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In the first quarter of this year, the sales of LED lighting manufacturers surged, driving the supply and demand of the LED industry. The decline in upstream chip inventory has also raised concerns in the industry about chip price increases. However, it has been learned from a number of chip manufacturers that these manufacturers currently have no price increase plans, and the release of some production capacity is expected to ease supply shortages in the second half of the year.
There is no plan to raise prices. Bian Difei, vice president of Huacan Optoelectronics, said that the company does face short-term capacity shortages and tight supply and demand, but it will not raise prices.
At present, the chips used by domestic LED packaging manufacturers have gradually become localized, mainly supplied by manufacturers such as Sanan Optoelectronics, Huacan Optoelectronics, and Silan Micro. Domestic LED packaging manufacturers such as Jufei Optoelectronics and Ruifeng Optoelectronics have also increased their purchases of Sanan Optoelectronics chips in recent years.
Some manufacturers of packaging manufacturers have reported that the current inventory of LED chip manufacturers is really small. If downstream packaging customers do not communicate well in advance, there may be situations in which they need to wait for supply.
Ruifeng Optoelectronics believes that the price increase of the chip is unlikely. At present, the entire LED lighting market has shown a trend of price cuts. The price of upstream LED chips will also slowly decline in the long run. Due to short-term supply shortages, prices will remain stable. LED chip manufacturers mainly reduce costs through technology upgrades to ensure their gross profit margins, unlike other industries to increase profits through price increases.
In the past, chip manufacturers have tried to raise prices. At about the same time last year, due to the recovery of the European and American markets, the lighting chip was in short supply. Sanan Optoelectronics raised the price in a timely manner, but soon found that the market share had shrunk and then returned the original price. Some industry insiders believe that unless all chip manufacturers unanimously announce price increases, a single-vendor price increase will mean giving up market share.
On the other hand, the recent shortage of LED chips may not be the norm. At present, Sanan Optoelectronics, Huacan Optoelectronics and other manufacturers are actively expanding production capacity, which will effectively alleviate the current lack of capacity of upstream chips.
The recent shareholder meeting of Huacan Optoelectronics passed the expansion plan of the third phase of the LED sub-chip of Suzhou Subsidiary. The project invested 1.184 billion yuan and is expected to be put into operation at the end of this year, releasing 656,000 pieces of 4-inch LED epitaxial wafers. LED chip production capacity of 26.24 billion. Together with the full capacity of the first and second phases of the base, after the third phase of the project is completed, Huacan Suzhou will achieve an annual production capacity of 1.147 million wafers and a chip production capacity of 63.62 billion.
Sanan Optoelectronics Wuhu Photoelectric Industrialization (Phase II) project will also start construction in the near future. In addition, the company will set up a subsidiary in Xiamen to increase the production capacity of LED chips. The total investment of the project is 10 billion yuan, and the total scale is 200 MOCVD. The first phase starts with 100 units and the construction period is one year.