LED Display Enterprises How To Respond While Raw Material Increased Prices

- Aug 28, 2019-

Mainland shengyi technology co., the world's second largest copper foil substrate (CCL) manufacturer, announced a 5 percent increase in prices for different materials from September, as the electronics industry increased prices for key components during the traditional peak season. CCL is the key raw material of printed circuit board and PCB, and cannot be replaced by other materials. Shengyi leads the price rise, revealing the strong market demand. The three major Taiwan CCL photoelectric, lianmao and taiyao peak season effect is expected, and affects the PCB market. Not long ago, the upstream PCB manufacturer of LED displays, wilbon electronics, also issued a notice to adjust the price of copper cladding. LED display upstream raw material manufacturers have prices, LED screen enterprises and how to respond?

Strong market demand for 5G drives up the price of raw materials

Industry insiders said the global electronics industry has been cautious this year, last year's market favorite panels, memory, semiconductor silicon wafers and other key components are no longer popular, prices are back. It is understood that the price increase of shengyi is mainly due to the increased demand of netcom for CCL driven by mainland China's 5G infrastructure construction, which is a key part of the recent price increase in the peak season of electronics industry. As the key raw materials of PCB, copper foil substrate and copper clad plate cannot be replaced by other materials, accounting for more than 30% of the production cost of PCB. PCB is known as "the mother of industry", and its market position is self-evident.

Since June 6, 2019, the ministry of industry and information technology has issued 5G commercial licenses to China telecom, China mobile, China unicom and China national radio and television. The issuance of 5G commercial licenses marks the first year of 5G commercial development in China. The arrival of 5G era has brought a huge market to consumer electronics, and at the same time, the huge demand for copper foil substrate and copper clad plate has also been triggered. It can be said that the rise of 5G concept drives up the price of copper foil substrate and copper clad plate, and then drives up the price of PCB. This price rise, affecting the PCB factory cost and raw material supply, caused a high degree of concern in the industry.

Environmental storms are also an important reason for rising prices of raw materials

In recent years, environmental protection awareness has been paid more and more attention by people, and people have more requirements for environmental protection construction while based on the steady economic development. Building an "environmentally friendly" society has become an urgent need of people. The state also increased its efforts to improve environmental protection to meet the needs of The Times. China tightened environmental restrictions on manufacturing in 2017, and nearly 100 companies were forced to suspend trading in their stocks during the investigation. The implementation of the "environmental tax" in 2018 has also led to an increase in environmental costs for PCB manufacturers.

After the reorganization of PCB manufacturers, some of them failed to meet the environmental requirements were forced out of the market, and those lucky enough to survive had higher requirements on the environmental monitoring of raw materials. The increase of environmental protection cost is bound to lead to the increase of upstream industrial chain cost. In PCB manufacturers, some small and medium-sized PCB enterprises are forced to withdraw from the PCB market due to environmental unqualified, and the original supply and demand balance of PCB market is broken, and the PCB market supply and demand will inevitably lead to a direct rise in price. In the "environmental protection tax" implemented in 2018, China has legalized environmental protection issues in the form of laws, and environmental monitoring of PCB manufacturers will become a kind of normalization, which is also the reason for the increasing material prices of PCB manufacturers.

Pushing prices up is good for healthy competition

For LED display enterprises, this round of price increase is not only caused by the industry, but also an active strategy. On the one hand, the price rise of raw materials is beyond the range that manufacturers can afford. On the other hand, the industry needs to return to rational competition, and raising prices is a good start. Therefore, it is understandable for LED display enterprises to increase the price, and even push up the price of the whole LED market, pushing LED display industry to get rid of the vicious competition of "low price" and move towards the benign price competition. In addition, the "price hike" will accelerate the reshuffle of the LED display industry, and those enterprises lacking innovation will either be eliminated or upgrade their products to take the innovative development route.

To sum up, a few happy a few sorrow, everything is just like this, especially in the turbulent and treacherous more than the battlefield of the shopping mall, in the supply system is sound today, a stone stirred up thousands of waves is inevitable. No matter what the reason is, the price rise of PCB board driven by the rise of raw materials is determined by the market. What enterprises can do now is to play their CARDS well, instead of being passive and arbitrary. Nobody denies that this is a crisis, but who can deny that this is not an opportunity?