should put "value" in the first place, from the light source itself to think about how the industry should develop, rather than blindly concerned about the price. The value of LED products at this stage can be reflected in the health lighting, plant lighting, visible light communications, and intelligent lighting and so on. By doing fine, strong, high value-added things to find their own position. The current development of the industry is gradually maturing, the traditional marketing strategy relying solely on price competition has become somewhat "powerless" LED industry has passed the initial stage of extensive, explosive growth, the price war is no longer the main mode of operation of enterprises , But shifted to the development of mid- and high-end products. It is at the core of the strategy to upgrade the technology and meet the new needs of consumers. Fortunately, there are already many LED companies are beginning to realize the importance of the "value" of the product, from the price war to the value war, and through the "differentiation strategy" to find its own position in the market. In response to the current market competition, director of Guangdong Semiconductor Lighting Industry Joint Innovation Center / Shenzhen LED Industry Association 眭 Shirong advice: the face of rising raw material costs, companies must first ensure their own survival issues, the rise is up, Will give top priority to product quality, and to eliminate homogenization of competition, identify differentiated positioning. "When the technical threshold is crossed, the next task of the enterprise is to find subdivided and differentiated markets and make high value-added products, which is also the next step for the industry to think about and explore," said Nobuyoshi Shiro. A new wave of price hikes also indicates that the LED industry is moving from the focus on price to focus on value. Perhaps, LED companies all understand that price increases do not mean that the industry pick up, it can not bring much real profits to the enterprise. To develop the industry, enterprises still need continuous innovation. Based on the nature of the light source, more high value-added functions should be explored to promote the long-term sustainable development of the industry.


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