Up to now, the performance of listed companies in 2021 and the performance of the first quarter of 2022 has been announced. In general, the majority of LED display enterprises in 2021 have risen, which also confirms the prosperity of the LED display industry last year. But from the first quarter of 2022, companies in the industry are mixed.

It is worth noting that at the end of the first quarter, set chuang North, fu Man microelectronics and other IC manufacturers announced product prices. As the most concerned industry trend in the LED display industry in 2021, "IC price increase" seems to lose its "magic" in 2022.

Fundamentally, or can not do without "supply and demand" two words, although the supply side of the wafer shortage is a fact of the board, but the demand side of the shrinkage, so that the price of IC eventually just rise in price. And this also reflects a big problem in the industry in the first quarter - short - term demand is indeed decreasing!

Overall demand is clearly cold

From the first quarter report released by listed companies, LED display enterprises are both worried and happy, although the LED display to hand over the quarterly report is still growing, but there are orders and revenue confirmation of the time difference, from the performance of the supply chain has been able to feel the decrease in market demand. According to experts, Research shows that in the first half of this year, the domestic LED display market demand is weak. With the repeated epidemic, the LED display market in the first half of the year is not optimistic, and the overall estimated decline of 20-30%.

At present, part of the shrinking demand side is the impact of the off-season and natural demand decline, and more is from the overall market slump, the most important is the impact of the epidemic. The rebound after the epidemic in 2021 showed that the frenzy of demand was over, but the spread of the epidemic brought new difficulties to the market in logistics, production and other aspects. Procurement of spare parts for production lines could easily be disrupted as the blockade continues for a long time, even to neighboring cities.

In such an environment, not only is demand reduced, but prices also have a corresponding impact. Due to the tight overall economic environment, the demand side of the price is more sensitive, and there will be delays.

The demand of desalination is also constantly impact on the supply chain, the rate of movement of the packaging plant decreased, LED chip prices have also declined to a certain extent.

Breaking the game: under the fierce competition, both demand and supply seek change

So what signal does this send to the LED display industry? What are the pros and cons? How to break the game next? Mainly from two aspects of enterprise capacity and market demand.

• Adjust the structure of production capacity based on the advantages of enterprises

Compared with the ever-expanding demand in 2021, the 2022 production capacity may be slightly surplus. Optimizing the capacity structure is one of the most basic strategies, and to some extent, it can also alleviate the continuous "roll-in" of the industry.

Therefore, in view of the current market, the industry first needs to implement the strategy of optimizing production capacity and adjusting product structure. Due to the current impact of logistics and demand fluctuations, the demand for inventory control is higher, enterprises need to be cautious about expansion and inventory overstocking, and try to keep enough cash to deal with risks.

Of course, the optimization of this structure is adjusted with the advantages of the enterprise itself.

The decline in market demand will have a more direct impact on price competition. Therefore, in the parts with cost advantages or market advantages, relevant input can be increased and the relationship between the upstream supply chain can be consolidated. If the equipment efficiency of new enterprises is high, there is more room for bargaining.

However, it is worth noting that, generally speaking, such "low tide" and "price competition" for the head enterprises often have a favorable side, the head enterprises have more sufficient capital and talent to deal with risks, the result is often to further expand industrial concentration. At present, the traditional manufacturing technology has been mature, and the imbalance between supply and demand of production capacity stage, the market also has early signs of concentration to the head, but there is an obvious "arms race" phenomenon in the head enterprises.

According to the white paper of 2021 micro-spacing LED display research, the comparative advantage gap between head screen manufacturers and small and medium-sized screen manufacturers is gradually emerging, and the market share of the TOP5 domestic enterprises in 2021 is estimated to be nearly half of the total market.

At the same time of the increase of concentration, most of the backward production capacity will be phased out, and high-quality resources will be gathered to the leading enterprises. The leading enterprises will conduct a more comprehensive competition in the gross margin, three expenses (sales expenses, management expenses and RESEARCH and development expenses). Industries are always in a spiral, with each round of pressure followed by another round of growth.

• Focus on growth markets in the face of the pandemic

Most of the current challenges in the industry are due to the impact of the epidemic. Therefore, in the context of the epidemic, market selection should be based on the current environmental background. There are two main considerations: demand that changes in the context of the epidemic, and demand that is less affected by the epidemic.

① Changing needs in the context of the pandemic

There has always been a steady demand for large LED screens. However, after the normalization of the epidemic, the government needs to spend a lot of money and energy on fighting the epidemic. In addition, the number of consumers in outdoor shopping malls and the demand for commercial large-screen displays decrease.

However, large enterprises and cities still need to respond quickly to the epidemic, which also increases the demand for intelligent, digital and visual command centers.

In addition, large companies also have the same kind of demand, large enterprises will gradually from TOG TOB development (large enterprises and groups), to build a professional combat troops, not depend on the local traditional local distribution, adopts the direct sales model, focused market, deepening the needs of different industries, many applications customized solutions (such as coal, water conservancy, energy industry application mode).

② Needs that are less affected by the pandemic

From the first quarter, there are two main aspects of the markets that are less affected by the epidemic.

First, the overseas market. Compared with 2021, the overseas market recovered significantly in the first quarter. Some LED display companies said that from the current order signing, the overseas market has basically recovered, and continued to sign orders in the second quarter. Therefore, in the case of a stable overseas environment, it will benefit enterprises with advantages in overseas channels.

Second, emerging markets such as special-shaped screen, XR and immersive market. In the first quarter, although the overall market demand declined, various emerging markets are still in the growth stage, and orders are constantly rising. In addition, the high-end market has relatively slow competition, which is conducive to the sustainable development of emerging markets.

In addition, it is worth noting that the emerging market forces, small spacing products are also getting new opportunities. For example, XR virtual photography needs to be matched with camera shooting, and immersive market needs to constantly narrow the distance for close display. XR market has entered the innovation market of 1 billion level in 2021.

At the same time, the standardization and scale of small spacing also further promote LED display to the high-end market. According to the 2021 Research White Paper on Micro-pitch LED Displays, the cost and price of small-pitch LED displays are gradually decreasing. At present, the price of P2.5 pitch screen is about 0.45 million yuan /㎡, and the price of P1.8 pitch screen is about 0.75 million yuan /㎡, and the price has entered the price order of magnitude of LCD screen.

Conclusion: People are always promoting change in development, seeking development in change. Despite many challenges in the current environment, the industry is moving forward steadily and there are bright spots in the application market, such as XR photography, openeye 3D and other secondary growth curves, as well as the recovery of overseas markets, bringing new vitality to the industry.

The connoisseur says