On March 26, 2024, Qianzhao Optoelectronics released its 2023 annual report. During the reporting period, the company achieved operating income of 2.387 billion yuan, a year-on-year increase of 40.63%, and net profit attributable to shareholders of listed companies of 31.6073 million yuan, a year-on-year increase of 162.77%.
Key accounting data and financial indicators
In the first half of 2023, the LED industry has had a difficult time. Although the domestic market is slowly recovering, the oversupply situation has made the competition particularly fierce. In the second half of the year, the industry began to show positive changes, the export market began to gradually pick up, and the recovery of the domestic market was slow, but it moved forward steadily. Overall, the LED industry has shown a positive development trend, especially in the field of display and lighting, and the product prices of upstream, midstream and downstream enterprises have begun to stabilize and show signs of recovery. With the inventory clearance and the gradual recovery of market demand, LED companies are given an opportunity to return to normal operation and a healthy market environment.
Key financial indicators by quarter
During the reporting period, the company's main business has not changed, mainly engaged in the research and development, production and sales of semiconductor optoelectronic products, and is a leading supplier of LED chips and gallium arsenide solar cell epitaxial wafers in China. The main products include full-color chips from ultraviolet to infrared, gallium arsenide solar cell epitaxial wafers, Mini LED, Micro LED, VCSEL, etc., with leading advantages in comprehensive performance such as uniformity, consistency and reliability, and a number of product performance indicators have reached the international advanced level. The company's products are widely used in ultraviolet sterilization, backlight, display screen, general lighting, digital display, infrared security, electronic equipment indicators, traffic indicators, night projects, vehicle lighting and many other fields.
During the reporting period, the key indicators of LED products are as follows:
At the beginning of 2023, Hisense Video officially became the controlling shareholder of Qianzhao Optoelectronics, bringing great support and all-round empowerment to the company. In terms of management, its excellent experience in "end-to-end process management" has prompted the company to initiate profound management changes, improve the company's operational efficiency and ability to respond to market changes, and in terms of business, its demand for LED products in the terminal has also led the company to enter new market segments and open up new growth opportunities.
In 2023, the price of LED chips will still decline, and the overall demand recovery of the industry will be relatively slow. In terms of R&D, we will continue to increase R&D investment, promote iterative upgrading of products, and meet customers' needs for continuous improvement of product performance; in terms of market segmentation and customer expansion, we will focus on customer needs, stabilize important customers and potential customers, and increase the expansion of high value-added products such as Mini LED, backlight, plant lighting, vehicle LED, solar cells, VCSELs, etc., and the proportion of revenue from medium and high-end products will continue to increase.
The company actively promotes management reform and comprehensively starts lean management. In 2023, the company will continue to improve the level of intelligent and automated equipment, with the annual capacity utilization rate reaching 85%, an increase of 10.4% year-on-year, and the per capita efficiency increasing by 25.17% year-on-year. In 2023, the company's gross profit margin will increase quarter by quarter, and its performance will continue to improve.
Composition of operating income
In the field of display, we continue to lead the market. In 2023, the demand for RGB display terminals will show a growth and recovery trend, but there is still a relatively prominent oversupply problem as a whole, and enterprises are still facing the dual pressure of cost and price. In the face of the complex market environment, the company has always adhered to the original intention of sticking to the product, seeking strategic synergy with customers, and seeking breakthroughs in the red sea. Through internal and external training, the company continues to iteratively upgrade its products, the overall performance has increased by more than 10%, the revenue of RGB direct display has increased significantly year-on-year, and its market share has been further improved. Especially in the field of Mini RGB display, the company accurately grasps the product development direction through pre-research, and successfully mass-produces 0407 and 0306 series products, which have been unanimously recognized by customers and sold in batches; Commercial display, rental display, sports display, creative display and other display fields.
In the field of backlight products, with the support of the resources of the controlling shareholder, the research and development and product promotion of new technologies in the backlight field have been increased, and the light efficiency, antistatic ability, and reliability ability of the backlight chip have been significantly improved. Backlight chip products have been deployed in 5 types of subdivisions, which can be applied in the fields of vehicle backlight, TV backlight, MNT backlight, NB backlight and mobile phone backlight, and have been successfully introduced into TV manufacturers. In 2023, the revenue growth momentum of backlight chips will be strong, doubling the revenue in 2022, and the market performance will be excellent, laying a solid foundation for the company's future product development in the backlight field.
During the reporting period, the company and its wholly-owned subsidiaries continued to improve the intellectual property system, and during the reporting period, 45 new invention patents and 33 utility model authorizations were added, and 95 invention patents and 39 utility model applications were newly applied. At the same time, technological progress or breakthroughs have been made in many product fields.
(1) RGB display field
The traditional LED display field is the market that the company continues to cultivate, thanks to years of display chip technology precipitation, the company continues to lead in the market share. In 2023, the company will develop indoor and outdoor display products with greatly improved light efficiency and reliability in response to the pain points of the industry. The 05 series of indoor products and the series of outdoor products from 0406 to 1114 sizes have been recognized by mainstream packaging companies in the industry for their high brightness, high uniformity, high reliability and ultra-high back-voltage resistance. With cost-effective chip products and high-quality customer service, the company's market share in the traditional display field continues to increase.
In the field of Mini display, the company is one of the earliest companies in the industry to begin to develop Mini display technology, and has accumulated many Mini proprietary technology solutions, including Mini special epitaxial technology, Mini flip chip technology, and high uniformity mixing technology, and is currently in a leading position in the industry. With high-level products and services, we have cooperated with most of the leading enterprises in the industry, continue to grasp the market trend, and lead the development direction of display chip products. In 2023, 0408, 0407, 0306 and other size products will be recognized by mainstream display packaging companies with their industry-leading light color consistency, wide color gamut and high cost performance. For emerging AM-driven COG applications, the company has developed high-voltage products with peak efficiency current μA level, and has reached cooperation with high-end display customers in the industry.
(2) Lighting field
In 2023, the company will focus on the performance of high-efficiency products, and by optimizing the structure of epitaxial quantum wells and reducing the absorption of light by electrodes, the photoelectric conversion efficiency of large-size chips such as 2639 and 2645 will reach the leading level in China. In addition, for ultra-small current applications, the brightness of 2235 and 1835 has been improved by improving the current diffusion, and the high-efficiency lighting chips that meet the European standard A-level energy efficiency > 210lm/W have been successfully mass-produced, becoming the main chip supplier of major international lighting brands, and becoming a performance benchmark enterprise in high value-added markets such as human factors lighting and smart lighting.
(3) Backlight field
In 2023, the company has made great breakthroughs in the research on the reliability and optoelectronic performance of backlight chips, laying a solid foundation for the vigorous promotion of backlight chips in the future. In terms of traditional backlight products, the introduction of high-density passivation layer technology, so that the chip can resist KSF powder corrosion in high color gamut applications, 2536 and 2551 chips have been successfully introduced into a number of end customers; in terms of Mini backlight products, it has taken the lead in introducing ALD advanced technology to meet the requirements of Mini backlight modules for high waterproof performance, and has successively obtained certification from many end customers, and gradually promoted high-end multi-zone backlight applications; The film structure enables 4040, 4545 and other chips to successfully pass the domestic and international customer certification.
（4）Micro LED 领域
The company has made remarkable progress in continuous research and development from both technology and products. In terms of small screen products, for the application of ultra-small current density watches and other products, we have cooperated with major domestic terminal manufacturers to develop a special epitaxial structure, and the luminous efficiency of green and red light is increased by more than 20% at the current density of 0.1A/cm²; in the application of large screen, we have developed products of various sizes such as 15~60μm, and continue to improve the yield; samples have also been developed for MIP chip products with high current, which are being jointly verified with customers; and in terms of mass transfer, we have also developed FCOC for vertical chips products and interposer products by customer needs, and start working with customers on related technologies.
(5) Automotive field
The company has won the IATF16949 automotive industry quality management system certification, and has a rich automotive product line, covering a full range of products such as 0.2W, 0.5W, 1W, 2W, 3W, 5W, etc., covering from cabin atmosphere lights, reading lights, vehicle backlights to exterior taillights, turn signals, daytime running lights, headlamps and other automotive scenarios. All products are designed and developed in accordance with AEC-Q102 standards in the automotive LED industry, and have passed rigorous reliability tests to ensure excellent quality. At present, the company's on-board products have been widely recognized by customers at home and abroad, and the product certification has passed and mass production has been realized. Looking forward to the future, the company closely follows the development trend of "electrification + intelligence" in the automotive industry, and has established in-depth cooperation with major global automotive LED manufacturers to jointly develop high-performance and high-reliability automotive LED chips, such as ADB adaptive headlights, DMS driver monitoring systems, etc., and is committed to promoting the innovation and development of automotive lighting technology.
(6) Horticultural lighting
With the intensification of extreme climate and the rise of urban agriculture, indoor planting is developing rapidly, and LED has gradually replaced traditional mercury lamps as a new generation of plant lighting sources with the advantages of high light efficiency, energy saving, and long life. The company has developed horticultural lighting chips to meet different application scenarios, including 660nm UR band chips with size 10-20mil and power 0.1-0.5W and 45-75mil and 1-2W power chips that meet the requirements of the red zone of photosynthesis, and 730nm FR band chips with 10-26mil size and 0.1-0.6W power that meet the requirements of the red zone for chlorophyll absorption in plant growth. The company's layout in the field of LED plant lighting has been effective, and has been certified by many downstream manufacturers of plant lighting at home and abroad, and will continue to increase R&D investment and marketing efforts in the future to provide diversified products to meet the needs of different application scenarios.
(7) Solar cell field
The company is a leading supplier of gallium arsenide solar cell epitaxial wafers in China. In terms of commercial aerospace, gallium arsenide solar cell epitaxial wafers will continue to lead product performance and adapt to the rapid development of the industry, newly developed flexible thin-film cell epitaxial wafer products continue to enhance product competitiveness, and work closely with customers in the field of consumer electronics to provide feasible solutions for mass entry into the civilian market; in ground concentrating photovoltaics, the performance of concentrating bandgap matched triple junction cell CPV continues to improve, and strategic collaboration with customers strives to take the lead in providing photovoltaic new energy solutions.
(8)VCSEL 激光领域
The company's laser products can be used in consumer electronics, industrial sensing, face recognition, medical beauty, data communication, vehicle and other fields, 8mW, 28mW, 200mW and other products are shipped stably. With the continuous innovation and breakthrough of new energy vehicles in the field of safety and intelligent driving, the demand for laser chips is gradually increasing, and the company's DMS monitoring products and auxiliary radars in the on-board field have passed the certification of vehicle regulations and car companies, and are expected to be commercialized within the year. In the field of data communication, with the huge expansion of data centers brought about by AI, the demand for VCSEL chips in this field will increase greatly, and the company has deployed 10G and 25G products, and simultaneously developed 50G and above products.
Industry pattern and development trend
In 2023, while facing a series of complex challenges, the LED industry will also usher in multiple opportunities such as technological innovation, market demand recovery, and policy support. With the release of market vitality, the demand for home decoration and commercial activities has gradually recovered, which has driven the inventory clearance of LED products, highlighting the rigid demand for general lighting products and the advantages of China's stable industrial chain and supply chain, opening up new space for industry growth. In this context, the three major areas of display, lighting, backlight, and are expected to expand a broader market, and the LED market is slowly but firmly returning to the growth track.
With the progress of science and technology and the iteration of technology, the LED industry is ushering in a trend of high-end, and the demand is constantly escalating. The global awareness of energy conservation and emission reduction has increased, and the construction of urban infrastructure has advanced, so that the proportion of the outdoor lighting market has increased year by year. Consumers' demand for lighting products has shifted from quantity to quality, and from basic demand to quality upgrading. The educational lighting market is in demand due to national vision protection policies, while the improvement of 5G networks has promoted the application of high-quality lighting and smart lighting in areas such as "new infrastructure" and smart cities. Mini/Micro LED technology is rapidly penetrating the market with its advantages of low power consumption, high integration, high display effect and long technical life, and related products are emerging, and the market size is expected to continue to expand.
The application diversification and innovative expansion of LED technology have also become the highlights of the development of the industry. The application of Mini LED in the new energy vehicle market has been favored, and the Mini LED backlight technology in the VR headset market has also begun to emerge. With the reduction of costs and the increase in demand for end products, the industrial chain is becoming more and more perfect, forming a positive cycle, indicating that the Mini LED market will usher in volume growth in the future. The demand for special lighting such as plant lighting, sports lighting, explosion-proof lighting, etc. is growing rapidly, and the market space is huge. Driven by innovation and technology, the LED industry is ushering in a recovery, with demand for consumer electronics, electric vehicles and AI maintaining rapid growth, and continuous destocking in the industrial and communications sectors. Leading enterprises are accelerating the transformation to high value-added businesses, and are deeply engaged in subdivided application fields such as Mini/Micro LED, agricultural lighting, vehicle lighting, educational lighting, ultraviolet LED, infrared LED, etc., and the industry is expected to open a new chapter of high-quality development.
The company's future development strategy
With the intensive introduction of government economic stimulus policies, the domestic consumer market has picked up, the LED market demand has gradually recovered, and it has slowly returned to the growth track. Mini and other high-end LED display core businesses, and actively expand new business markets such as backlight, micro LED, automotive LED, horticultural lighting, batteries, VCSELs, etc., to create a second growth curve. At the same time, the company will realize the transformation from product center to customer center, promote digital upgrading, and gradually extend to the field of high-end semiconductor products.
Management plan for the next fiscal year
1. Promote high-end efficiency, expand and deepen the main business of LED In the next year, we will continue to focus on the layout of traditional RGB display and Mini RGB display products, dual-engine drive, and plan to focus on strategic customer needs and development through expansion and efficiency improvement and product iteration and upgrading. Excellent product quality and performance, steadily increase market share and sales, and strive to continue to grow RGB display revenue significantly compared with 2023, continue to improve the competitiveness of high-efficiency products in the lighting field, increase the share of high-end lighting market products, and expand orders in overseas markets.
2. Expand high-end business and create a second growth curve
In the next year, on the basis of doing a good job in traditional industries, based on the characteristics of the R&D and manufacturing capabilities of the all-color system of dry lighting, the company will focus on core talents, pursue the depth of R&D, actively expand high-end business, and create a second growth curve. In the field of micro LED, we will continue to promote the mass production of micro LED products, and will continue to tackle key problems in terms of high uniformity, high yield and high light efficiency to meet customer needs. In terms of products, 30~60μm COW and COC products for large-screen display will be the focus of our promotion, and at the same time, we will also achieve mass production of 200μm MIP products; for AR array module products, we will also launch chip products and module samples below 10μm to meet the needs of different scenarios; in the automotive field, with the rapid development of the new energy vehicle industry and the steady increase of the market share of domestic automobiles, the process of supply chain localization is also advancing rapidly. In the field of horticultural lighting, the company will consolidate the R&D foundation and expand the product line to become a first-class supplier of horticultural lighting chips, improve the efficiency of photoelectric conversion and product quality, deliver high-quality to customers, and consolidate the leading position in the market of gallium arsenide solar cells In the field of lasers, we will continue to stabilize the application of the consumer electronics market, expand emerging fields such as medical beauty and automotive through the introduction of talents and investment in high-end equipment, lay out the data communication market, and meet customer needs with a rich product line.
3. Promote end-to-end cost reduction and improve operational efficiency
In the next year, the company adheres to the market and customer-oriented, based on value engineering, establishes a standardized manufacturing efficiency promotion management mechanism, and promotes the cost management of the whole process, all categories, all elements and all employees. Combine R&D with industrial chain technology development to build technological differentiation; step by step expansion, continue to achieve full production and full sales, form scale advantages, improve the depth of self-control, and build absolute cost competitiveness through vertical integration of resources; build long-term, stable and healthy cooperative relations with suppliers, effectively collaborate to improve efficiency and reduce costs; lean foundation, through automation and intelligent upgrading, refined operation to achieve production optimization cost reduction. Promote digital transformation, comprehensively improve efficiency in customer service, supply chain management, product management, process organization, etc., and achieve industry-leading operational efficiency and customer satisfaction.
4. Build a digital factory and promote the company's digital transformation
In the next year, the company will continue to improve the data collection rate of equipment by promoting business process reform, systematically planning and improving the degree of informatization, standardizing and standardizing, establishing equipment self-research capabilities, building automation and intelligent equipment based on standardization, and finally fully opening up the information system to achieve comprehensive digital data interconnection, and introducing the application of AI in various fields of the company to improve the degree of intelligence. With the continuous improvement of the company's production capacity, digital transformation is an important part of the company's future development, which will lead the high-end manufacturing in the industry, help the development of the manufacturing industry, achieve the healthy and long-term sustainable development of the company, and bring better returns to shareholders.
5. Improve the organizational process and motivate the growth of talents
In the next year, based on the company's development goals, the company will continue to evaluate and improve the organizational structure and management process, so as to achieve full business organization and functional coverage and meet the company's business development needs. Focus on the planning and acquisition of key talents, improve the talent structure, and work with business departments to promote the accumulation and retention of talents, help the steady development of various business segments, and support the company's strategic development and organizational capabilities. Innovate incentive methods, establish a long-term mechanism for talent development, establish a standardized system for front-line employment management, continuously optimize performance management, and motivate employees to drive growth. Practice the three cultures of "customer culture, process culture, and engineer culture" for all employees, strengthen the publicity and optimization of the three cultures, and promote the deep cultivation and implementation of cultural construction.
The development and application of LED technology has penetrated into many fields, and the future development momentum of LED segments such as Mini/Micro LED, agricultural lighting, automotive lighting, and ultraviolet/infrared is strong. With the rapid evolution of digital technology and the entertainment industry, emerging industries such as glasses-free 3D, metaverse and virtual shooting continue to develop, and automotive displays, LED movie screens, AR/VR, XR virtual shooting, smart wearable devices, etc., will also bring huge business opportunities and innovation potential to the LED industry. As the "main battlefield" of LED chips, Mini/Micro LED applications have become the main growth point of epitaxial chips. According to GGII, the global Mini LED market size will reach US$5.3 billion in 2025, with a compound annual growth rate of more than 85%, and the global Micro LED market will exceed US$3.5 billion by 2025, and the global Micro LED market is expected to exceed US$10 billion in 2027. Relying on the advantages of the controlling shareholder's display industry chain, Qianzhao Optoelectronics is expected to make greater progress in the research and development and product promotion of new technologies such as Mini/Micro LED, and open up more application scenarios.