LED chip prices raised concerns that small businesses cut corners into hidden problems

The LED industry is in hot demand, and chip prices have continued to rise. In the first half of the year, the increase was close to 30%, and some varieties were even around 50%. Dongguan, a number of LED companies said that this is the upstream raw material prices and other factors caused by the "trouble", worried that small-scale peers will cut corners.

The chip price rose up to nearly half

"The LED chip has hundreds of colors and prices have risen." The manager of Dongguan Xinguang Electronic Co., Ltd. Yu Huan was slightly irritated and said that investment in the LED industry, red-yellow LED chips, and blue-green LED chips were rushed across the country. The rise was more than two percent, and some types of LED chips were as high as 30%.

Li Zehe, general manager of Yinxin Lighting Co., Ltd., also has the same distress. He said that the LED chips imported by the company are mainly from Taiwanese manufacturers, and the price increase is also more than 20%. Qin Bingzhong, deputy general manager of Optoelectronics, told reporters that the company's LED chips are imported from Taiwan, but also from the mainland chip manufacturers to buy, chip prices have risen nearly 23%.

Industry sources said that at the end of the first quarter of this year, global LED chips and epitaxial wafers began to increase prices. At present, some chips have gained nearly 50%, and it is expected that prices will remain high in the third quarter. In this unexpectedly rapid price increase, China's major chip giants ushered in a period of high profit growth.

Raw material prices for LED chips

For chip prices, Xie Jiping, deputy secretary-general of the Shanghai Electronic Information Industry Association, said that there is no statistical data at the moment, but price increases have been heard. He believes that price increases are due to factors such as supply and demand, rising raw materials, and labor costs.

Fulin Electronic Deputy General Manager Fan Ningning believes that the most critical reason for the price increase is that the potassium carbide gas needed for the epitaxial wafer production of chip upstream materials is produced by more than 10 companies worldwide, but is often monopolized by some LED giants in Taiwan and South Korea. This directly led to the increase in the price of potassium carbide gas. Materials such as sapphire substrates and organic metal (MO) gases, which are important raw materials, have also shown price increases. For example, a two-inch sapphire substrate has risen from a minimum of $8/piece to about $30/piece, and the current rally hasn't seen signs of stagnation.

Although the prices of LED chips and epitaxial wafers are rising, the market is still in short supply. Fan Ningning said that the real reason for the rise in chip prices is the imbalance between supply and demand. Overseas LED upstream companies believe that Chinese LED companies will continue to increase, so they do everything possible to control from the upstream.

It is understood that with the influx of large amounts of capital and the formulation of corresponding industrial development strategic plans in various places, the signs of repeated construction have already emerged, and the industry may be overheated.

influences

Small businesses may cut corners

The rise in the price of the LED core component of the chip directly benefits manufacturers. According to LEDinside statistics of the industry research institute, in April of the first half of the year, the overall chip factory revenue in Taiwan reached 4.029 billion yuan, an increase of 12.2% from March.

Zhu Bingzhong said that in general, the cost of LED chips accounts for 30% of the total cost, and the price increase has a significant impact on product cost. However, he optimistically believes that the company's large output and strong sales can reduce overall costs.

The Yinxin LED uses more low-power chips. The price of low-power chips is much lower than that of high-power chips. Li Zehe said that the impact of rising chip prices on the company is limited.

However, companies have invariably expressed a concern, Dongguan LED industry is no shortage of some small-scale lighting companies, anti-risk ability is weak, with the chip prices rise, their cost increases greatly, it is likely that there will be cutting corners.

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