Zhang Xiaofei: Substrate capacity exceeds 10 times demand and the crisis of bankruptcy will intensify next year

September 12, 2019

The planned production capacity has reached 10 times of the market demand. This supply oversupply situation occurs in the field of LED substrates. Recently, Zhang Xiaofei, director of the High-tech LED Industry Research Institute (GLII), said in an interview with the "Daily Economic News" that the current LED industry investment scale is very large.

According to the monitoring data of the Institute (GLII), the planned substrate throughput is currently 150 million pieces, while the actual domestic demand is only 15 million pieces, and the supply is seriously unbalanced. The actual capacity of the LED substrate project is four times that of demand.

The investment is overheated, and the demand has yet to be cultivated, which makes the LED industry, which is still in the “boiling point” in the first half of the year, facing embarrassment. According to Zhang Xiaofei, the LED enterprise collapse crisis is spreading from the middle and lower reaches to the upstream, and the situation will be more severe in the first half of next year.

The price of the substrate is on the roller coaster
The LED substrate is in the upstream link in the entire industrial chain, plays a role of bearing and fixing in the LED chip, and is an important component material in the LED product.

Due to the sharp increase in downstream demand, the market price of 2-inch sapphire substrates increased from US$9 to US$38 per piece in the middle of last year, which was close to US$40. At that time, the argument was that such a price could not even be believed by the enterprises themselves. The upstream companies sold out of stock, and the downstream enterprises even had to queue up to increase their prices.

Few companies are indifferent to such a favorable market, so all the capitals are crazy about the field. However, the high price of the substrate is only a short-lived one. After the peak, the price is rapidly falling, and it has dropped to about $8.

Zhang Xiaofei told the reporter of "Daily Economic News" that from the current situation, even in the first half of next year, the price of LED substrates will remain at this level, and there is no upward momentum.

The crisis of bankruptcy spreads upstream

Zhang Xiaofei said that the current middle and upper reaches of the LED industry chain are still hard to support, and the number of bankruptcies will increase in the first half of next year, and even concentrated.

In fact, the crisis of bankruptcy in the downstream has spread everywhere.

The first to push down the dominoes is Shenzhen Yiduoli Industrial Co., Ltd. (hereinafter referred to as “钧多立”). This LED company, which belongs to the “Dayu” class in Shenzhen, reported the boss’s “running the road” in early October. . A month later, Mao Guozhen, chairman of the “钧多立”, who returned to Shenzhen, said in an interview with the media that there are only 10,000 yuan in hundreds of millions of homes.

Subsequently, the LED industry has not been able to stop the collapse of more companies. Some people in the industry estimate that Shenzhen has fallen more than 400 LED companies this year. According to Wang Dianxi, honorary president of Shenzhen Semiconductor Lighting Industry Development Association, according to his investigation, more than 80 LED companies in Shenzhen have been bankrupt or liquidated this year.

This situation also occurs in the LED industry markets such as Zhongshan and Foshan in the Pearl River Delta. The market in Zhongshan, Guangdong is equally worrying. In the ancient town of Zhongshan, known as the "Lighting Capital", Li Faqian, deputy general manager of "Guest Liang" Lighting Appliance Co., Ltd., said in an interview with the "Daily Economic News" reporter that every day, you can see the lighting companies that have closed down.

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