LED domestic demand will drop by 10 percent this year, UV lamps and displays are opportunities
Wang Fei, the research director of the research organization LED inside in China, predicted in an interview with the first financial reporter on February 13 that the new coronavirus infection pneumonia epidemic will reduce the domestic LED demand in 2020 by more than 10 percent year-on-year. Ultraviolet LED lamps with certain sterilization functions and display screens that can be used for online meetings may become opportunities for the LED industry.
A number of LED companies have resumed work on February 10. While taking anti-epidemic measures, they cut unnecessary expenditures, adopted more three-dimensional and diverse marketing methods, adjusted internal production capacity, and seized market segments such as displays to become LED companies. A common choice to deal with the epidemic.
The automotive lighting industry has been greatly impacted
The impact of the epidemic on the supply side of the LED industry is reflected in three aspects: chips, packaging, and applications. From the perspective of upstream chip factories, Wang Fei believes that the overall LED industry chip industry is far away from the core epidemic areas of Wuhan and Hubei, so the impact is not as serious as LCD (liquid crystal) panels, semiconductors, optoelectronic communications, automobiles and other industries. In addition, the LED chip industry is in a state of high inventory, and the inability to resume work in the short term will not affect the supply of chips.
HC Semitek (300323.SZ) has a relatively high proportion of employees from Wuhan. Some employees are affected by the closure of Wuhan after returning to Wuhan during the Spring Festival. It is difficult for them to return to work in the short term, which may cause a certain degree of impact. However, the Wuhan factory has withdrawn its production capacity, and its production bases are mainly located in Yiwu and Zhangjiagang. The current production capacity is not affected by the epidemic temporarily, and further observation is required in the future.
Sanan Optoelectronics (600703.SH), whose main production bases are located in Fujian and Anhui provinces, will be relatively less affected; however, its new Micro/Mini LED chip project in Ezhou, Hubei Province is expected to be delayed due to the impact of the epidemic. Other Chinese LED chip factories are far away from the epidemic area and will not be affected for the time being.
From the perspective of midstream packaging factories, the LED packaging industry chain is mainly distributed in the Pearl River Delta, as well as in Jiangxi Province, where some enterprises in the Pearl River Delta have relocated inland. At present, neither of these two areas is the epicentre of the epidemic, and it is expected that the impact will be minor. In the follow-up, it depends on whether Guangdong and Jiangxi can effectively control the epidemic.
From the perspective of downstream applications, Guangdong, Fujian, Zhejiang, Shanghai, Jiangsu and other provinces and cities where the LED lighting industry is concentrated are currently affected by the epidemic, but the situation is still under control. The LED backlight industry chain is mainly located in Guangdong and Jiangsu, and the overall impact is not large. However, since Wuhan is an important center of the LCD (liquid crystal) panel industry, the demand will be affected to a certain extent. In terms of automobiles, Hubei Province is an important cluster of the automobile industry, and Wuhan is also an important center of China's automobile industry. Therefore, the overall automobile industry will be deeply affected, and the automotive lighting market will be greatly affected. The display industry chain is mainly around Shenzhen and is expected to be less affected.
Ultraviolet lamps and display screens have great opportunities
On the demand side, Wang Fei believes that the epidemic will bring about a one-time demand decline, so demand will decline sharply in a single quarter. The epidemic has also brought about changes in lifestyles and working methods, which are expected to have an impact on some LED industries. The overall expected decline in LED demand in the Chinese market is more than 10 percent .
Among them, the one-time demand shock will have an impact on general lighting and car lights, and will have the effect of accelerating the clearing of the general lighting and car lights industries that are already in a state of oversupply. Some small and medium-sized enterprises may withdraw permanently.
In addition, the decline in demand will also be indirectly reflected in the market segments of non-essential products such as outdoor displays and landscape lighting. These industries are highly reliant on government purchases. It is expected that the government budget will significantly reduce investment in related fields this year, and instead spend mainly on epidemic prevention, medical care, social security, public safety and other fields.
At the same time, Wang Fei predicts that "the sub-industries that may be beneficial to the epidemic include UV LED (ultraviolet LED lamp) and conference display system". Ultraviolet lamps can kill bacteria and viruses, so during the epidemic, the sales of traditional ultraviolet lamps surged, and the supply of quartz lamps and brackets was in short supply. Although there is still a gap between UVLED and the effective sterilization dose, the tide is rising, and the rising price of UV lamps stimulates the commercialization of related industry chains.
In addition, due to the impact of the epidemic, online meetings and online education have become the preferred work methods for enterprises, governments and schools, so the demand for large-screen display equipment has increased, so the conference display industry will indirectly benefit.
Many LED companies have resumed work
A number of domestic LED companies have resumed work on February 10, including NVC Lighting (02222.HK), Huacan Optoelectronics, National Star Optoelectronics (002449.SZ), Ledman Optoelectronics (300162.SZ), Lianjian Optoelectronics (300269) .SZ), Zhaochi (002429.SZ), Foshan Lighting (000541.SZ), etc.
NVC Lighting began staggered work resumption and flexible office on February 10. Wang Donglei, CEO of NVC Lighting, said that the epidemic is a huge and sudden challenge to most companies in the short term, especially the offline retail industry, but the opportunity lies in the challenge. NVC's commercial lighting business may be more difficult in the first quarter, but the projects obtained will only be delayed a little; the market share of NVC in the segmented lighting market is still small, and there is still room for development; the offline retail team adopts more three-dimensional and diverse, Marketing methods for online and offline interaction. NVC will cut off all unnecessary costs, support the front line to the greatest extent, and use its greatest certainty to deal with any future uncertainties.
HC Semitek's factories in Zhangjiagang and Yiwu have fully resumed work, saying that the epidemic has not had a substantial impact on the company's production and operation. Nationstar Optoelectronics resumed work on February 10, and issued a notice to employees on personal protection, dining, accommodation, etc. Zhaochi's factories in Guangdong and Jiangxi also resumed work on February 10. It plans to make up for the lost sales in the first quarter in the second and third quarters through internal capacity adjustment.
Ledman said in response to investors' questions on February 5 that with the advancement of the domestic 5G process and the development of ultra-clear displays, the ultra-high-definition video conferencing system with ultra-large screen is expected to develop into a new blue ocean market, with remote online collaboration and intelligent Office will also become the trend of office in a critical period.
