Keywords: LED chip industry

Recently, large and small, old media new media were authorities refresh. Pundits interpretation and guidance for China's economy is undoubtedly an important vane we glimpse into the direction of China's policy for the LED industry, and can get what enlightenment?

One of the most important is the economic L movements of judgment.

In the first quarter of this year, because of the reason of easy credit, economic recovery began appearing in signs, and the LED industry also began to appear better, this is, of course, is a good phenomenon. But authorities believe that it is difficult to use "start" and "enjoying" simple concept, because these are levers driven, not endure, while reduce the momentum of the economic downturn, but ultimately not healthy circulation.

LED industry, however, under the stimulus of the Indian summer, unleashing a new round of competition of capacity expansion.

HuaCan photoelectric LED epitaxy, the chip in yiwu industrial park construction and industrial chain extension project, is expected to total about $6 billion, land area of 350 mu, the project reaches producing within five years after construction license.

According to LEDinside research, three Ann photoelectric will add in 2016 is expected to 60 MOCVD machines. Australian foreign shun cheong, harmony photoelectric have also plans to expand in 2016 epitaxial wafer and chip production capacity, to deal with the chip market tight supply situation.

However, the market really have so hot? According to the actually LEDinside analysis, LED industry has gradually into a mature period of steady development, difficult to reappear the growth of high-speed growth miracle. In the LED industry, several big downstream port: 1. The backlit LED demand in a recession, and under the impetus of the VR technology, the OLED alternative tide has come, the most late in 2017, a large number of backlit LED demand will disappear; 2. The lighting LED demand growth also gradually tends to be stable, difficult to achieve explosive growth; 3. Small spacing display demand growth is one of the biggest bright spot, however, as technology dividend period disappeared, a large number of new competitors to join, also gradually eroded profits, affect the future development of space, so it is unfavorable and exorbitant expectation.

Actually LED chip industry is in the pig cycle cycle. So-called swine cycle is a kind of economic phenomenon, refers to the "price of injured people, and high prices mean hurt farmers" cyclical phenomenon of pork price changes. "Pig cycle" circular trajectory is commonly: meat prices rise, the sow breeding stock soar - pigs increased supply, pork prices fell, a large number of eliminating the sow - supply reduce - rise in meat prices. Pork prices stimulate farmers enthusiasm caused supply increases, the supply increases due to price fall, meat prices hit the farmers enthusiasm created a shortage of supply, supply shortages and makes meat prices rise, the cycle, this creates a so-called "pig cycle".

How similar, and the LED chip industry (price) chip prices - makers buy MOCVD (sows living) - (pigs) increased supply - chip prices fall (meat) - makers bankruptcy MOCVD equipment idle (eliminating the sow) - chip (pigs) reduced supplies (meat) - chip prices. Sow to the pig market also about two years, two years later, the live pig market began to retreat to eliminate the sow to 1 year, pork prices to have 1 year, because of the MOCVD from order to production release it's about two years, and then from the supply exceeds demand, the elimination capacity to two years, the LED chip industry cycle, and the pig cycle is almost 4 years.

Pork price fluctuations and the LED chip price highly similar.

Downstream demand over the past few years, LED chips will continue to increase, so every time of MOCVD equipment out of the process is not so pain and sufferings, LED industry is equivalent to in a pork demand growth period (early similar to China's reform and opening up, the per capita meat consumption increasing), but in the future if you can't reproduce the explosive growth of downstream demand, once chip prices plunged again, the new capacity will face a huge risk of profit.

Already give guidance and authority, the future of China's economy will be a L, won't be u-shaped, at this time also to bet big reversal, is run.