Advanced Facilities Efficient ProductionIn the recent period, the wave of price increases in the upstream of LEDs such as chips, materials, lamp beads, IC, PCB, etc. has not stopped. Out of stock and price increases are still a major problem that plagues the LED industry.
Then, in the face of the current supply chain status and future development trends, how do downstream companies view it? In the context of rising costs, what can companies do to respond? Through the semi-annual reports recently released by major companies, corporate surveys, etc., you can learn about one or two.
Linsen
In the semi-annual report, Mu Linsen pointed out that in the first half of the year, the upstream raw material supply in the semiconductor industry was tight, the downstream LED lighting client demand continued to remain strong, and the new upstream capacity has not been fully released, resulting in a shortage of major raw materials. The stability of the main raw material supply chain and price fluctuations will affect the company's future production stability and profitability.
In response to the above risks, Mulinsen takes the following countermeasures:
(1) Actively adopt an active supply chain procurement strategy, give full play to the advantages of leading listed companies, control the resources of the upstream material supply chain and establish a friendly strategic partnership.
(2) Standardize internal management, optimize and control business processes, and reduce production costs through lean management and scale advantages.
(3) Accelerate product iteration and service upgrades, and optimize the product sales mix through timely and appropriate adjustment of the price positioning of some products to minimize the impact of raw material fluctuations.
It is reported that the strong terminal demand for LED products has led to the continuous rise of prices in the LED product supply chain, especially the sharp rise of upstream raw materials and components.
In this context, Mulinsen’s cost advantages and scale advantages are more prominent. On the one hand, the company has achieved independent production of materials such as brackets and PCB boards in the midstream packaging field, making the company’s costs controllable; on the other hand, the company’s production equipment is automated High degree, large scale of mass production, and the layout of the entire industry chain reduces the impact of raw material price fluctuations on the company’s production costs.
Riad
Leyard pointed out in a survey report released on August 23 that the price increase of upstream chips has little effect on the company.
Leyard introduced that the upstream price increase was the most serious in the first half of the year from March to June. In addition, the company's stockpile and other reasons also pushed up the increase in costs. Leyard arranged ahead of schedule, negotiated with upstream supply around May, locked in supply through partial prepayment and other methods, basically meeting the company's needs in 2022, and production costs will not fluctuate too much.
At the same time, Leyard also said that the driver chip does not account for a high proportion of the company's product cost. Although the upstream price increase is large, it is transmitted to the application side and the impact is not so large. It is reported that in the first half of the year, Leyard raised prices by 5-15% according to different products, which can basically cover all cost increases.
Abison
In the semi-annual report, Absen pointed out that because countries have adopted quantitative easing stimulus plans that have led to excessive currency issuance, market supply and demand and other factors, the prices of bulk raw materials such as aluminum, copper, and oil have continued to rise, resulting in lamps, PCBs, ICs, etc. The cost of main raw materials for LED displays such as boxes has also continued to rise, causing the company's production costs to increase.
In response, Absen took the following measures:
(1) Use its own advantages to strengthen cooperation with upstream suppliers and obtain strategic support from upstream suppliers;
(2) Based on capacity forecast and production planning, strategically stock up key materials to ensure relatively low-cost material procurement and supply guarantee;
(3) Improve efficiency and reduce overall costs through the introduction of new materials, new technologies and the application of new equipment;
(4) The company will adjust the sales price to customers in a timely manner based on market competition and company strategy.
Unilumin Technology
Unilumin Technology said in an institutional survey on September 10 that, judging from the market situation in July and August, the prices of some main materials, including driver ICs, PCBs, etc., have returned to rationality, ushering in the second quarter after the “rush to buy”. A moderate correction, but the overall situation is still high.
The company pointed out that the main reason for the price correction of raw materials in July and August was that it is currently in the off-season of channel products and demand is not urgent. This supply-demand relationship is transmitted to the material end, leading to price corrections. However, the fourth quarter is the traditional peak season, and the relationship between supply and demand may become tense again.
In addition, Unilumin Technology also said that from absolute data, raw material prices have improved in the third quarter, but when the normal price level can be restored is still unknown. This requires a comprehensive judgment based on factors such as upstream capacity input.
However, Unilumin Technology believes that the worst has passed, and the phenomenon of "rush to buy" some materials in short supply regardless of cost should not occur again. Generally speaking, the industry is developing in a good direction.
Op Lighting
Recently, Op Lighting has been investigated by institutions and talked about the company's layout under the tide of rising prices of raw materials.
It is reported that Op Lighting achieved a gross profit margin of 37.5% in the first half of 2021, a year-on-year increase of 1%. Op Lighting said that the company mainly used the following aspects to effectively alleviate the pressure caused by rising raw material prices:
(1) Strategic storage of raw materials;
(2) Platform-based development of the Product Solution Center to achieve continuous cost reduction of basic products;
(3) Adjust prices in a small range.
Netac Smart
Netac Intelligent stated on the investor interaction platform on September 14 that most of the company's upstream chip shortages have eased, but there are still shortages of individual chips; as the upstream raw material supply situation improves, the company's product delivery situation has also been improved. improve.
In addition, on August 30, Netac was optimistic about the recovery of the company's gross profit margin when it was surveyed by specific subjects. The company said that it is expected that gross profit will gradually pick up in the second half of the year, and the recovery will be even more significant in the fourth quarter. On the one hand, the company’s upstream raw material price increase is expected to be eased; on the other hand, the company has reached an agreement with a considerable number of customers on the issue of order price increases. New orders will be implemented at new prices, which will help ensure the company’s products are reasonable Profit margins.
Regarding cost control methods, Netac Intelligent said that in the face of the continuous shortage of raw materials in the first half of the year, the company comprehensively used various methods such as alternative solutions, increased early stocking efforts, and strengthened internal management to achieve effective cost control.
Take product program substitution as an example. In the first half of the year, the company’s R&D investment was invested in product program substitution. After continuous adjustment of the company’s product program, the proportion of outsourcing raw materials is gradually decreasing, and the same product has achieved lower cost and higher A double breakthrough in performance.
We, Dongguan Zhiding Electronics Technology Co., Ltd, one manufacuter of all series led (SMD led, DIP diode led, High power led, UV led and IR led) in China. Although the price of raw materials has risen, we will still provide the best prices to customers all over the world.