LED packaging market 'is the layout of the price war imminent?

A few days ago, Taiwan's Luyang Optoelectronics invested 100 million US dollars in high-power LED packaging projects formally settled in Nanchang High-tech Zone. So far, in addition to advanced electricity, Taiwan's eight LED packaging giants have opened factories in the Mainland. Although the LED packaging market has developed rapidly, market share has been dominated by giants such as foreign companies and Taiwanese companies. It is understood that there are currently 1,500 packaging companies in China, with more than 40 first camps with annual sales of over 100 million yuan, and less than 400 second-tier companies with sales between 10 million yuan and 100 million yuan. About 30% of the company's total sales are less than 10 million yuan. This is a far cry from the average sales of 1 billion yuan in Taiwan's eight largest listed companies.

Taiwanese companies are actively deploying domestically and occupying domestic high-end and middle-end packaging markets with their skills and talents. However, domestic packaging companies are mostly concentrated on low-end, medium- and low-end products, and their homogeneity is serious. At present, one of the main measures for domestic LED packaging companies to cope with market competition is low prices, and some small companies even sacrifice their product quality.

National Star Optoelectronics reported in the first quarter of this year that the combined gross profit rate of LED packaging products decreased by 9.52% year-on-year to 22.97%. In explaining the change in performance, the report stated that due to the bullish outlook of TOPLED, in order to increase market share, it actively lowered the selling price and caused the gross profit margin to drop. Wang Sen, the managing director of National Star Optoelectronics, once stated that the scale of the company's production expansion is large and the competition in the packaging industry is fierce. In order to cope with the competition, such adjustments are needed.

"Now most companies are cutting corners and are not entirely corporate behaviors, but market pressures." Dalian Jiu Jiu Optoelectronics Technology Co., Ltd. General Manager Shi Weili publicly stated that the gross margin of packaging companies is declining and market pressure is increasing.

Lehman Optoelectronics also reported that its net profit dropped 38.23% year-on-year. One of the reasons for the report's explanation is the intense competition in the LED product market and the continuous decline in product prices.

With the active deployment of strong Taiwanese-funded enterprises in the Mainland, mainland LED packaging companies, which were originally at the mid-to-low end of the market, have suffered severe homogenous production, and are fighting a price war, will face even greater challenges.