Shaoxing Xinshan Science Technology Co.,Ltd
Address: Dongfangyimai, No. 2, Pujiang Road, Shaoxing, China
The merger and acquisition integration has become the quickest means of resource integration, and the optimal allocation and efficiency of resources can be achieved through acquisition or acquisition. Especially in the semiconductor field, from integrated circuit to LED, with the rapid growth of the industry, mergers and restructurings are frequent. According to statistics, since early 2015, the LED field consolidation mergers are close to 30, used in mergers and acquisitions funds nearly one hundred million yuan, covering industrial chain each link, also varied in the form of mergers and acquisitions. But with the merger and acquisition scene in the lower reaches of LED, the upstream substrate chip enterprises are seldom involved. Chip links with the top of the "smiling curve" in the LED industry, with a heavy assets, the characteristics of high investment, high technology content, in the face of "large Evergrande", the development trend of the future of the LED chip industry is remarkable.
In the first half of 2015, the industry of China's LED chip industry was nearly 8 billion yuan, an increase of 15% year-on-year, showing a steady growth. As of 2014, the number of MOCVD equipment in China reached 1,172, and in 2014, it bought MOCVD150, a year-on-year growth of 36 percent, which has been the largest number of MOCVD equipment in the world for four consecutive years. It is expected that China will continue to acquire nearly 200 MOCVD in 2015, and the number of equipment is expected to increase to 1372. But the number of upstream chip companies has plummeted from more than 60 in 2009 to below 20, and there are only about 15 companies that are currently operating normally. At the same time, the chip industry leading enterprises to further improve market concentration, the first five big chip companies market share from 64% in 2013 to 67% in 2014, the capacity of the nation to nearly 70%, gradually formed the oligarch competition situation.
There are three main reasons for the further concentration of chip market: first, the purchase of equipment to build new chip manufacturing production lines requires high continuous investment. In the early stage, due to government subsidies, multi-led enterprises bought MOCVD equipment, built a factory, and LED the project of LED chips in large areas, and formed a number of industry leaders, such as SAN 'an and dehaitrunda. With the gradual withdrawal of government subsidies, new entrants will find it difficult to afford the equipment that can compete with industry leaders for competition. In order to expand the scale at the same time, the need to continuously invest capital expansion or improve equipment performance, buy more than 4 inches and more expensive equipment, some of the economic situation is not good in small LED chip companies due to lack of cash flow to the follow-up investment, after the loss of subsidies will be eliminated by the market.
Secondly, to improve the competitiveness of products requires a lot of research and development. LED industry is in a rapid development stage, LED technology is developing rapidly, and domestic and foreign technical equipment and production technology are constantly updated, and the chip light efficiency is up one step every quarter. In order to reduce the production cost in a shorter time to occupy the market, enterprises need to invest a lot of manpower and material resources for product development and technical input, pressure on smaller companies production and operation.
Third, chip price decline leads to profit difficulty. As domestic capacity further release of chips, because chip market competition, resulting in a decline in prices too fast, a large number of enterprise profit space will be squeezed, this all further compression LED epitaxy chip company profits, for small and medium-sized enterprises is unbearable. The leading enterprises, relying on stable customers and bargaining power, further strengthen the industry control ability, thus establishing a stable industry competition pattern.
Domestic LED enterprises can be divided into three categories: first, private enterprises, and private capital investment, such as domestic and foreign investment companies; The second is the group company, which is invested by the group or the head office to set up a subsidiary; Third, the company that is formed by state capital.
For the first kind of small and medium-sized LED chip enterprises, in the case of poor operating conditions, it is an important way to seek m&a. However, such enterprises tend to produce small scale, old equipment, and lack of technical patents. Due to the characteristics of the heavy assets in the chip industry, it is difficult to achieve the integration of the company. At the same time small and medium-sized enterprises are not listed companies, not convenient to the price. These factors lead to high m&a costs and weak m&a performance. Few large companies are willing to buy, and such small and medium-sized enterprises can only go bankrupt and exit the market quickly.
For the subsidiary companies of the second group corporation, facing operational pressure, it can maintain the existing scale of operation for a period of time due to the financial support of the tree of the group company. In the long run, the company will develop a different development strategy, according to the market situation in the field of semiconductor group company took advantage of the channel, through mergers and acquisitions or stake in the way of power LED chip unit upward downstream development, expand the LED chip market. Dabble in various areas of business group co., LTD., in the field of LED profits under the condition of limited, will reduce the investment, with limited funds to maintain the existing scale of operation, after being boosted market demand to expand investment.
Third class company an embarrassing situation, because of state-owned capital, the shareholders for their own interests is not willing to file for bankruptcy liquidation, coupled with the old equipment, and local government relations and so on all sorts of complicated reasons lead to the acquisition, finally can only become a small production or basically no production "zombie" companies.
Under the pressure of big enterprise products, brands and capital advantages, small and medium-sized LED chip enterprises should seek the future development through their own characteristics.
First, promote independent innovation and technological progress and tap the market segment. Low price competition is not a long-term solution when market profits are squeezed. LED backlight, display and illumination applications to ecological agriculture, intelligent lighting, automotive, health care, and other applications, it also gave the upstream chip different requirements, small and medium-sized enterprises can adapt to the need of the new application development of large, medium and small power LED chip products, enhance the independent innovation ability, avoid vicious competition in the same product market low prices.
Second, seize the opportunity of "One Belt And One Road" to accelerate the product to go out. Domestic overcapacity LED chip to small and medium-sized enterprise to bring a lot of pressure, Russia, India, southeast Asia and other emerging markets increasingly strong demand for LED lighting, and generally lack of LED products industry chain. In the future as "area" all the way along the state street light, the development of high-speed rail and other infrastructure construction projects, will create more demand for the LED chip, domestic small and medium-sized enterprises should gain layout overseas markets, expanding overseas market share, brand awareness and product seeking international cooperation, improve the enterprise competitive advantage.
Third, China made 2025, Internet plus and other national strategies to realize the intelligent development of LED chips. "Made in China 2025" strategic emphasis on manufacturing in the future will be green, energy-saving, environmental protection and intelligent development, focus on "Internet +" to promote technological progress, improve efficiency and organizational change, all of these LED chip manufacturing industry has brought the development opportunity. On the one hand, the LED chip, small and medium enterprises can take advantage of new technology such as Internet, cloud, big data, realize the raw material procurement, production, sales, management, the platform, develop online sales channels, reduce the enterprise cost; On the other hand play the advantages of LED energy conservation, environmental protection and strategic emerging industries, to seize the market demand brought by other industry transformation and upgrading, such as for energy conservation and the use of LED lighting factory, automated control of the intelligent building, etc., to expand the LED chip products market share.