Silan Micro claims that gross margin has been higher than that of mainland and Taiwan counterparts

On April 26th, " We are increasing the investment in the LED industry. Our positioning is high-end, high-quality products, and we do not fight the price ." At the Shilan Micro (600460) 2009 Annual General Meeting of Shareholders held recently, the company's directors Chen Xiangdong revealed that the company has planned to produce in volume for the layout of LED chips and packaging business. In response to changes in product prices, Zheng Shaobo, vice chairman and general manager of Silan Micro, said that the company has plans to raise prices.

When talking about the LED products that are most concerned about in the industry, Chen Xiangdong is quite emboldened. At present, the LED industry has entered a period of rapid development. Chen Xiangdong expects that the industry will have broad market prospects in the next 5-8 years. He introduced that since the second and third quarters of last year, the company's LED device business has rebounded sharply, and now it has entered a stable development period. The supply of LED chips is in short supply. " The sales margin of the company's outdoor LED display chips has been higher than that of mainland China and Taiwan."

Silan launched a private placement plan at the beginning of the year, and plans to raise funds of no more than 600 million yuan for the expansion of high-brightness LED chip production line projects and the replenishment of working capital. Silan Micro Secretary and Chief Financial Officer Chen Yue said that the company's additional issuance has been reported to the CSRC and is now in the early stage of communication. Chen Yue told reporters that the company's LED products are mainly blue-green light, and downstream applications mainly face the outdoor LED display market. However, the company will also be involved in the field of LED backlight LCD TV chips with rapid growth in demand.

In addition to increasing investment in upstream chips, Chen Xiangdong also briefed the shareholders on the package of Silan Micro Investment. Looking at the LED industry chain, upstream chips have the characteristics of high technology content and relatively dense capital. In contrast, the mid-stream package threshold is lower, which also attracts more enterprises to compete for the Nuggets. Statistics show that epitaxial wafers and chips account for 70% of the LED industry chain, while LED packaging and applications only account for about 30% of the cake. Most Chinese LED companies are concentrated in the middle and lower reaches of the industrial chain, and the problem of homogenization is serious. In the fierce competition between the middle and lower reaches, price wars have come and gone.

Chen Xiangdong emphasized: "There are many domestic companies involved in the packaging industry, but due to the lack of technology and quality, the price is only 50% to 60% of the international advantage . In this context, Silan Micro has established Hangzhou Meikale Optoelectronics Co., Ltd. The company entered the LED package, and the current product performance indicators have reached domestic leading level, and the pricing is also significantly higher than domestic counterparts ."

Silan Micro, which specializes in domestic IC design and manufacturing, has been tested by the financial crisis since 2008. In the words of Chen Xiangdong, "the difficult period of the past two years has made the time of Shilan's micro-structure adjustment and technology research and development longer than expected." The painstaking efforts, the company's expansion and heavy-duty pace tend to be cautious.

Some analysts pointed out that the circuit design is the traditional business of Silan Micro. The company started with low-end products such as toys and home appliances. The entry barriers for low-end products are relatively low. The low differentiation will inevitably lead to price competition, but The company must be strong and big, and must take the route of high-end products. At present, it determines the product lines of integrated circuits, discrete devices and LEDs.

Taking LED packaging as an example, Silan Micro's positioning is to shape the brand, not to fight the price war, first to achieve small batch production, and then expand according to market demand. "We will strive for the LED production and profit to be the first in the country, but the development of any industry can not replace the steady pace with a moment of pride." Chen Xiangdong stressed.

(This article Source: Securities Times)

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