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The impact of the new coronavirus pneumonia epidemic on the LED industry chain

Release time:

2020-04-14 10:28

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The new coronavirus epidemic spread rapidly before the lunar new year. To control the epidemic, the government first announced the implementation of "closure" measures on several Hubei cities led by Wuhan, and then successively removed Beijing, Shanghai, Shenzhen and other provinces, counties and cities. Incorporated into closed management, and extended the Lunar New Year holiday, and did not officially resume work until February 10.

However, as the epidemic heats up, many regions have postponed the resumption date again, and because the government and manufacturers have strengthened their control, people who return to work from other counties and cities must self-isolate for 14 days. Even if some factories have already started, they produce online manpower. It is also difficult to reply immediately. According to LEDinside's survey, most LED manufacturers are quite conservative about the resumption rate, and the resumption rate in mid-February is estimated to fall between 50-70%.

The backward production plan caused by the delay in resuming work is bound to impact the entire industry. For the LED industry, from the upstream sapphire substrate and chip manufacturing, to the downstream packaging stage, and subsequent application production, the extent of the impact varies depending on the location of the factory, manpower requirements, and inventory.

From the perspective of LED chip production, since the LED industry is in a state of oversupply in 2019, chip manufacturers currently still have inventory products accumulated last year for sale, so production delays will not have an impact in the short term. However, because the supply of chip raw materials such as sapphire substrates may be interrupted due to the epidemic, coupled with the delay in resumption of work, and the increase in labor production costs, it is estimated that chips will have a chance to start to increase in price after March.

The downstream LED packaging manufacturers are more affected by the delay in resuming work than the upstream chip side, because the labor demand of the packaging factories is high, and the factories are mostly located in Guangdong and Jiangxi provinces, and the employees are mostly migrants from all over China. If the rework condition is not good, the lack of work continues, which will directly affect production. At the same time, due to the low inventory level of the packaging plant, the demand for resumption of work is even more urgent.

In terms of end application products, Hubei, as a major automobile production center in China, has been greatly affected by the epidemic. As the resumption time is still difficult to determine, the lack of related parts and components also affects subsequent automobile production, and consequently causes the impact of automotive LEDs.

The impact of panel production and backlight modules also comes from the shortage of upstream raw materials. Although panel manufacturers have resumed production one after another, if there is a lack of materials, the factory utilization rate is expected to decrease in March. At the same time, the rapid increase in confirmed cases in South Korea has also begun to have an impact on local panel production.

In addition to production delays, the current global pneumonia epidemic has also caused many heavyweight exhibitions to be cancelled or postponed. MWC, the mobile phone industry event originally scheduled to start at the end of February, announced the cancellation on February 12, and the biennial Frankfurt Lighting Fair Light + Building also moved the exhibition period from March to September.

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