Watch today: LED companies rush to transform the lighting field will be closer to bankruptcy

In the face of the feast of LED's that look beautiful, many companies blindly "transform" and move forward, and they become "martyrs" on the "transition" road. Industry insiders have boldly predicted that the greater storm in the LED industry is likely to erupt next year, when more LED companies will close down.

Small businesses may be shuffled

"Not surprisingly," on November 8, Wu Yulin, chairman of the Foshan Lighting Association, told reporters about Shuai Liang's collapse. "This company has done a traditional lighting manufacturing, simply do not have the conditions for the production of LED products. I heard that the industry is good, and immediately jumped." Wu Yulin believes that Shuai Liang’s failure will not just begin. “It is expected that in the first half of next year or the second half of next year, more companies can see a collapse.”

According to Wu Yulin, there are more than 300 companies engaged in LED production in Foshan at present, but like Shuai Liang, from the traditional lighting industry, it has been able to smell LED business opportunities and there are more than 100 “transitions”. The transition of these small companies took place in the past two years. "Some companies are just transitioning from the traditional lighting industry." Some traditional lighting companies that have not yet been transformed are also planning to switch to LED battlefields.

"Guangdong LED Industry Plan for the 12th Five-Year Plan" shows that Guangdong is home to 60% of the country's traditional lighting companies. Hu Yulin revealed that only Foshan has gathered about 30% of the country's traditional lighting companies. For a large number of traditional lighting companies, the LED industry has become the answer of choice for the transition. “But too many inexperienced companies are making headway. It's like the road is good, but it's too much traffic. Eventually someone will be squeezed and died.” Wu metaphor.

In Wu Yulin’s view, the biggest risk point is likely to be exposed to “transformers” of the same size as Shuai Liang.

There will be many companies die next year

Shenzhen Hao Lighting Technology Co., Ltd., located in Shenzhen Longgang, also faintly smelled the smell of the storm. "Next year, there may even be a lot of LED companies die early this year and early next year," Mr Xiao predicts. He believes that this year's reduction in LED foreign orders on the one hand is due to the poor economic situation in foreign countries, but on the other hand, it is because the bitter fruits of a large number of aggressive "transformers" have begun to appear.

"Some LED products produced in 2007 and exported to foreign countries have already exposed quality problems of this type. Foreign merchants want to find back the original suppliers, but found that the manufacturers are closed. This makes some foreign manufacturers to China LED products. This creates a crisis of confidence, which is also largely responsible for the reduction of LED orders." Mr. Xiao said that they found that the life of some LED lamps on the market was only three months or six months. "No matter how many small businesses, one-shot deal, earn money to leave. Can not afford to close the door, rename another name."

There is also risk in the upper and middle reaches

According to Guo Xiu, secretary-general of the Guangdong Provincial Lighting Association, the risk is not only focused on the many tiny companies blindly smashing into the LED industry, but it also attracts large consortiums, whether it is the mid-range packaging of medium-sized investors. There are many risks hidden in the upstream epitaxial chip production stage of large capital investment.

“Someone took $20,000 to $30 million to consult with me on being able to do LED packaging; others also brought in a thick LED business plan and wanted to break into this industry.” Guo Xiu said that most people saw this The market has a good investment prospect but lacks a correct assessment of risk. Precisely because of this, Guo Xiu believes that the risk in the upstream link in LED is greater. "Small business ships are better off and the economic scale is limited; the upper and middle reaches are frequently investing 10 million yuan in hundreds of millions. How can they turn around once they have a risk?"

Mr. Xiao of Lighting Technology agrees with this view. He believes that the current LED market is full of "speculators", no shortage of some "LED" speculators circling the speculators. “We are all shocked by the prices given by some companies. These companies either do nothing or stick money.” Mr. Xiao said that the purpose of these companies is nothing more than to seize market share and enlarge the plate, and their motivation to expand the market is intriguing.

In addition to multi-dimensional, Century Jingyuan is a microcosm of the risk exposure of large and medium-sized LED companies. In May of this year, Shenzhen Century Jingyuan was sued by the bank for defaulting on loans. It defaulted on suppliers’ payment and construction costs ranging from several tens of thousands of yuan to tens of thousands of yuan. Zhongyuan Securities found that the company entered the field of LED epitaxial wafers and chips in 2005, with an initial investment of 3 billion yuan. The planned investment will reach 20 billion yuan in 3 to 5 years, and the planned total output value will exceed 100 billion yuan. In 2010, many companies entering the upper reaches of the LED are exactly the same. However, the actual situation is that Century Crystal's LED chip was officially put into operation in 2008. After many years of operation, the products are rarely seen in the market. At present, the company is close to bankruptcy.

“For new companies with no technology reserves and sales channels, there are major risks in tapping into epitaxial wafers and chips upstream of LED. There is uncertainty about whether planned production capacity can be transformed into effective production capacity,” said a source from China National Securities.

In listed companies that have gathered many LED "big brothers", the situation is not optimistic either. LED industry listed companies announced in the third quarter of 2011 showed that in the third quarter, LED listed companies' revenue and profit growth rate almost fell across the board. This shows that LED is currently at the bottom of the industry's performance, "Da Lai" are also struggling.