Taiwan factory "turnaround battle": the Mini LED war that cannot be lost

After years of declining revenue and net profit, and even losses, Mini LED has been regarded as the key to performance "turnaround" by LED companies and panel manufacturers in Taiwan.

Innolux Optoelectronics, one of the two tigers in Taiwan, recently held a corporate briefing meeting, and Hong Jinyang, chairman of Innolux, proposed three main axes for Innolux's future operation: technology upgrading, field construction and new business.

MiniLED and Micro LED are seen by Hong Jinyang as the focus of Innolux's next development towards high value-added products.

Innolux expects the market size of Mini LED backlight-related products to increase from 2.7 million units, and shipments are expected to exceed 40 million units in 2024, with a compound annual growth rate of 41.18%.

AUO Optoelectronics, another leader of Taiwan's panel double tigers, is launching the "Go Premium" and "Go Vertical" dual-axis transformation strategy, based on the development strategy of "Go Premium", AUO invested in the development and application of forward-looking display technologies such as MiniLED and Micro LED, in addition to deepening cooperation with Fucai Investment Control, it was announced that Taichung Houli will expand 8.5 generations of next-generation high-quality production capacity to strengthen the panel production capacity layout.

In addition to panel manufacturers, TaiwanESE LED companies that have been "impacted" by mainland LED companies in the past few years have turned to the Mini/Micro field.

Relevant market information shows that in the past two years, the investment and expansion of LED companies in Taiwan has also been mainly concentrated in high-end products such as Mini/Micro LED, automotive, and infrared.

Transformational anxiety

In 2019, Taiwan LED packaging manufacturer Yiguang in its 2018 annual business report had described, "in the second half of 2018, the global boom turned conservative, the LED industry was affected by poor terminal demand, and the impact of trade frictions, the client reduced the inventory level, the annual demand showed a sharp freeze, and in the second half of 2017, the mainland manufacturers used government subsidies to significantly expand production capacity, under the industrial oversupply, chip manufacturers inventory continued to rise, LED price decline expanded." ”

At that time, Yiguang expected that the overcapacity of the LED industry would continue.

In fact, E-light's expectations lasted for years.

Overcapacity, general lighting gradually touched the ceiling of the industry, LED prices continued to decline, including Taiwan factories, Chinese LED companies have also experienced several years of performance decline.

The unfavorable situation of the Taiwan factory was also vividly reflected in the financial report.

In 2018, jingdian revenue fell by 19.88% year-on-year, and Ronda, which has significantly reduced its consumer lighting finished product business, also fell by 8.17%.

The net profit of the packaging giant E-Optics in 2018 also hit the lowest record since 2013.

The situation of the display panel factory is even more miserable.

Panel Double Tiger AUO and Innolux lost more than 1.4 billion yuan in 2018.

Chip giant TCCO's net loss after tax in 2019 was NT$3.938 billion (approximately RMB915 million), an increase from the net loss after tax of NT$506 million (approximately RMB113 million) in 2018.

Turning is the voice of the Taiwan factory.

The goal of "techno-esque"

The emergence and development of Mini/MicroLED seems to have opened a new door of hope for taiwan factories that have been suppressed for a long time.

"Taiwan factories are indeed ahead of mainland companies in terms of technology, especially Mini/Micro LED." Li Haifeng, general manager of the Shenzhen branch of Changchun Xida Electronics, said frankly that Taiwan factories without scale advantages can only take the road of technological leadership.

For Taiwan factories, if they do not struggle well, they can only be annihilated in the torrent of rapid development of LED displays.

Since 2018, the trend of Taiwan factories has been very promising.

Former Taiwan factories regarded automotive lighting, ultraviolet LEDs, etc. as niche markets, and since the second half of 2018, Taiwan factories have focused on the new products launched one after another - Mini/Micro LED.

For Taiwan factories that have withdrawn from the general lighting market, Mini/Micro LED with high technical threshold and high gross profit is undoubtedly the niche market that best matches them.

In August 2018, the first layout of Mini LED crystal power was rumored that its RGB Mini LED 0.4 mm x 0.4 mm tri-color packaging products that had been developed for a long time began to be shipped in batches to LED customers Chinese mainland.

"The turn of the taiwan factory is helpless and necessary, and there is no other way for them to go." A senior person familiar with the LED industry in the two places told Gaogong LED that as long as it is an industry that wins with scale and cost, Taiwan factories must not be able to fight mainland enterprises, and Taiwan factories can only be a dead end if they do not take a step ahead to engage in Mini/Micro LED.

In 2019, AUO shouted out the shipment of Mini LED products in 2020, and Micro LED spelled two years of mass production.

The Innolux AM mini LED, which began mass production in June 2019, entered the public display market with its seamless stitching. Yang Zhuxiang, general manager of Innolux, said that its AMmini LED 8K public display seamless splicing and wireless extension of variability strive to lock in large and medium-sized international exhibition venues/conferences or any commercial venue.

For commercial display applications, Innolux has introduced Rollable AMmini LED displays that can be applied to a wide range of curved devices.

Gaogong LED noted that at Touch Taiwan 2019, a number of leading manufacturers in Taiwan, including Ronda Electronics, Innolux, AUO, Rhenium, etc., exhibited their related Mini/Micro LED products.

In the past two or three years, Taiwan factories have also achieved remarkable results in the key layout investment in the field of Mini/Micro LED.

A decisive battle that cannot be lost

On March 3, Jingdian released a major information to acquire the technology plant of Songrui Pharmaceutical Zhunan Science Park for a total amount of NT$610 million (about 136 million yuan), and Fan Jinyong, chairman of Jingdian, explained that the new plant purchase is to prepare for the mass production of Micro LED in 2 to 3 years.

According to relevant information, cai benefited from the full capacity of Mini LED and the demand for red LEDs, and the revenue of Fucai (a merger company of Jingdian and Ronda) increased by 31.8% in January this year, and it was initially estimated that fucai's revenue in the first quarter of this year had the opportunity to increase by more than 30% annually.

In response to the growth of order demand, rich MiniLED production capacity and red light production capacity continued to expand this year, and it is expected that the new Mini LED production capacity will be put into operation before the end of the second quarter of this year, and the expansion rate is estimated to be more than 20%.

According to Gaogong LED, in addition to entering the Apple Macbook supply chain, customers and orders from other application products other than non-apple labels and laptops are also growing, and its MiniLED accounted for about 30% of revenue last year, and with the addition of new production capacity, it is estimated that it will be further improved this year.

Thanks to the growth of the two major product businesses of Mini LED and Red Light Products, Fucai's revenue reached NT$36.4 billion (about 8.124 billion yuan) last year, an annual growth of more than 50%.

Taiwan PCB factory Dynamic also optimistic about this year's operation, the expected growth momentum from electric vehicles, ADAS, Mini LED, 5G Netcom four major products.

At present, The Dynamic Mini LED is mainly used in the laptop and TV markets, using HDI design, and has begun to ship.

Innolux's MiniLED backlit automotive panel has also shipped to customers in Europe, the United States, Japan and other places, and AUO has also introduced its self-developed direct MiniLED backlight "AmLED" large-size display technology panel into the automotive market to lock the automotive console and dashboard market.

E-Optics also expects that revenue growth in 2022 will still be dominated by optocouplers/invisible light, Mini LEDs, automotive and other related products.

Yiguang revealed that Mini LED will expand its introduction into the application side in 2021, and it is expected that the overall shipment scale will maintain double-digit growth this year. In addition to the accelerated growth of the original DEMAND for backlighting of TV and notebook screen panels, automotive Mini LED-related products also have the opportunity to gradually increase in the second half of this year to 2023.

At present, E-light cooperates with North American label customers to cooperate with Mini LED backlight new products.

Looking back now, the pressure on the Taiwan factory is very great, but its determination to transform is firm, because the direction is clear.