What Signal Does The Closure Of The Chip Plant Send To LED Companies?

- Jul 16, 2019-

On July 9, the 14th meeting of the sixth board of directors of Elec-Tech was held. The meeting passed the "motion on authorizing the management to push forward the closure of the LED chip factory related matters" and agreed to close the LED chip factory. A series of actions, such as the closure of the plant and exit from the chip industry, have caused a sigh, but also released some signals for LED companies.

Signal a: enterprise development bottleneck period, more need for proper layout


 The first-half loss is expected to be between 300 million yuan and 400 million yuan, due to a decline in gross profit from small home appliances and a reduction in the price of LED chip processing overcapacity, according to the 2019 half-year forecast released by dehau on Tuesday. Looking back on the road of LED chip development of Elec-Tech, in fact, Elec-Tech is only halfway to become a professional in LED. * at the beginning, Elec-Tech started by producing small household appliances. In 2009, when the enterprise met the development bottleneck, Elec-Tech needed to transform. At that time, when the LED display industry was booming, Elec-Tech turned to join the ranks of LED chips with great investment. Due to his unique vision and good timing, until 2014, the turnover of LED chips reached a record high, even surpassing the turnover of small household appliances. At this time, Elec-Tech achieved a successful transformation.


The turning point came in 2017, when the flow rate and change rate of dehau returned to the pre-market period. Moreover, the LED chip industry entered a stable development period, and the price began to show signs of continuing low. However, dehau continued to choose to go deep into the chip industry, only realizing in 2018 that the LED chip industry was no longer what it used to be. Even as it moves to close LED chip factories in the fourth quarter of 2018, it has lost money for two and a half years and is at risk of delisting. Although ride the LED display screen to develop the wind, but due to the late failed to properly layout the enterprise's development plan, resulting in its LED chip building slowly collapsed. Now, Elec-Tech is facing another bottleneck. After the closure of the chip factory, what kind of transformation plan will be deployed to help Elec-Tech take off again? It is also the concern of the industry. Although Elec-Tech is a listed enterprise, its LED chip path is worthy of all LED enterprises to learn from. Now the LED display industry has entered a white-hot stage, enterprises need to proceed from the long-term, careful layout, to ensure the good development of enterprises.


Signal 2: exit chip industry, vacancy position waits for other enterprise to fill


China's LED industry has developed so far, and the technical level of the segmentation field has surpassed the international level. However, since then, it has been difficult to popularize the domestic chip, and the market is still dominated by Europe and America. However, enterprises need strong technology and strong financial support for chip research and development. The market is relatively small and the research and development risk is high, so it is difficult for small and medium-sized enterprises to enter the chip industry. As one of the leading LED chip manufacturers, Elec-Tech has occupied a position in the LED chip industry. Now it has withdrawn. Its vacant position and released orders are a once-in-a-lifetime good opportunity for other manufacturers. At this point, enterprises do not lose their own, do not compete with low prices, but more should create quality products, establish a brand, to occupy the chip market with enterprise value. At the same time, due to the continuous closure of the two chip manufacturers of xinnajing and Elec-Tech, the enterprise's confidence in the LED chip manufacturers may be under unprecedented pressure. Manufacturers do not need to hesitate, but must pay attention to, actively respond to the confident posture of competition industry release orders.


Of course, the industrial signals released by dehau's closing of the chip factory, including but not limited to the above two, are only two obvious points at present, which are also worth reference and reference for the LED enterprises. In addition, through careful analysis of the reasons for the closure of the chip factory, it is concluded that the current LED chip industry is in the stage of fierce competition and the penetration rate of domestic chips is not high. Therefore, increasing the research and development of chips, increasing the penetration rate of domestic chips and increasing the value of domestic chips are also urgent problems for the industry.