Dialogue with Unilumin Technology executives: The fifth round of integration in the LED industry is coming, integrating “light” and “display” to cope with the new changes | Shenzhen High-Quality Dev

LED display industry is an industry that directly affects the quality of visual information transmission.

Recently, Tencent announced the establishment of an XR department to lay out a full-link XR ecosystem, attracting investors' attention to Unilumin Technology (300232.SZ) on the interactive platform.

Unilumin Technology is an early company in the LED display industry that has laid out XR virtual photography, naked-eye 3D, immersive venues, etc. and has achieved a leading position.
LED is a type of semiconductor. Its development logic is similar to that of chips and is also cyclical. But unlike Moore's Law in the chip industry, the growth attributes of the LED industry come from "Haitz's Law", that is, every ten years, LED light efficiency increases by 20 times, and at the same time, the cost price of LED drops to 1/10 of the original. Therefore, the LED industry faces a major test every 10 years.
Currently, the LED display industry is entering the fifth round of industry cycle changes, and the industry is beginning to develop vertically.
A new round of cycle is coming, and this round is more fierce than the previous round in terms of cross-border integration of resources.
In June, the Shenzhen Municipal Party Committee Propaganda Department organized and planned the “Seeking Progress in Stability for the Future·Shenzhen Media ‘High-Quality Development Research Tour’” event, which came to Shenzhen Unilumin Technology.
How can Unilumin Technology maintain its industry competitiveness and make the strong always strong? Southern Financial All-Media Reporter spoke with Lin Mingfeng, Chairman and President of Unilumin Technology, and Yuan Daoren, Vice President of Unilumin Technologydialogue.

Integrate “light and display” to adapt to new prices
Southern Finance Omni Media: Competition in the LED industry is becoming increasingly fierce. How can Unilumin break through the low-price competition?
Lin Mingfeng: There is no need to worry about orders now. The next step for the company is to pursue quality revenue. It forces us to make reforms, innovate, and improve efficiency internally. (Additional background: Unilumin changed the company's organizational structure from the original divisional system to a large department system during the epidemic.) At the same time, the company strictly controls and reduces accounts receivable while maintaining growth.
Yuan Daoren: In terms of products, we also need to transform. In the future, we can no longer engage in pure product-based competition, but must start from optical display solutions. During the epidemic, Unilumin integrated more than 5,000 people and 40 companies in the company. From now on, it will be unified with one Unilumin and one Guangxian. Otherwise, it will be like the panel industry, where only a few leading companies will be left. In addition, the company adheres to the "dual cycle" strategy in sales, focusing on both domestic and overseas sales.
In addition, the company's gross profit margin is affected by overseas sales business. When overseas sales are blocked due to the epidemic, most LED display companies that go overseas can only be forced to return to China. The only thing companies that originally had no advantage in domestic market share can do is to use low-price competition strategies, which has forced the entire industry to "involve". In order to maintain its original market share, Unilumin implemented internal reforms to adapt to the new prices.
The "Two Kings' Battle for Hegemony" with Leyard

Southern Finance All-Media Reporter: In the ten years from 2011 to 2021, the LED industry once formed a "Four Little Dragons" pattern, but in recent years it has evolved into a "Two Kings' Battle for Hegemony". How does Unilumin plan to differentiate its competition next?
Lin Mingfeng: The key in the future is not the competition within our industry, but the cross-border competition faced by domestic companies from large international companies, such as white goods companies such as Samsung, Sony and Panasonic. In other words, wolves, tigers and lions are coming. Therefore, in the next cross-border horizontal integration competition, how to maintain one's competitiveness is the key.
Yuan Daoren: The LED industry has entered a period of integration. In addition to cross-border horizontal integration, there is also vertical integration within the industry. After the integration is completed, there will be a first-line and second-line division, and the gap between them will become wider and wider. Therefore, in the next development direction, Unilumin will naturally move towards verticalization, but our verticalization focuses on creating integrated solutions for customers.
Southern Finance All-Media Reporter: Unilumin chooses to focus on customers, and Leyard chooses to focus on terminal products. Is this related to the sales model of the two?
Yuan Daoren: In the 18 years since its establishment, Unilumin has always accounted for more than 80% in distribution and channels, which is exactly the opposite of Leyard's direct sales model. It is precisely because Unilumin already has customers and channels that Unilumin chooses to create an integrated solution and work with partners to target customers.square.
Leyard focuses on direct sales, so its gross profit margin will indeed be higher. But what Unilumin pursues is to work with dealers to create a value chain ecosystem, create more value, and share the cake with everyone. At the same time, in terms of research and development, we are increasing our efforts to reduce costs.
Layout ideas for the next generation of products
Southern Finance All-Media Reporter: The industry proposes that the LED industry has a ten-year cycle. Currently, the industry’s technology has entered the micro-pitch era (consumer electronics, such as VR/AR) from small spacing (commercial screens, such as large outdoor advertising screens). Where will Unilumin’s next efforts be focused?
Yuan Daoren: Nowadays, the focus is definitely on small spacing. In addition, the current cost and price of small spacing are gradually decreasing, and it has reached a stage of good cost performance. Therefore, 80%-90% of the current market share is in small spacing LED products. However, micro-pitch is still in the promotion period, and the demand is far less than that of small spacing.
Southern Finance All-Media Reporter: Micro-pitch is divided into Mini LED and Micro LED, especially Micro is related to the concept of the Metaverse. What is Unilumin’s current layout of these two products?
Lin Mingfeng: According to the development trend of the industry, we have laid out the packaging of the Mini product line. At present, Unilumin has invested 100 lines of equipment in Mini packaging.
Yuan Daoren: Mini is our established strategic direction. Of course, we also have technical reserves in Micro.Unilumin is now able to achieve mass production of P0.5, and Micro LED display products will be released soon.
At present, each company has no major problems with technological breakthroughs and reserves. The key lies in whether there are application scenarios. Because technology is ultimately defined by application scenarios.
At the same time, application scenarios are also related to cost. For example, you have made a Micro, but the cost is extremely high. There may be two situations here: one is that the company's own production technology cannot reach the level of mass production; the other is that the market coverage is not wide enough and cannot form economies of scale, resulting in extremely high costs for producing Micro. Now for the first-tier companies, everyone is stuck in the second situation.