[Source: Gaogong LED's "LED Research Review" magazine February issue Reporter / Tang Guirong] Following the scale war and technical warfare, the company once again launched a competition for accessories to reduce the cost of the LED industry chain.
The first two methods, although the investment cost is relatively large, but the benefits are outstanding, which is the main way for enterprises to reduce costs. However, "High-tech LED" learned that in addition to scale and technology, self-sufficiency of accessories is becoming the new favorite of enterprises to reduce the overall cost of LED.
In the past two years, the rapid growth of the LED lighting market has also led to the growth of LED accessories companies. At present, auxiliary materials account for about 40% of the cost of LED lighting, including many LED packaging and application companies such as Mulinsen and Changfang Lighting have invested in LED accessories. When the company's increment does not increase profits, and listed companies have raised funds but no investment projects, the auxiliary materials will undoubtedly become the next battlefield for LED enterprise performance and gross profit margin growth.
Ma Jun, general manager of Shenzhen Jiahai Technology Co., Ltd. said that LED companies can make auxiliary materials, which can reduce costs and obtain profit margins. On the other hand, they can understand the procurement information of the peers and the bottom line of the products by making auxiliary materials, and then lower them. The cost is support, launching price wars and seizing the market.
Peng Xuecheng, deputy general manager of Yitong Electronics, also holds a similar view: “Enterprises can support the raw material market and reduce costs by disguising their industry chain and expanding their own industrial chain costs and vertical integration advantages.â€
"If the company has channels to do the accessories, it must go this way." Ma Jun said that the overall profit level of the LED industry is now dropping very fast, especially in the past two years, the price reduction rate of products is not a few percentage points but dozens By a percentage point, the profits of enterprises have become increasingly meager.
According to the ideal state, if the enterprise itself can do the support, it can reduce the cost by 10%; the profit margin of the phosphor is large, the cost is 1 yuan and 1 kilogram, and it can sell 4 yuan to 5 dollars, but the technical threshold of the phosphor is relatively high; The price changes are very different, ranging from 7 yuan to tens of dollars and 1 kilogram. Prices vary and profit margins vary.
However, De Xiaorun, deputy general manager of Dehao Runda, said that the industry has specialized in expanding the auxiliary materials market, although it can reduce costs, but the risks are also there. "Unless the company has enough demand and chooses some areas with relatively low technology barriers, it will not pay off."
Or driven by profiteering
The reporter learned that in the cost of LED products, chips and light sources account for about 60% of the cost ratio, while auxiliary materials (divided into light source accessories and applied accessories) account for the remaining 40%. At present, the light source auxiliary materials mainly include a power source, a bracket, a glue, a phosphor, etc., and the auxiliary materials mainly include a lens, a PCB board, a heat dissipation aluminum material, a mask, and the like. Among them, the power supply accounts for 20%-30%, the glue accounts for 12%-15%, the brackets occupy 15%-20%, the phosphor 4%, the gold wire 5%, and the other 10%.
At present, companies mainly choose to start with the most cost-effective accessories, this line is mainly from the power supply, to the brackets and glue, gold wire, and then to the phosphor. In the field of accessories, especially the brackets, glues, phosphors, and PCB boards have basically formed a market situation in which high-end foreign brands are expensive and domestic low-end products are inexpensive. Due to the high technical threshold, the investment cost of enterprises is relatively high, and the gold price has only risen and not fallen due to the rising price of gold. The domestic market for LED packaging and application companies is mainly in the fields of glue, brackets and power supplies.
In May 2012, Changfang Lighting pointed to the LED bracket and used the over-raised funds of 40 million yuan to invest in the SMD bracket project of LED lighting source.
According to the announcement, the proportion of materials in the cost of brackets is more than 25%. With the rapid growth of sales of LED patch light sources, the demand for SMD brackets has also increased rapidly. The company intends to extend the industry to achieve cost reduction. Consolidate cost advantages.
"High-tech LED" learned that many domestic packaging companies are developing LED glue. In addition, some companies are developing phosphors.
The early LED power supply accounted for 30% of the cost of LED lighting. In the past two years, the competition in the power supply market has been fierce, and the price has fallen rapidly. The proportion of the overall cost of LED lighting has been less than 20%. A number of lighting manufacturers including Dajin Dongfang, Skyworth Lighting, Juzuo Industry, and Baishi Optoelectronics have pegged this market. Taking Skyworth Lighting as an example, LED power has been one of its main businesses. Philips has long been involved in the LED power supply field and has a place in the high-power LED power supply market.
The person in charge of the above-mentioned company told the reporter that on the one hand, some technical problems of the power supply products on the market have not yet been solved; on the other hand, the specifications of LED lighting products are diversified, and there are many requirements for personalized customization.
In fact, driving companies to focus on the LED accessories market, the reason is also driven by the huge profits behind it. "High-tech LED" learned that some small manufacturers who make auxiliary materials can achieve a gross profit margin of 50% or more due to low technical threshold, low capital investment and timely payment.
“The investment in the auxiliary materials market is low. If the company has its own channels and has such good profits, why not do it?†an industry insider said.
Market change risk
Peng Chengxue said that the key to the encapsulation of the enterprises involved in packaging is whether the enterprises have resources, whether they can integrate resources and complement each other. “If you do this, you can make money, otherwise you will incur additional costs invisibly.â€
It is reported that the company extends the auxiliary materials link and usually adopts another company or brand to avoid the embarrassing situation of “customer is the competitorâ€.
岑 Self-reliance means that companies can reduce costs by doing their own accessories, but only if their demand is large enough. If the amount is not large, do your own accessories, which may lead to an increase in the overall cost of the enterprise.
“If you have the technical advantage and develop a relatively unique product, you can get a relatively high profit. But if it is just a simple product, you can't get a higher profit.†Peng Chengxue said frankly, not only that, but also the company needs to invest more. Human, material and financial resources.
Yan Xiaoming said that if the degree of specialization of accessories is not high, and the demand for the materials is very large, you can try to make your own accessories, otherwise it will not be worth the candle.
For the practice of reducing the cost of self-produced accessories, Li Yang, general manager of Dongguan Xinlong Optoelectronics, expressed another view. “There are a lot of LED supporting materials. For a LED company, the procurement cost is very large. If all the supporting enterprises of LEDs are brought together to form a cluster benefit, the procurement cost can be minimized.â€
Wright Optoelectronics Planning Manager Shi Guangdian said that the application of new materials has become an inevitable choice for enterprises to reduce costs. "The way to reduce the cost of products by cutting corners or reducing operating costs can no longer meet the requirements of price wars."
The price of traditional materials and accessories has fallen to a low point, and the drop has already fallen. Take LED glue as an example. The glue for LED packaging is 4,000 yuan/kg last year, and some even sell it to 7,000 yuan/kg. From the end of last year to the first half of this year, the price of filled rubber dropped to 300-600 yuan / kg, and the integrated glue dropped to 1,500 yuan / kg.
The first two methods, although the investment cost is relatively large, but the benefits are outstanding, which is the main way for enterprises to reduce costs. However, "High-tech LED" learned that in addition to scale and technology, self-sufficiency of accessories is becoming the new favorite of enterprises to reduce the overall cost of LED.
In the past two years, the rapid growth of the LED lighting market has also led to the growth of LED accessories companies. At present, auxiliary materials account for about 40% of the cost of LED lighting, including many LED packaging and application companies such as Mulinsen and Changfang Lighting have invested in LED accessories. When the company's increment does not increase profits, and listed companies have raised funds but no investment projects, the auxiliary materials will undoubtedly become the next battlefield for LED enterprise performance and gross profit margin growth.
Ma Jun, general manager of Shenzhen Jiahai Technology Co., Ltd. said that LED companies can make auxiliary materials, which can reduce costs and obtain profit margins. On the other hand, they can understand the procurement information of the peers and the bottom line of the products by making auxiliary materials, and then lower them. The cost is support, launching price wars and seizing the market.
Peng Xuecheng, deputy general manager of Yitong Electronics, also holds a similar view: “Enterprises can support the raw material market and reduce costs by disguising their industry chain and expanding their own industrial chain costs and vertical integration advantages.â€
"If the company has channels to do the accessories, it must go this way." Ma Jun said that the overall profit level of the LED industry is now dropping very fast, especially in the past two years, the price reduction rate of products is not a few percentage points but dozens By a percentage point, the profits of enterprises have become increasingly meager.
According to the ideal state, if the enterprise itself can do the support, it can reduce the cost by 10%; the profit margin of the phosphor is large, the cost is 1 yuan and 1 kilogram, and it can sell 4 yuan to 5 dollars, but the technical threshold of the phosphor is relatively high; The price changes are very different, ranging from 7 yuan to tens of dollars and 1 kilogram. Prices vary and profit margins vary.
However, De Xiaorun, deputy general manager of Dehao Runda, said that the industry has specialized in expanding the auxiliary materials market, although it can reduce costs, but the risks are also there. "Unless the company has enough demand and chooses some areas with relatively low technology barriers, it will not pay off."
Or driven by profiteering
The reporter learned that in the cost of LED products, chips and light sources account for about 60% of the cost ratio, while auxiliary materials (divided into light source accessories and applied accessories) account for the remaining 40%. At present, the light source auxiliary materials mainly include a power source, a bracket, a glue, a phosphor, etc., and the auxiliary materials mainly include a lens, a PCB board, a heat dissipation aluminum material, a mask, and the like. Among them, the power supply accounts for 20%-30%, the glue accounts for 12%-15%, the brackets occupy 15%-20%, the phosphor 4%, the gold wire 5%, and the other 10%.
At present, companies mainly choose to start with the most cost-effective accessories, this line is mainly from the power supply, to the brackets and glue, gold wire, and then to the phosphor. In the field of accessories, especially the brackets, glues, phosphors, and PCB boards have basically formed a market situation in which high-end foreign brands are expensive and domestic low-end products are inexpensive. Due to the high technical threshold, the investment cost of enterprises is relatively high, and the gold price has only risen and not fallen due to the rising price of gold. The domestic market for LED packaging and application companies is mainly in the fields of glue, brackets and power supplies.
In May 2012, Changfang Lighting pointed to the LED bracket and used the over-raised funds of 40 million yuan to invest in the SMD bracket project of LED lighting source.
According to the announcement, the proportion of materials in the cost of brackets is more than 25%. With the rapid growth of sales of LED patch light sources, the demand for SMD brackets has also increased rapidly. The company intends to extend the industry to achieve cost reduction. Consolidate cost advantages.
"High-tech LED" learned that many domestic packaging companies are developing LED glue. In addition, some companies are developing phosphors.
The early LED power supply accounted for 30% of the cost of LED lighting. In the past two years, the competition in the power supply market has been fierce, and the price has fallen rapidly. The proportion of the overall cost of LED lighting has been less than 20%. A number of lighting manufacturers including Dajin Dongfang, Skyworth Lighting, Juzuo Industry, and Baishi Optoelectronics have pegged this market. Taking Skyworth Lighting as an example, LED power has been one of its main businesses. Philips has long been involved in the LED power supply field and has a place in the high-power LED power supply market.
The person in charge of the above-mentioned company told the reporter that on the one hand, some technical problems of the power supply products on the market have not yet been solved; on the other hand, the specifications of LED lighting products are diversified, and there are many requirements for personalized customization.
In fact, driving companies to focus on the LED accessories market, the reason is also driven by the huge profits behind it. "High-tech LED" learned that some small manufacturers who make auxiliary materials can achieve a gross profit margin of 50% or more due to low technical threshold, low capital investment and timely payment.
“The investment in the auxiliary materials market is low. If the company has its own channels and has such good profits, why not do it?†an industry insider said.
Market change risk
Peng Chengxue said that the key to the encapsulation of the enterprises involved in packaging is whether the enterprises have resources, whether they can integrate resources and complement each other. “If you do this, you can make money, otherwise you will incur additional costs invisibly.â€
It is reported that the company extends the auxiliary materials link and usually adopts another company or brand to avoid the embarrassing situation of “customer is the competitorâ€.
岑 Self-reliance means that companies can reduce costs by doing their own accessories, but only if their demand is large enough. If the amount is not large, do your own accessories, which may lead to an increase in the overall cost of the enterprise.
“If you have the technical advantage and develop a relatively unique product, you can get a relatively high profit. But if it is just a simple product, you can't get a higher profit.†Peng Chengxue said frankly, not only that, but also the company needs to invest more. Human, material and financial resources.
Yan Xiaoming said that if the degree of specialization of accessories is not high, and the demand for the materials is very large, you can try to make your own accessories, otherwise it will not be worth the candle.
For the practice of reducing the cost of self-produced accessories, Li Yang, general manager of Dongguan Xinlong Optoelectronics, expressed another view. “There are a lot of LED supporting materials. For a LED company, the procurement cost is very large. If all the supporting enterprises of LEDs are brought together to form a cluster benefit, the procurement cost can be minimized.â€
Wright Optoelectronics Planning Manager Shi Guangdian said that the application of new materials has become an inevitable choice for enterprises to reduce costs. "The way to reduce the cost of products by cutting corners or reducing operating costs can no longer meet the requirements of price wars."
The price of traditional materials and accessories has fallen to a low point, and the drop has already fallen. Take LED glue as an example. The glue for LED packaging is 4,000 yuan/kg last year, and some even sell it to 7,000 yuan/kg. From the end of last year to the first half of this year, the price of filled rubber dropped to 300-600 yuan / kg, and the integrated glue dropped to 1,500 yuan / kg.
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