Affected by COVID-19, the global demand for LED terminal applications declined significantly year-on-year in 2020, especially in fields such as display screens and landscape lighting. From the perspective of packaging, the data shows that the output value of LED packaging for the whole year was 15.3 billion US dollars, a year-on-year decrease of 9.6%.
Affected by the decline in terminal demand, the LED chip market demand has also declined. Mainland China has become the world’s major LED chip supply base. Although some small and medium-sized LED chip manufacturers have withdrawn from the Chinese chip market in 2020, new capacity was still released, including San’an’s Quanzhou production base and Shenzhen MTC’s Nanchang base.
Overall, the total revenue of LED chip manufacturers in mainland China in 2020 (counting only external sales) was 11.5 billion RMB yuan, down 6.6% year on year. Benefiting from the recovery of terminal demand in the second half of the year, the utilization rate of LED chipmakers has been significantly improved, and the product prices have also been increased. However, due to the low utilization rate in the first half of the year and the exit of some LED chipmakers, the overall output value fell.
In terms of industry concentration, due to the exit of some LED chipmakers, the industry concentration continues to increase. Currently, there are about 14 LED chip manufacturers in production in Mainland China, of which the top ten LED chipmakers account for 97% of the revenue, and the top three manufacturers account for 67% of the revenue.
San’an Optoelectronics is still in an absolute leading position. The release of production capacity in Quanzhou in 2020 further expanded San’an Optoelectronics’ total production capacity. Its LED chip revenue accounted for more than 40% of the total revenue of mainland Chinese chip manufacturers. In 2021, the production capacity of San’an Optoelectronics’ Quanzhou base and Hubei Ezhou base will continue to be released, and will continue to consolidate the leading position of LED chips. In the field of Mini LED chips, San’an Optoelectronics direct display and backlighting have developed simultaneously, and shipments in the second half of 2020 increased significantly, and it has now entered the supply chain of internationally renowned manufacturers. It is also worth mentioning that in 2020, San’an Optoelectronics’ compound semiconductor business continued to maintain a rapid growth trend, with total revenue exceeding 900 million RMB yuan, a year-on-year increase of more than three times. And its revenue in the first quarter of 2021 exceeded 40% of the full year of 2020. It is expected that the revenue of its compound semiconductor business will continue to maintain rapid growth in 2021.
HC Semitek followed San’an Optoelectronics, ranking second. In 2020, HC Semitek adjusted its product structure. The revenue proportion of low-end lighting chip products declined, and the revenue proportion of high-end chip products such as high-efficiency lighting, backlighting, and automotive applications increased. The annual profitability increased significantly. In the third quarter of 2020, it realized a turnaround from loss to profit, and the annual net profit also returned to a positive value. In the field of Mini LED chips, HC Semitek takes the lead in solving the problems of light splitting and high grayscale display of Mini LED in COB applications. Since 2019, its Mini LED chip products have been the first to achieve mass production and sales in the industry. Mini LED RGB chip products have been used in many key projects of mainstream Mini LED terminal manufacturers. Its Mini LED backlight chip products have covered a full range of full-size terminal products for pads, notebook computers, monitors, TVs, and vehicles.
Changelight ranked third, its 2020 LED chip revenue continued to grow, and the growth rate was more than 20%. However, in terms of profitability, Changelight continued to lose money in 2020, and the net profit attributable to shareholders of the listed company was -250 million RMB. In the future development direction, in addition to the original red-yellow and blue-green chips, Changelight will also focus on the development of Mini/Micro LED, infrared, VCSEL and solar cell businesses.
Focus Lightings ranked fourth, up by one place compared to 2019. Focus Lightings is mainly engaged in lighting LED chips. In the second half of 2020, as the market demand picked up, its production capacity was released. By the end of 2020, its output was nearly 300,000 pieces/month (4 inches). In the future, Focus Lightings will focus on the high-end LED chip industry represented by Mini LED, high-quality lighting, and plant lighting.
The other 5-10 vendors were Aucksun, Shenzhen MTC, Hualei Optoelectronics, Silan Azure, Zhaoyuan Photoelectric and Kaistar. Among them, Shenzhen MTC shares have developed the fastest. It started production at the end of 2019, and its production capacity was gradually released in the first half of 2020. Initially, its products will be mainly used for Shenzhen MTC’s internal use. The market was gradually opened in the second half of the year, and its production capacity continued to be released, and its output reached 550,000 pieces/month (4 inches) at the end of the year, and most of the products were sold externally.
After the low period of the pandemic in 2020, market demand is gradually recovering, and some changes have taken place in the LED chip industry in mainland China. From the perspective of the supply side, although the production capacity of new projects has been continuously released, some small and medium-sized LED chip manufacturers have also withdrawn, resulting in no significant increase in market supply. From the demand side, due to the increasing market demand for Mini direct display, Mini backlight, high-end lighting, backlighting, and automotive applications, leading LED chipmakers in China such as San’an and HC Semitek have reduced the production capacity of low-end products and turned to high-end products.
Therefore, it can be seen that the current market prices of low-end products have gradually increased; the threshold for high-end products is relatively high, market competition is relatively slack, and relevant Chinese LED chip manufacturers can guarantee certain profits. Looking forward to 2021, with the improvement of supply and the support of demand, it is expected that the LED chip industry in mainland China will develop more healthily, and the profitability of the LED chip manufacturers is expected to be improved.
Source: LEDinside