In 2014, the price of LED packaging light sources dropped by more than 30% compared with 2013. Driven by a price war, the LED packaging market seemed to be booming in 2014, but in the end, it was still inevitable to face the embarrassment of increasing revenue without increasing profits.
The industry has already overdrawn its resources for 2015 in advance, so what else can LED packaging do in 2015 that has already arrived? The author believes that the way to break through is to return to the roots of technology, strengthen supply chain management, and segment application fields.
2014 is a magnificent year for the LED industry:
The boss of Juliang Optoelectronics is running away with a huge sum of 200 million, and the LED supply chain is in turmoil;
The exciting merger and acquisition war is slowly beginning. Curtain: The Dehao Runda merger and acquisition of NVC Lighting, which has caused a sensation in the country for two consecutive years, came to an end with Wu Changjiang being arrested and taken to Maicheng; in the middle of the year, Hongli Optoelectronics spent 180 million yuan to acquire Smed Optoelectronics and reached a climax; at the end of the year, it came to a successful conclusion with its controlling shareholder Wanliangyou Bracket Company.
The realm of ice and fire shows an irrefutable truth: the big fish eats the small fish, and the catfish effect of the strong and the strong is intensifying in the LED industry. Round after round of price wars, one merger and acquisition after another, one after another asset restructuring, in the face of more intense homogeneous competition in 2015, what else can the domestic LED industry, especially the packaging industry, do?
In 2015, competition intensified
Domestic counterparts fighting each other is only one aspect, and the rapid localization of Taiwanese and foreign LED giants has intensified competition in 2015.
In the past three years, domestic LED companies have made significant progress in R&D investment, new technology and process development, and large-scale production, and are narrowing the gap with foreign giants. In addition, the natural low-cost advantage of Chinese manufacturing has made domestic LED companies invincible, seizing many market shares that originally belonged to foreign giants. Some domestic LED companies have even established a firm foothold in high-end application fields such as TV backlight sources.
In order to cope with the challenges of domestic enterprises, Taiwanese and foreign LED enterprise giants have chosen to localize their products. The prices of their LED light sources are becoming increasingly affordable and even comparable to those of domestic packaging manufacturers. It is really a storm that is about to come.
In general, the localization of Taiwanese and foreign LED companies is mainly divided into two categories:
1. Setting up processing plants in the mainland, making full use of local optimization policies and low labor costs, mainly Taiwanese companies. After all, the two sides of the Taiwan Strait are separated by a narrow strip of water, and blood is thicker than water.
2. Rely on the brand advantage and huge order volume to find excellent domestic packaging companies for OEM, with Philips and Osram as typical representatives.
Strong for technology
Technology is the eternal driving force for the development of high-tech industries. The author believes that in the past 2014, LED companies more adhered to tradition and were not enterprising. They focused on shoddy manufacturing and large-scale use of low-end raw materials to obtain low prices. The pursuit of newer and stronger technologies was forgotten. The author believes that in 2015, the LED industry must return to the original track of technological innovation.
1. LED chip technology
The performance improvement and price reduction of LED chips in 2014 are much lower than those in 2013. This trend is even more obvious in 2015. In order to increase the luminous flux by 3% or increase the output distribution of high-end chips, chip companies need 3 or even 6 months of accumulation. Obviously, LED chip companies cannot meet the increasingly stringent needs of customers without technological innovation. Some chip companies that cannot keep up with the pace of development will be eliminated in the new round of competition.
As we all know, reducing the chip area and increasing the drive current is the most feasible direction, and LED packaging companies have been practicing this for 14 years. For example, smaller size chips such as 1020 or even 0920, 0815 used 20mA driver 3 years ago, 30mA driver 2 years ago, and 60mA driver was generally used in 2014.
Recent information on the market, a more radical chip manufacturer said that its 0815 chip can achieve 150mA current drive. If the chip technology is innovative, the performance is stable, and mass production is feasible, it is really good news for the industry.
In 2014, flip-chip LED chips made much noise but little rain. Public opinion and media publicity was in place, but product promotion was far from achieving the expected results. The stability and price of the chip have no outstanding advantages, and it is difficult to shake the field of formal small chips in the short term. In 2015, continued efforts in flip-chip chips and combined with CSP packaging may make a difference.
2. LED alloy wire and copper wire technology development
In 2014, LED packaging gold wire connections still dominated. As the prices of other packaging accessories continued to fall, the proportion of gold wires in the LED packaging BOM became more prominent, especially in small-size light sources such as 2016, 3014 and 2835. The price of gold wire mainly depends on the price of gold, and the room for downward adjustment is limited. In order to reduce the cost of connecting wires, LED alloy wires and even copper wires are the general trend.
Research by Taiwan LG Co., Ltd. shows that alloy wires account for an increasing proportion in IC and LED packaging, while gold wires are decreasing year by year.
There are two key steps for alloy wire to replace gold wire:
First of all: the technical parameters of the LED alloy wire itself must be close to or surpass the gold wire, specifically reflected in: pulling force, solder ball thrust, hot and cold shock reliability, high temperature aging performance, etc.
Secondly: LED packaging companies carry out machine modifications to achieve stable and mass production in N2/H2 environments or even N2-free environments.
3. LED bracket technology
The cost of LED brackets is mainly composed of electroplating, copper materials and plastic materials. As for the stability of copper materials, we can only hope to change the electroplating method, coating thickness and recycling of plastic nozzle materials. The proportion of brackets in LED light sources is second only to chips. In 2014, brackets have fully blossomed in terms of coating thinning and nozzle material recycling. There are also various product models. This trend will be more obvious in 15 years. Some bracket companies have even tried to recycle PCT nozzle materials.
Maintaining high reliability of products while changing the plating method, reducing the thickness of the coating, and using nozzle materials requires each packaging company to use discerning judgment. Otherwise, it will be counterproductive and quality complaints will inevitably arise.
4. LED packaging technology
The trend of increasing the power and luminous flux of a single LED light source has been fierce in early 2015, especially in TV backlight applications, which will become mainstream. For example, for 32-inch LED TVs, in terms of direct-type solutions, in 2014, a 3*8 solution was adopted, with a single light source driving power of 1W. In 2015, a 2*7 solution was adopted, with a single LED light source driving power approaching 2W. There are also similar solutions for side-type TVs, which will not be described in detail.
The heated debate over the direction of PCT and EMC is a cliché. I believe that with the deepening and refinement of the application of packaged light sources, there will be a clear conclusion in 2015.
Strong supply chain
In recent years, it has been popular in the Internet industry to take sides and say that if you want to develop, you must have a strong leg. This trend is permeating the LED packaging industry. The LED packaging industry is most directly related to packaging raw materials and packaging machines. All packaging companies cannot avoid these two areas if they want to develop. It can be said that there are different paths to the same goal. Whoever can get the full support of packaging raw materials and packaging machine manufacturers will have the crucial price control power.
Taiwanese and international LED packaging companies started early and have established an unbreakable relationship with the associated supply chain. In addition, these manufacturers themselves have sufficient production capacity and a strong sense of self-protection. Both parties often sign confidentiality agreements and have first-mover advantages in the development of raw materials, new machines, and new processes.
Usually, the advantages in this area are invisible and easily ignored by domestic competitors. As time goes by, weak supply chain management has become the weakness of domestic LED packaging companies, and domestic companies have an increasingly strong desire to control the supply chain. After more than 14 years of running away from home, LED suppliers are in a state of turmoil, and everyone hopes to choose a reliable partner.
Hongli Optoelectronics is the first domestic LED packaging company to understand and make efforts in supply chain management. In 2014, Hongli acquired Smed, which valued the latter's EMC series bracket design and manufacturing capabilities, hoping to enter the EMC packaging field. Its holding of Dongguan Liangyou shows its eagerness to reduce the cost of brackets, which account for 30% of the cost of packaged light sources.
Compared to chip companies, Hongli is at a disadvantage, but in order to compete for orders from major international lighting manufacturers, Hongli chose to team up with Sanan Optoelectronics to fight against the Epistar system.
With the development and growth of domestic LED packaging companies, domestic LED packaging companies will surely have the same voice and bargaining power as international LED packaging companies in the near future.
Strong Applications
Prior to 2014, packaging companies were relatively single, focusing on the identity of light source suppliers. In order to expand market share, they would not hesitate to start a price war. In the end, they increased revenue without increasing profits, and watched downstream lighting companies make a lot of money. After learning from the experience, powerful LED packaging companies have extended their tentacles to the field of lighting applications. After initially enjoying the benefits, in 2015, packaging companies' tentacles will be longer and wider in the application field.
Packaging companies that have made gains in applications include Hongli and Nationstar. Hongli has spared no effort to promote its Lydia brand lighting subsidiary in 2014, and Nationstar Optoelectronics has launched a series of lighting fixtures such as Nationstar brand LED tubes and bulbs, and has achieved good sales. The most dramatic and the most talked about in the industry is Dehao Shunda's acquisition of the largest NVC lighting company in China.
For packaging companies that have not yet entered or do not plan to intervene in the application field in the short term, it is urgent to strengthen close cooperation with downstream application companies and develop new light sources and new applications.
For example, the highly cost-effective 0.5W EMC 3014 has no suitable applications due to its strong point light source characteristics. Through research, the author believes that through suitable power supply and lampshade matching, 0.5W EMC 3014 can be used to produce 7~10W bulbs with good optical effects. If this type of light source can be successfully applied, it will definitely increase revenue for packaging companies.
There are countless such cases, the key lies in in-depth digging and development.
Summary
It is foreseeable that the price decline of LED packaging auxiliary materials in 2015 is far less significant than that in 2014, and those who continue to follow the development ideas of 2014 will surely fall into the quagmire of losses.
In 2015, LED packaging can focus on technology, low-cost chip technology, LED alloy wire, copper wire development technology, low-cost LED bracket development technology, and LED packaging technology; it can focus on supply chain management and application, and diversify development to resist potential risks.
ANNA