As of the end of April, seven listed companies, mainly involved in the manufacture of LED chips and epitaxial wafers, have all disclosed their 2023 annual reports. As the upstream of the LED industry, LED chips play a role as a vane for the industry, and understanding the development of the head LED chip manufacturers in the past year not only helps to understand the development status of the LED chip itself, but also helps to understand the development trend of the entire LED industry. To this end, Pjtime.com made a comparative analysis of the 2023 annual reports of seven LED chip listed companies and shared them with you.
Summary of important information:
1. Throughout 2023, the LED chip industry will begin to pick up in the middle of the year after the downturn at the beginning of the year. 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 LED chip companies are still facing the dual pressure of cost and price.
2. From the perspective of total revenue, the 7 listed companies have increased significantly except for the blue lithium core. However, due to the downward price decline, HC Semitek and Silan Micro suffered losses, and the net profit of the four companies decreased year-on-year, and only three of them achieved a year-on-year increase in net profit.
3. From a quarter-by-quarter point of view, in the first half of the year, due to weak demand and fluctuations in raw material prices, the rising cost of products led to poor revenue and profitability, and the demand gradually recovered in the second half of the year, the equipment utilization rate gradually rebounded, and the price was raised, and the revenue and gross profit margin of most enterprises were better than those in the first half of the year.
4. A common strategy of most companies in 2023 is to increase product development in high-end fields and increase the proportion of high-end products in the LED business, so as to provide profitability.
5. In the field of Micro LED, Qianzhao Optoelectronics has developed products of various sizes such as 15~60μm in large-screen applications, and continues to improve the yield; Samples have also been developed for MIP chip products with high current; In terms of mass transfer, we have developed FCOC products with vertical chips and interposer products arranged according to customer needs. San'an Optoelectronics MIP has met the conditions for mass production, and the product yield has been continuously improved. In July 2023, the Guangdong HC Semitek Zhuhai Micro LED Wafer Manufacturing and Packaging and Testing Base project started and was successfully topped out on January 31, 2024. The project will create a production line for micro LED wafers and pixel devices. MTC has made a breakthrough in the development of the epitaxial structure of the Mini/Micro LED with extreme wavelength consistency, which is shipped in the form of wafers, which greatly reduces the cost of chip back-end testing and sorting, and the technology has been certified by many well-known domestic enterprises and has been mass-produced. Azure Lithium Core is promoting the research and development of Micro LED products.
6. At the beginning of 2023, Hisense Video officially became the controlling shareholder of Qianzhao Optoelectronics, which brought huge support and all-round empowerment to the company. Improve operational efficiency and ability to respond to market changes through management change; In terms of business, we will lead the company into new market segments and open up new growth opportunities. RGB direct display revenue increased significantly year-on-year, successfully mass-produced 0407 and 0306 series products, and small-pitch RGB display chips were awarded the "National Manufacturing Single Champion Product"
7. In 2023, BOE will invest nearly 2.1 billion yuan to obtain the controlling shareholder of HC Semitek to jointly expand the cutting-edge technology and products of Mini/Micro LED. With the empowerment of the BOE brand, the marketing capabilities of lighting BU, direct display BU, backlight BU, and overseas major customer BU have been greatly improved, and sales volume and revenue have increased significantly. However, the net profit attributable to the parent company was -846 million yuan, which was wider than the loss of -147 million yuan in 2022. It seems that the synergistic effect of BOE and HC Semitek is not as good as that of Hisense Video and Qianzhao Optoelectronics.
8. The strategic development plan of Azure Lithium Core to promote the transformation of LED business from the field of general lighting to the field of display. MiniLED and other backlight chips have entered the supply system of major global head customers, and large-size flip TV backlight products have achieved the first application in China, and CSP special packaging products have been launched.
9. In 2023, the structural differentiation of the domestic semiconductor market will be obvious: on the one hand, the demand for products related to ordinary consumer electronics will be weak; On the other hand, the demand for products related to automobiles and new energy is relatively strong.
10. Judging from the annual sales volume, most LED chip manufacturers have achieved revenue growth. It shows that under the guidance of national policies, the process of import substitution of domestic chips is accelerating.
11. San'an Optoelectronics Hubei Mini/Micro LED major project postponed. The planned investment of 12 billion yuan in the "Hubei San'an Optoelectronics Co., Ltd. Mini/Micro Display Industrialization Project" was affected by many factors, resulting in the delay of the entire project promotion plan. In its annual report, Sanan Optoelectronics disclosed that the date for the project to reach the intended usable state was extended from the original date of June 2024 to June 2026. By the end of 2023, 2.432 billion yuan has been invested in the project, accounting for only 20.27% of the total investment.
12. The "GEM issuance of A-share shares to specific objects" was successfully completed, and the fixed increase plan to build an annual output of 7.2 million pieces of Mini/Micro LED chip R&D and manufacturing expansion project will further implement the company's layout on the Mini LED segmentation track.
Next, we will conduct a detailed comparative analysis from six aspects: comparative analysis of main accounting and financial indicators, LED business comparison, LED chip business main performance highlights, sales and procurement analysis, R&D investment and innovation achievement analysis, and key business plan in 2024.
Part 01
Comparative analysis of key accounting and financial indicators
In the first half of 2023, in the face of multiple factors such as the slowdown in industry demand and fluctuations in raw material prices, various enterprises are under great pressure.
1. Comparative analysis of total revenue and net profit
From the perspective of total revenue, only the revenue of the blue lithium core has decreased sharply year-on-year, and the other 6 have increased by more than 6%, of which Qianzhao Optoelectronics has increased significantly with the blessing of Hisense Video Holdings, and its performance has increased significantly, becoming the first of 7, with an increase of 40.63%. In terms of net profit, Silan Micro and HC Semitek suffered losses, San'an Optoelectronics, Silan Micro, Azure Lithium Core, and HC Semitek decreased their net profit year-on-year, and Jucan Optoelectronics' net profit increased the most by 291.41% year-on-year. On the whole, MTC, Jucan Optoelectronics, and Qianzhao Optoelectronics have achieved remarkable results in revenue and net profit, while only Azure Lithium Core revenue and net profit have declined.
2. Operating cash flow
San'an Optoelectronics' operating cash flow was the most abundant, reaching 3.977 billion yuan, an increase of 397.19% compared with 2022; Silan Micro and Azure Lithium Core increased by 55.5% and 16.21% respectively; HC Semitek, Jucan Optoelectronics, MTC and Qianzhao Optoelectronics all saw significant year-on-year decreases, with year-on-year decreases of 85.65%, 58.78%, 52.43% and 42.88% respectively.
3. Comparative analysis of total assets and net assets
As the "first brother" in the field of LED chips, San'an Optoelectronics topped the list with total assets of 57.675 billion yuan and total assets of 38.303 billion yuan, about 1 times higher than the second place MTC. The net assets of the seven companies all increased year-on-year, and the total assets of Silan Microelectronics, Jucan Optoelectronics, Zhaochi Co., Ltd., and HC Semitek Co., Ltd. achieved year-on-year growth.
4. Comparison of quarterly revenue and net profit
In terms of quarterly revenue, the total revenue of most enterprises in the second half of the year was higher than that in the first half of the year. It shows that the first half of the year was under pressure as a whole, and the industry began to pick up slightly in the second half of the year. Net profit in the second half of the year did not bring the same general improvement as revenue, 7 companies' quarterly earnings did not show much consistency of the law, appear messy, which shows that the profits of the LED chip industry are subject to more uncontrollable factors, such as raw material prices, product sales prices, process control costs, sales costs, inventory management, remittance speed and other factors will affect profitability, in addition to the LED chip semiconductor industry, due to the relatively concentrated sales customers and suppliers, risk control is difficult.
Part 02
LED business: comparison of revenue, production and sales, production capacity, and comprehensive gross profit margin
Because the seven listed companies in this article are involved in the LED chip and epitaxial wafer business, the following focuses on the comparative analysis of the revenue, sales, production, production capacity and comprehensive gross profit margin of the LED business section of the seven listed companies
1. Revenue and proportion of LED business
San'an Optoelectronics' LED business revenue reached 7.896 billion yuan, including LED epitaxial chips and LED supplies, accounting for 56.19% of the total revenue, of which LED epitaxial chips were 5.665 billion yuan, an increase of 6.30% over the previous year. The revenue of the LED industry chain of MTC was 4.504 billion yuan, accounting for 26.24%. In terms of proportion, the top four are Qianzhao Optoelectronics 73.17%, HC Semitek 61.52%, San'an Optoelectronics 56.19%, and Jucan Optoelectronics 50.87%, which is a big cut higher than the last three, of which Silan Micro accounts for the least, only 8.17%.
2. Comparison of gross profit margin of LED business
MTC had the highest LED gross profit margin, reaching 25.81%, while HC Semitek and Silan Micro had negative values, -15.21% and -1.01% respectively. HC Semitek's gross profit margin has a significant negative value, which is very different from the average of the same industry, and it seems that the company's profitability enhancement is a top priority in the future. Fortunately, HC Semitek has given various measures to enhance profitability in the annual report: 1) Continue to strengthen the existing business, continue to tap the potential of existing factories, optimize the positioning of production lines, and further expand production capacity and increase production capacity. Consolidate existing advantages, reduce product costs, expand market share, and rapidly improve product gross profit margins and company profitability from the dimensions of raw material cost reduction, manpower optimization, and yield improvement; 2) On the basis of consolidating the existing business, we will continue to make technological breakthroughs and mass production of Mini/Micro LED, automotive LED, GaN power electronic devices and other products, so as to lay a solid foundation for the company's strategic development and enhance the company's ability to resist risks; 3) Clarify the company's development strategy, further optimize the construction of the management system, strengthen the teamwork ability and talent echelon construction, improve the incentive mechanism, and improve the company's operational efficiency through lean management; 4) Strengthen investment in technology research and development, improve product performance and quality, strengthen technology and quality, and enhance market competitive advantage.
3. Comparison table of production and sales volume of LED business
The production and sales rates of seven companies are relatively high, four are more than 100%, and the blue lithium core is slightly lower at 76.8%. Among the four units of "tablets", HC Semitek has the largest sales volume and production volume, much higher than the three companies of Jucan Optoelectronics, Qianzhao Optoelectronics, and Azure Lithium Core.
4. LED business capacity comparison table
Among the three companies whose main business is LED chips and epitaxial wafers (accounting for more than 50% of the total revenue), HC Semitek, Qianzhao Optoelectronics and Jucan Optoelectronics have disclosed in detail the production capacity, capacity utilization rate and capacity under construction, among which HC Semitek has the largest production capacity of 76491200 pieces/year, and another 8.36 million pieces/year of production capacity under construction, and the production capacity of Qianzhao Optoelectronics and Jucan Optoelectronics is about the same, about 22 million pieces/year, and both have 6 million pieces/year of production capacity under construction.
Part 03
The main performance highlights of the LED chip business in 2023
San'an Optoelectronics
1. The operating income of LED epitaxial chip products increased by 6.30% over the previous year, of which the operating income of traditional LED epitaxial chip products increased by 3.91% year-on-year, and the operating income of high-end LED epitaxial chip products increased by 13.99% year-on-year, and the sales of high-end products further increased, realizing the initial adjustment of product structure.
2. In the first half of the year, the market demand was weak, and the price fluctuations of some raw materials led to an increase in product costs and poor profitability; In the second half of the year, the demand gradually recovered, the equipment utilization rate gradually rebounded, and the selling price of some products was not raised to the level of the same period last year, but the sales volume increased year-on-year, so the operating cost of LED epitaxial chip products increased by 29.99% year-on-year, and the gross profit margin decreased by 16.08% year-on-year.
3. Mini LED has been used in TVs, monitors, laptops, car displays, VR and other fields, and the products continue to be delivered and the sales volume continues to grow;
4. Micro LED technology has significant advantages, and has cooperated with large manufacturers at home and abroad, MIP has met the conditions for mass production, and the product yield has been continuously improved;
5. Driven by new energy vehicles, automotive LED has a good development momentum, and most of the application chips in various parts of the vehicle have entered mass production and batch delivery, and the market share has been further improved; The technology of plant lighting products continues to make breakthroughs, and the performance of high-power mobile lighting vertical technology products is comparable to that of international manufacturers; The laser has begun mass production and shipment, and the high-end mobile phone flash has won orders from leading customers, and the product performance is leading in the domestic industry.
6. Anrui Optoelectronics has further optimized the internal management, and the product yield, cost and quality have been improved, with the per capita output value increasing by nearly 20% and the product yield increasing by nearly 30%.
7. Combined with the personalized and intelligent market demand, Anrui Optoelectronics has successfully mass-produced a variety of front combination lights, rear combination lights and atmosphere lights of popular models in the market. In 2023, it will complete the fixed-point of 20 projects, complete the development of 96-pixel ADB lens modules, and the fixed-point application of Mini LED in Chang'an, and open up the projects of SAIC-GM, Dongfeng Nissan, and Changan Automobile, and realize the batch supply of Chery Star Era, Xingtu, Zhijie, New Energy, Dongfeng Haohan, GAC Aion, Beijing Hyundai, Beijing X7, Jihu, Lotus Emeya, Dongfeng 007, and Wenjie M5, M7 and other brand models;
8. The company's fund-raising project "Hubei San'an Optoelectronics Co., Ltd. Mini/Micro Display Industrialization Project" was affected by many factors, resulting in the delay of the entire project promotion plan. The company has decided to extend the date on which the project will reach its intended state of use until June 2026. The total planned investment of the project is 12 billion yuan, and 2.432 billion yuan has been invested by the end of the reporting period, with a construction area of 294,500 square meters completed and 207,800 square meters put into use.
MTC Semiconductor
1. MTC Semiconductor is the only chip factory in the industry that has made a large profit after full production and sales throughout the year and after deducting non-profits. During the reporting period, the vertical integration and synergy strategy continued to deepen, and the strategic focus was inclined to high value-added products, and finally achieved high-quality and sustainable development from "scale" to "scale & value".
2. In terms of production capacity, the gallium nitride chip expansion project will begin to increase in April 2023, and the output of 1 million pieces (4-inch pieces) has been achieved by the end of June, and the subsequent production efficiency has been improved, as of the end of December, the output of gallium nitride is 1.05 million pieces (4-inch pieces), and the company's gallium nitride chip production capacity ranks second in the industry, and the production and sales volume ranks first in the industry; During the reporting period, the output of gallium arsenide chips was 50,000 pieces (4-inch pieces). The expansion of LED chips provides the source power for the company to increase the market share of high value-added such as Mini RGB, Mini BLU, and high-end lighting.
3. Mini RGB chip, the industry-leading progress of chip miniature technology, can realize the cost of Mini RGB chip plummeting under the premise of the same light efficiency, helping the Mini LED display industry chain to continue to reduce costs, during 2023, the company's mass production of Mini RGB chip size is mainly 04*08mil (100*200μm), 03*07mil (88*175μm), 03*06mil (70*160μm), 02*06 mil (50*150μm), and the mass production chip size will eventually reach 02*04mil (50*100μm). Up to now, the company's monthly shipments of Mini RGB chips are 10,000KK sets.
4. In the second half of 2023, the company will increase the price of LED chip products used in the general lighting market, and increase the proportion of high value-added products based on the release of production capacity, such as MiniRGB chips, backlight chips, and high-gross margin lighting.
5. During 2023, MTC Semiconductor successfully entered Samsung's supply chain system.
Dry photoelectric
1. At the beginning of 2023, Hisense Video officially became the controlling shareholder of Qianzhao Optoelectronics, which brought huge support and all-round empowerment to the company. , so that its operating income and net profit have achieved significant growth; In particular, the revenue of backlight chips has doubled compared with 2022.
2. In the field of Micro LED, 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 green and red light luminous efficiency is increased by more than 20% under the current density of 0.1A/cm²; In the application of large screens, we have developed products of various sizes such as 15~60μm, and continue to improve the yield; Samples of MIP chip products for high current have also been developed and are being jointly verified with customers. In terms of mass transfer, we have also developed FCOC products with vertical chips and interposer products arranged by customer needs, and have started to cooperate with customers on related technologies.
3. In 2023, the price of LED chips will still be declining, and the overall demand recovery of the industry will be relatively slow.
4. In terms of market segmentation and customer expansion, we will increase the expansion of high value-added products such as Mini LED, backlight, plant lighting, vehicle LED, solar cells, VCSEL, etc., and the proportion of revenue from medium and high-end products will continue to increase.
5. 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 the market share has been further improved. Especially in the field of Mini RGB display, the company accurately grasped the product development direction through pre-research, and successfully mass-produced 0407 and 0306 series products, and sold them in batches
6. The small-pitch RGB display chip was awarded the "National Manufacturing Single Champion Product", which has overcome many technical bottlenecks of small-pitch LED display, and the key performance indicators such as photoelectric conversion efficiency, reliability, and half-wavelength width are at the international leading level of similar products.
7. The new business of Qianzhao Optoelectronics includes products in the field of backlight and products in the field of batteries, and the overall revenue increased by 50% year-on-year. At present, it has laid out 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 has been successfully introduced into the TV factory.
Jucan Optoelectronics
1. During the reporting period, the capacity utilization rate of the company's main products maintained a high level, reaching 98.45%.
2. In 2023, the company will achieve dual promotion in product yield and performance improvement, and obvious breakthroughs will be made in both original products and new products. GaAs products are undergoing technical reserves and layout, and the performance of products such as ultra-high light efficiency, large and small backlights, and Mini LEDs has been rapidly improved, and the comprehensive competitiveness is strong. Silver mirror flip and blue-green display screen series products achieve stable mass production and supply of products with the fastest research and development speed.
3. In terms of epitaxy, the company has developed the epitaxial growth technology of SiO2/Al2O3 composite substrate, broken through the bottleneck of the performance and yield of the new substrate, and successfully achieved large-scale and stable mass production. The new high-gamut low-cost light source development scheme has been added, and the dual-wavelength and triple-wavelength single epitaxial layer structures have been successfully developed. The rapid production of Unimax MOCVD equipment has tapped the space for reducing manufacturing costs, and the market competitiveness of the company's products has been further enhanced.
4. In terms of chips, we continue to deepen the cultivation of high-end products. In the field of horticultural lighting, ultra-high luminous efficiency silver mirror flip chip has been developed, which will be gradually increased.
5. In the field of Mini backlight, through the introduction of atomic layer deposition equipment, the optimization of the deep etching process, and the independent research and development of innovative insulation layer optimization treatment process, the technical problems such as high temperature and high humidity aging failure of Mini high-voltage backlight products have been successfully solved, and the terminal market of well-known brands has been successfully entered.
6. In the field of Micro LED, we maintain close cooperation with leading enterprises at home and abroad to improve technical reserves.
7. In the field of vehicle lighting, the brightness and reliability of the silver mirror flip product have been further improved through technical iteration, and the market share has continued to increase.
8. The annual output of LED chips in 2023 will be 21.74 million pieces, an increase of 14.78% from 18.94 million pieces in 2021 and an increase of 8.37% from 20.06 million pieces in 2022.
9. The "issuance of A-shares by GEM to specific targets" was successfully completed. The fixed increase plans to build an annual output of 7.2 million pieces of Mini/Micro LED chip R&D and manufacturing expansion project, which will further implement the company's layout on the Mini LED subdivision track
HC Semitek
1. In 2023, BOE will become the controlling shareholder of HC Semitek, which can fully empower upstream and downstream resources and industrial synergy, enrich product structure, enhance product competitiveness, expand application markets, and jointly expand Mini/Micro LED cutting-edge technologies and products.
1. With the blessing of BOE brand empowerment, the marketing capabilities of lighting BU, direct display BU, backlight BU, and overseas major customer BU have been greatly improved, and sales and revenue have increased significantly. The sales volume of LED chips increased by 110.66% year-on-year, but the loss increased.
2. Due to the slow economic recovery, fierce market competition, and weak demand in the LED terminal market, the overall inventory is slow, and the competition intensifies after new players enter the game, the market price is under pressure, and the volume increases and prices fall, resulting in a greater impact on the gross profit margin of the company's products.
3. The high-end LED display market has always been the market segment that the company has been deeply cultivating for the longest time and continues to lead. Through continuous technological upgrading, the company has achieved the top level of indoor/outdoor products in terms of terminal reliability and display image quality.
4. In July 2023, Guangdong HC Semitek Zhuhai Micro LED Wafer Manufacturing and Packaging and Testing Base Project started and was successfully capped on January 31, 2024.
5. The LED epitaxial chip industry is a capital and technology-intensive industry, and the strength of technology research and development is the core of whether capital investment can be effectively converted into profits.
Azure lithium core
1. In 2023, Azure Lithium Core will continue to implement the strategic development plan to promote the transformation of LED business from the general lighting field to the display field
2. After the launch of the company's silver mirror products, it was successful and won the favor of customers
3. In the field of backlight chips such as MiniLED, it has successfully entered the supply system of major global head customers and achieved a leading market share
4. The large-size flip technology is leading the peers, and the large-size flip TV backlight product has achieved the first application in China;
5. The company actively laid out and took the lead in launching CSP special packaging products to promote them to the market;
6. Promote the research and development of Micro LED products.
7. Since the second half of 2023, the demand for LED downstream applications has shown signs of recovery, and MiniLED series products have also begun to gradually increase in volume, and the overall market environment has improved.
8. During the reporting period, the LED business turned losses into profits, with an overall operating income of about 1.24 billion yuan, an increase of about 10.04% over the same period last year. Huai'an Shunchang has turned losses into profits, and realized a net profit attributable to listed companies of about 40 million yuan.
Silanwei
1. In 2023, the operating income of the company's light-emitting diode products will be 742 million yuan, an increase of 1.28% over the previous year.
2. In 2023, affected by the intensification of price competition in the LED chip market, the company's LED chip prices will decrease by 10%-15% compared with the end of last year, resulting in large operating losses for its holding subsidiaries Silan Mingxin and Silan Minggallium.
3. Accelerate the launch of new mini-display chip products and stabilize the market share of color screen chips, while accelerating the volume of new products such as plant lighting chips, automotive lighting chips, high-end optocoupler chips, high-power lighting chips, and security supplemental lighting chips.
4. Since the second quarter, the capacity utilization rate of the company's LED chip production line has continued to increase and is close to full production.
5. In 2023, the company's LED chip sales will increase to a certain extent compared with the same period last year. Up to now, Silan Mingxin and Silan Minggallium have a total monthly production capacity of 14-150,000 pieces of 4-inch LED chips.
6. In 2023, the operating income of the subsidiary Mecara Optoelectronics Co., Ltd. will decrease by about 20% compared with the same period last year.
Part 04
Sales & Purchasing Analysis
The main sales areas of the seven listed companies are basically in China, and all of them are mainly direct sales, only MTC shares have a small amount of distribution of 3.5%, and the other five are 100% direct sales model (Silan Micro did not disclose the composition of the sales model), so we do not do a comparative analysis of the sales model.
1. Analysis of domestic and overseas sales and the proportion of total revenue
The main sales areas of the seven listed companies are basically in China, only MTC has overseas sales of more than 50% to 54.94%, San'an Optoelectronics, which ranks second in overseas sales, is only 15.83%, and Silan Micro has 100% domestic sales.
2. Gross profit margin of domestic and overseas sales
The gross profit margin of overseas sales of most enterprises is higher than that of domestic enterprises. The blue lithium core is 12.98% both at home and abroad. MTC's overseas gross profit margin was 16.23%, lower than the domestic gross profit margin of 22%. The overseas gross profit margin of Qianzhao Optoelectronics is as high as 50.07%, far exceeding the second place Jucan Optoelectronics by 34.22%. The gross profit margin in China is basically not high, except for MTC shares, the others are less than 13%, and HC Semitek is even negative. HC Semitek's domestic and overseas gross profit margins are the lowest, because the gross profit margin is too low, resulting in a loss of 846 million yuan in annual net profit, which is the smallest of the seven companies with net profit.
3. Main sales customers and suppliers
The top five customers account for a relatively low proportion of the total sales amount of Silan Micro and Azure Lithium Core, which is less than 15.1%, and has a low degree of dependence on a single customer, which can better disperse the risks brought by a small number of customers. HC Semitek, Qianzhao Optoelectronics, and Jucan Optoelectronics account for more than 50%, and downstream customers are relatively concentrated.
The top five suppliers accounted for the lowest proportion of the total purchase amount of Azure lithium core, which was 15.9%, which was relatively scattered compared to suppliers. The highest concentration is Jucan Optoelectronics, whose top five accounts for 84.46%, and the relative procurement risk is high. The other five accounted for between 27% and 62%.
Part 05
Analysis of R&D investment and innovation results
As a branch of the semiconductor industry, LED chips are a technology-intensive industry, and R&D investment largely determines the sustainable competitiveness of enterprises in the future.
1. R&D expenses and proportion
In terms of R&D investment, San'an Optoelectronics is still the "leading big brother", with an investment of 1.736 billion yuan and a revenue of 12.35%. The R&D investment ratio of Silan Micro and HC Semitek also exceeded 9.4%, and the R&D expenses of the other four accounted for between 4.10% and 6% respectively.
2. The number and proportion of R&D personnel
In terms of the number and proportion of R&D personnel, Silan Micro topped the list with 4,005 and 43.09%, and San'an Optoelectronics ranked second with 2,707 people. In terms of proportion, Jucan Optoelectronics ranked second with 26.71%.
3. Some of the company's patents, copyrights and other intellectual property achievements
San'an Optoelectronics: As of December 31, 2023, the company has more than 3,900 patents (including pending applications), including 2,390 authorized patents, more than 1,000 overseas patents, and its own patents account for more than 95%.
As of the end of the reporting period, the company has 142 authorized domestic and foreign patents, including 123 domestic authorized patents (45 invention patents and 78 utility model patents) and 19 overseas authorized patents (17 invention patents and 2 utility model patents).
HC Semitek: As of December 31, 2023, HC Semitek and its subsidiaries have a total of 1,253 patents and software copyrights (of which 939 have been authorized and 314 are under review), including 856 invention patents, 82 utility models (1 expired during the reporting period), and 1 design.
Qianzhao Optoelectronics: During the reporting period, 45 invention patents and 33 utility model authorizations were added, and 95 invention patents and 39 utility models were newly applied. At the same time, technological progress or breakthroughs have been made in many product fields.
The other three companies did not disclose the specific number of patents in their annual reports, so they were not listed.
Part 06
Key business plan for 2024
The seven listed companies are full of confidence in 2024 and have put forward business plans suitable for their own corporate characteristics.
MTC: Technological innovation and quality leadership promote the coordinated development of the entire LED industry chain; The strategy focuses on the two vertical industrial chains of Mini LED backlight and Mini LED display (Mini RGB chip - COB direct display).
San'an Optoelectronics: Increase the adjustment of product structure, continue to increase the proportion of high-end products such as LED vehicles, Mini/Micro LED, and plant lighting, accelerate the expansion of integrated circuit business, expand sales scale, and improve product gross profit margin. Promote the verification of silicon carbide MOSFET products as soon as possible, accelerate the introduction of the company's products into the supply chain, accelerate the construction progress of Chongqing, Hunan and other projects, release production capacity as soon as possible, meet the market demand gap, and improve the company's revenue scale and profitability.
HC Semitek: HC Semitek will optimize the performance of Mini/Micro LED and other products, improve product reliability and yield, and strengthen the mass production of cutting-edge technologies such as compound semiconductor power devices. Give full play to the company's industrial chain integration advantages from sapphire substrate to PSS to epitaxial chips, strengthen the horizontal collaboration of R&D resources, and improve the comprehensive performance of the company's products.
Jucan Optoelectronics: Deeply cultivate the main business of LED epitaxial wafers and chips. We will continue to make breakthroughs and solve pain points in light efficiency breakthroughs, voltage reductions, yield improvements, machine difference improvements, and substrate optimization. Focus on the marketing and promotion of high-end and high-priced products to ensure that the increment of high-end products represented by Mini LED, vehicle lighting, high-quality lighting, horticultural lighting, mobile phone backlight, and screen display has been greatly improved. We will continue to build an intelligent manufacturing factory.
Qianzhao Optoelectronics: In 2024, it will continue to focus on the layout of traditional RGB display and Mini RGB display products, and expand high-end business to create a second growth curve.
Azure Lithium Core: Continue to promote the high-end route strategy, continue to promote the strategy of transformation to display, continue to invest in R&D to upgrade products, maintain the continuous leading position of superior products, and promote the batch supply and share growth of superior products such as Mini LED. Continue to research and development, continue to adjust the product structure and customer structure, increase the proportion of backlight display products, and achieve profitable growth.
Silanwei: It is expected that the total operating income will be about 12 billion yuan in 2024 (an increase of about 28% over 2023), and the total operating cost will be controlled at about 11.3 billion yuan (an increase of about 26% over 2023).
Part 07
Summary: Future trend outlook
Through the detailed comparative analysis of the 2023 annual reports of the above 7 listed companies, and combined with the dynamics of key manufacturers such as LED midstream packaging and LED downstream displays, we have summarized the following future development trends for reference:
1. Affected by the economic situation and demand, the competition in the traditional LED chip market is getting bigger and bigger, and the profitability will be greatly limited.
2. With the intensification of competition, high-quality resources in the market will be more and more concentrated in enterprises with more advantages in scale and differentiation, and small and medium-sized enterprises with small production capacity and backward technology will be in a more difficult situation, or even eliminated, and the concentration of the LED chip industry will be higher in the future.
3. As LED display terminal manufacturers are keen to accelerate the application of Mini/Micro LED displays with smaller pitches, the demand for Mini/Micro LED chips will increase significantly in 2024.
4. With the rapid development of China's new energy vehicles, intelligent driving, and intelligent cockpits, the market penetration rate of the two major automotive LED applications of on-board LED screens and on-board lighting will increase rapidly.
5. With the continuous launch of terminal brand Mini LED TV and display products, the penetration rate of Mini LED TV and display is expected to increase rapidly, driving the rapid growth of sales of Mini LED chips.
6. Based on the expansion of new applications, major companies will accelerate the adjustment of product structure, accelerate the increase in the proportion of products in high value-added fields, and must rely on innovation to develop differentiated products to enhance market competitiveness, so as to improve performance and profitability.
7. Driven by the display giant Hisense Video Holdings, Qianzhao Optoelectronics, and the panel giant BOE BOE Holdings, HC Semitek, the cross-border cooperation in the LED industry may be strengthened in breadth and depth.
8. The continuous promotion of the "double carbon" strategy, energy conservation and emission reduction policies and green economy policies will bring certainty to the long-term development of the LED industry.
As more projects are put into production in China, the center of gravity of the global LED chip industry will further shift to China, and China's LED chip production capacity will not only rank first in the world, but will also gradually eat away at the market share of other countries and regions. It is expected that all LED chip companies will continue to innovate technology, improve new quality productivity, and continue to expand and strengthen China's semiconductor industry.
Note: This article is only an analysis of financial report data and industry observation, and does not constitute investment advice. If there is any discrepancy in the data, please refer to the original financial report.