In recent years, a little bit of capital strength LED packaging companies have already carried out or are planning to expand the production line, and a large group of those listed packaging company, is aggressively expand territory, open around the mainland production base in an attempt to further enhance production scale.
Some analysts believe that the reason this year focused packaging industry to expand production capacity, last year was due to the lighting market high stimulation, so the second half of last year, China's LED packaging field there has been an expansion peak. In other words, this year the major packaging companies to accelerate the expansion of production capacity, not for the pressure of market competition, to seek means to break through, simply because the market this year overestimate results.
This analysis now appears to be some truth in this year, LED lighting products affected by the price war, LED packaging companies living space is further squeezed, the market once again into "Delta does not increase profits" state. Prices have fallen sharply directly led LED packaging market as a whole as expected, the vast majority of corporate profits and not with shipments grows, some even down there. Although the size of the market is still maintained rapid growth, but the company's earnings performance remained sluggish. According to relevant data show that the first half of 2015, the domestic LED package devices prices of most products fell by more than 50% of the international LED packaging manufacturers product prices also fell more than 20%. 2014 package has hundreds of enterprises have been eliminated, this year eliminated this situation will be further widened.
We can foresee that in case prices decline, packaging companies race to expand production capacity, Shidao had been very fierce market competition more severe for those SMEs lack of capital, technology, and other channels in terms of competitiveness, we are facing much bigger operational difficulties and risks, serious or even collapse due to financial strand breaks.
Therefore, we can say that "in addition to expansion, or expansion," the initiative is not appropriate? Apparently not, now is the trend of the entire LED industry to accelerate the integration of industry concentration increased. Packaging manufacturers to expand production scale of strength, and indeed accelerated phase-out and promote the industry reshuffle, from large enterprises to accelerate the integration of resources, increase our strength for the future market development in advance to do the layout.
Because competitive packaging field, in addition to process technology, market development, etc., often whether the specific cost advantages, with advanced and efficient production scale of strength, is the key to winning business. The vast majority of packaging manufacturers are planning the expansion of the expansion, in fact, also illustrate this point. Despite falling prices lead to "incremental does not increase profits," but I believe that after a period of adjustment, prices tend to be stable or rise a necessity.
Of course, since packaging companies compete to expand production capacity, leading industry structural overcapacity problems are more prominent, and this is likely to do. If the problem is exacerbated by overcapacity, "Delta does not increase profits" vicious cycle is to continue.
That being said, it seems that everywhere traps companies on how to choose the more confused: big price declines packages, companies naturally unable to parry continuing price war; exploring new markets or develop new technology products, will undoubtedly need greater capital and other inputs, the ability to obtain full return unknown. So as LED packaging companies, how to find a way to break through? Are they continue to stick to the "business expansion" of the road? This is currently worth attention.