1. The upstream epitaxial chip field is in the growth stage, but the demand for funds is large, the entrants are strong and comparable, and the urgency of horizontal integration in the industry is not high

    LED epitaxial wafers and chips account for about 70% of the industry’s profits. At present, there are about 60 LED chip companies in mainland China (most companies are in the construction stage).

Started late, and the scale is not large enough. The largest LED chip company has an annual output value of about 300 million yuan, with an average annual output value of 100 to 200 million yuan.

    The performance of LED packaging devices depends on the LED chip to a degree of 50%. At present, most of the small and medium-sized chips of domestic LED packaging companies use domestic brands.

The chip performance of these domestic brands has a small gap with foreign brands, and has a good price/performance ratio.

The performance of some chip manufacturers' products has been comparable to that of foreign brands, and through the cooperation of packaging technology, it has been able to meet the needs of many high-end applications.

 The investment in the upstream epitaxial chip field is large, the professional and technical personnel are relatively scarce, the investment risk is relatively large, the number of companies is small, and the return rate of the invested companies is not high.

Integration is difficult, and the field has not yet developed to a mature stage of full competition. The industry’s current integration needs are not high, and horizontal integration in this field has little effect on the entire industrial chain.

 2. There are many companies in the midstream packaging field, with similar products, high competition, and urgent demand for horizontal integration

    The connecting link in the LED industry chain is LED packaging, which plays an unparalleled important role in the entire industry chain.

LED devices are widely used in various application products based on LED devices, such as large-scale LED displays, LED backlights of liquid crystal displays, LED lighting fixtures, LED traffic lights and car lights, etc.

LED devices account for 40% to 70% of the total cost of application products, and the performance of LED application products is often more than 70% determined by the performance of the LED device.

 China is a big country in LED packaging. It is estimated that 80% of the world's LED device packaging is concentrated in China, distributed in various US-funded, Taiwan-funded, Hong Kong-funded, and domestic-funded packaging companies.

In the past five years, foreign-funded LED packaging companies have continued to move to the mainland, domestic-funded packaging companies have continued to grow and develop, and their technologies have continued to mature and innovate.

In the field of low-end LED device packaging, the overall market share of Chinese LED packaging companies is relatively high. In the field of high-end LED device packaging, some Chinese companies have made greater breakthroughs.

 However, the overall characteristics of my country's midstream packaging industry are low entry barriers, small scale and large number of enterprises, and increasingly fierce market competition.

Orders are crucial to the survival and development of enterprises. Most manufacturers adopt low-price competition strategies, and product quality lacks basic guarantees.

If Chinese LED packaging companies want to achieve rapid and efficient development, they must increase their R&D investment in the field of LED packaging technology research.

To bridge the gap between China's LED packaging technology and foreign countries, and at the same time, through the expansion of scale, improve product quality. Implement these strategies,

It is difficult to achieve an efficient realization of enterprises' own accumulation and power alone. It needs to rely on the power of the capital market to acquire and merge, and carry out horizontal and downward vertical integration.