After the downturn of the previous year and the impact of last year's epidemic, the LED industry has crossed the low point. The stimulation of emerging businesses such as Mini LED, third-generation semiconductors, and plant lighting, has ushered in a new round of the business cycle. The semi-annual reports of listed companies in the domestic LED industry chain from upstream chips, midstream packaging, downstream lighting, and displays show that most of the performance in the first half of 2021 has increased significantly.
Upstream expansion of Mini LED and compound semiconductor production
HC Semi-Annual Report released on the evening of August 29 revealed that in the first half of this year, revenue was 1.594 billion RMB, a year-on-year increase of 49.2%; net profit loss attributable to the parent was 25.43 million RMB, a year-on-year increase of 77.13%. Another LED chip leader, Sanan Optoelectronics, had revenue of 6.114 billion RMB in the first half of the year, an increase of 71.38%; net profit was 884 million RMB, an increase of 39.18%.
Entering 2021, the LED industry has gradually crossed the low point and ushered in a new round of boom. According to statistics from the China Lighting Association, in the first quarter of 2021, the export value of LED lighting products was 9.825 billion US dollars, an increase of 102.66% over the same period last year.
In terms of demand, on the one hand, the market for high-end lighting such as plant lighting is optimistic; on the other hand, Mini LED brings a new segment of the golden track. According to Arizton’s forecast, the global Mini LED market is expected to increase from US$150 million in 2021-2024. During this period, the year-on-year growth rate was as high as 140% or more. In addition, the third-generation semiconductor industry has also become a new growth point for LED chip companies. It is estimated that the global gallium nitride power semiconductor market will exceed 750 million U.S. dollars in 2024.
Due to the substantial increase in LED chip sales revenue and the rapid growth of subdivided businesses such as high-efficiency lighting, plant lighting, automotive lighting, and Mini LED, HC Semitek has increased its overall gross profit margin in the first half of the year by 6.99 percentage points to 8.64%, of which LED chip gross profit margin, an increase of 9.12 percentage points to 13.47%. New consumer electronics products equipped with its Mini LED backlight products have been introduced to the market. In addition, HC Semitek has set foot in the gallium nitride power electronic device business and is optimistic about the entry opportunities in the consumer market such as mobile phone fast charging.
Sanan Optoelectronics said that due to strong demand in the first half of the year, the prices of some low-end LED chip products continued to rise. It is expected that prices of some products will continue to rise in the future, and inventory will effectively decline. In addition to the TV market, Mini/Micro LED chips are also widely used in display fields such as tablet computers, notebook computers, and car screens. The shipment volume is increasing month by month. Part of the production capacity of the Mini/Micro LED display chip industrialization project in Hubei San’an has been put into production and operation.
The third-generation semiconductor business is one of the highlights of Sanan Optoelectronics' semi-annual report. Sanan Integration mainly provides R&D, production, and manufacturing services for radio frequency, optical technology, and power electronic compound semiconductors. In the first half of the year, it achieved sales revenue of 1.016 billion RMB (excluding Quanzhou San’an filter sales revenue of 12.426 million RMB), a year-on-year increase of 170.57%. With customer orders accumulated to next year, production capacity will be gradually released in the third quarter. Among them, the Hunan San'an Changsha project, which is mainly engaged in the silicon carbide industrial chain, was ignited in June this year.