Suzhou's LED chip leader has pre-empted losses. Can the 1.2 billion fixed increase "blood replenishment" be approved to keep out the cold?

In fact, although Sanan Optoelectronics, which has the largest A-share market value in the LED chip industry, has not disclosed its 2022 performance forecast, it cannot escape the fate of declining net profits.

Sanan Optoelectronics' third quarterly report for 2022 shows that the company's net profit attributable to its parent company fell by 23% year-on-year in the first three quarters, especially in the third quarter, which dropped by as much as 86% year-on-year. LED chips are a technology-intensive industry with high market concentration. The obstacles in the development of listed companies also mean that the entire industry is in trouble.

In the past 10 years, the domestic LED chip industry has experienced four rounds of cyclical changes. Each round of cyclical changes has shown a development trend of "technological breakthrough/application expansion-enterprise expansion/price increase-overcapacity/price decrease". Now, facing a new round of cyclical difficulties, what will be the future trend of LED chips?

2. The art of collective protection against "cold"

Survival and development are an eternal topic for every enterprise. Faced with the tired market, Jucan Optoelectronics, Sanan Optoelectronics, Huacan Optoelectronics, and Qianzhao Optoelectronics have collectively continued to increase their investment in Mini/Micro LED.

On the same day, according to the announcement of Jucan Optoelectronics, the company's application to raise an additional 1.2 billion yuan to increase its investment in Mini/Micro LED has been approved by the China Securities Regulatory Commission.

According to the company's previous announcement, Jucan Optoelectronics plans to invest 1.55 billion yuan this time to build a Mini/Micro LED chip R&D and manufacturing expansion project in Suqian, Jiangsu. The project construction will take 24 months. After completion, it will have an annual production capacity of 7.2 million Mini/Micro LED chips.

It is worth noting that this fundraising is the second time that Jucan Optoelectronics has increased its investment in Mini/Micro LED after raising 694 million in fixed capital in May 2021.

Previously, after Huacan Optoelectronics "bundled" BOE to increase its Mini/Micro LED sector layout, Sanan Optoelectronics also "launched" an 8 billion-level fixed increase plan, of which 6.9 billion yuan was used for Hubei Sanan Optoelectronics' Mini/Micro LED display industrialization project.

So, what is the charm of Mini/Micro LED? How big is the industry “cake”?

Currently, display terminal products are developing toward miniaturization, lightweight, intelligence, and three-dimensionality. High image quality and low power consumption have become the common goals pursued by consumers. With many advantages such as high resolution, high brightness, high contrast, high color saturation, low power consumption, fast response, thin thickness, and long life, Mini LED/Micro LED is considered to be the most potential new display technology and may bring disruptive changes to display terminals.

According to the forecast of consulting agency Omdia, in 2022 In 2019, total notebook panel shipments will reach 300 million units, of which Mini LED notebook panels are expected to account for 990 units, with a penetration rate of approximately 3%, setting a new high in shipment volume and market share. Omdia also estimates that by 2025, Mini LED backlit TV shipments will reach 25 million units, accounting for approximately 10% of the entire TV market. In addition, Mini LED backlight technology has been installed in many models such as ET7, Cadillac LYRIQ, and Ideal L9. The automotive display market may further open up room for growth of Mini LED backlight.

"The two-time increase in Mini/Micro LED reveals the strategic layout opportunities of Jucan Optoelectronics." Nanjing Securities Research Report pointed out that as Mini LED takes the lead in commercial mass production, the company is expected to fully enjoy the "dividends" brought by industrial development.

China Galaxy Securities research report stated that with the optimization of the industry structure after the LED integration and reshuffle, the Matthew effect has become more and more significant, and Jucan Optoelectronics has seized the Mini/MicroLED technology change belt. The industry growth in the future is expected to achieve breakthroughs and rapid growth in notebook computers, backlights, vehicles, TVs and other fields, further improve product quality and structure, optimize capital structure, and improve risk resistance and profitability.