Since entering 2016, the LED industry price hike has never stopped, and a wave has not recovered.
In May of this year, the global LED chip maker Taiwan Jingyuan Optoelectronics raised the price for some chip products. At the end of August, LED chips and packaging companies in the Chinese market followed the price increase, with price increases ranging from 5% to 15%.
Today, two aluminum substrate manufacturers in the WeChat circle of friends issued a price increase notice.
So, what impact will the price of sheet metal have on the industry?
The price of substrate materials is rising, and copper foil is the "culprit"
Over the years, substrate materials have been very low in price due to overcapacity. However, with the explosive growth of the demand for new energy vehicles, it is necessary to use a large amount of electrolytic copper foil. Copper foil manufacturers have transferred most of their orders to the field of new energy vehicles. At one time, there has been a shortage of supply of upstream copper foil, and the market gap is very large.
According to industry insiders, the price of raw material suppliers has actually started to increase since June, and has risen by three rounds so far, with a growth rate of 10% to 30%. In addition, the national “de-capacity†policy has continued to show its regulatory effects, especially during the G20 summit. The process of coal-to-gas conversion has caused a large number of manufacturers to fail to produce properly.
Coupled with the rapid growth cycle of lithium battery and new energy automobile industry, the profit of products is also very high. Copper foil factories and aluminum factories all give priority to supply, which leads to the rise of price.
Ding Huisheng, vice president of CITIC China, one of the largest suppliers of PCBs in China, said, “The shortage of copper foil is equivalent to the lack of rice in the plate makers, and even some plate manufacturers are starting to bid for copper foil.â€
At the same time, as the electronics industry is about to enter the peak season, it directly leads the board manufacturers to have no right to speak when ordering raw materials. At present, raw material prices are changing every day, causing some customers to start panic buying.
With the advent of the peak season, the tension between supply and demand will be more sustainable. It will be difficult to ease the price increase in a short period of time. This year, we should not see the hope of not raising prices or stabilizing prices.
"The price of copper foil has risen, and the price of plate manufacturers has also increased. As you rise, I have also risen. As a result, the whole industry is going up. The more you buy, the more you buy, which leads to the illusion of out of stock." Another PCB supplier, Ward Technology Sales Director Hu Yong believes that "in fact, the market demand is not so large. After this round of increase, it will probably stop for two months. It may rise on the eve of New Year's Eve, but the increase will not be too great."
With the news that the price of substrate materials has risen, customers can only accept price increases and can accept prices of around 10%.
The wave of price hikes has already started, and whether market demand will continue to grow is worthy of attention.
CITIC China is already preparing for the expansion plan recently.
“The Zhuhai Advanced Company acquired in June is pursuing procurement equipment. It is expected that the equipment will be basically in place in November; the second phase of Daya Bay will be put into operation in October; the new production base will be set up in Jiangsu on September 22, laying the foundation for the whole foundation.†Ding Hui Loud revealed.
The price increase of the board indicates that the industry will start shuffling?
Industry insiders expect that the source of this plate price increase is mainly upstream raw materials, which is expected to continue for some time.
“For the downstream customer group, the price increase of the plate will lead to the increase of the cost of downstream manufacturers. It is believed that the downstream customers will adjust the price according to the range acceptable to their customer groups.†Ding Huisheng said.
At present, the application of PCB in the LED industry is mainly in the fields of packaging, power supply, lighting, etc. Especially the rapid growth of LED display demand this year, the growth of COB and other packaging market scales are all contributing to the growth of demand in the PCB market.
The price increase of the board will not have much impact on the downstream lighting companies, because the proportion of sheet costs in the entire lighting products is not too large, probably between 5% and 8%. Lin Yan, deputy general manager of Sanxiong Aurora, said, “As a lighting manufacturer, we will not follow the price increase of the plate price, we will carry out reasonable control of the cost according to our own situation.â€
Wang Caixiang, general manager of Kegu Power, also holds the same view. "Although the price of substrate materials has increased, our cost has increased. However, as a power supplier, we will not increase prices. Next, we will manage production, design, and business operations. Optimize in other aspects to ease the pressure of price increases."
But for small businesses, the price increase of upstream raw materials will undoubtedly have a small impact.
Hu Yong said, "The changes facing the downstream should be the same as the ones we make. If large enterprises purchase large quantities, there will be certain bargaining chips. Small enterprises have no talks, and we say how much will rise if they rise, otherwise, we Will not supply again. As a result, the cost of small enterprises in the downstream will increase, it will certainly be difficult to survive, and will accelerate mergers and acquisitions, integration, and reshuffle."
The price increase will cause a new round of reshuffle. There is no brand advantage. It is difficult for PCB companies without purchasing power to survive because there is no money to buy materials, and it is difficult to buy materials with money, which makes it impossible to deliver.
In fact, the prices of sheet metal raw materials have been declining in recent years, and demand has increased year by year. This has also led many PCB companies to be squeezed out of the market because of price wars.
“Enterprises without scale advantage have no advantage in price, and orders will naturally drop sharply, because price increases will not increase market demand.†Hu Yong mentioned.
In fact, the reshuffle of the industry is the general trend, and the price increase of materials only accelerates the process of shuffling.
"This price increase has a certain role in promoting the LED industry reshuffle. This is like a catalyst, but it will not have a particularly large impact." Lin Yan finally mentioned.
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