Stable To Good, LED Display Industry Has Crossed The Turning Point

Since 2023, the display industry's "mood" is still relatively down. However, The industry's more consensus view is: the LED display has crossed the bottom of 2022, and the upward trend is fully established!

 

The first quarter of the "structural" problem

In 2022, the domestic display market ushered in a significant drop in volume and price. Although in the small-pitch display and other emerging products, there is a high-speed start of the overseas market, the overall industry "from the chip, packaging to the terminal" of the surplus is still very obvious. The industry has also ushered in another "significant price decline" process.

 

In the first quarter of 2023, this trend continued overall. In the first quarter of 2023, the sales of the small-pitch display market in mainland China reached 2.9 billion yuan, down 12.8% compared with the same period in 2022; the shipping area reached 203,000 square meters, up 4.4% year-on-year; the average unit price fell to 14,200 yuan/square meter.

 

Behind the increase in transaction area and decrease in sales is the fact that the average price is at a "historically low". At the same time, by the Spring Festival holiday and other traditional factors, December 2022 to January this year, the epidemic cycle and other special factors together, the industry based on low prices, limited increase in sales area (4.4%).

 

At the same time, the international market demand. On the one hand, the growth of new LED display applications in the international market in 2022 is very promising, resulting in a certain high base effect, the industry expects incremental inertia, a bumper crop in 2023. But on the other hand, the United States-led developed economies into the middle and latter part of the interest rate hike cycle, higher U.S. dollar and other international currency exchange rates, is bound to produce negative spillover to the global economy, which in turn hinders the growth of any product in the consumer side.

Because of the above structural problems, in the first quarter of 2023, it can be said that the LED industry has been "not good": this period is in the international market and the domestic market has doubled expectations, harvesting more "pressure and worry".

 

The second quarter of the market is a comprehensive improvement, double-digit growth can be expected: 2023 LED display market into March, especially after April to May, the domestic market new changes. Specifically, the "structural expansion speed accelerated". It is reported that from March to May, the industry's head brand comprehensive growth is close to or more than 15%, or even reaching 20%, and the industry market back to medium speed growth is expected.

 

Among them, the main factor representing the improvement of industry growth is "the industry in early May, there was a wave of price increases". Including midstream and downstream products are certain price increases. This represents a shift to the supply side of the market to take advantage of the balance between supply and demand. In this regard, the main market changes at home and abroad are:

 

First, domestic demand began to enter the "post-epidemic" recovery. In particular, the May Day travel crowds created a record high, in the consumer industry on behalf of the LED direct market demand end to a strong impetus and confidence. Decide the emergence of a turning point in the market. That is, the previous "recovery after the epidemic" is "expected"; but around May, this expectation becomes "in progress".

 

Secondly, in the international market, the previous concerns about the macroeconomic situation are melting away. In Europe and the U.S. markets, their financial regulators have intervened and protected financial institutions at risk, such as Silicon Valley Bank, in a timely and strong manner, and the macroeconomic bottoming out a signal in developed countries is clear. At the same time, the vast number of developing countries, especially in Asia, Africa, and Latin America, in this round of the U.S. dollar interest rate hike cycle has shown more financial stability and resilience than expected. This provides a solid foundation for LED display products to continue to maintain a similar growth rate in the global market in 2022.

 

"It can be said that around April, adverse factors in both domestic and international markets have entered a phase of reduction, and both micro and macro market situations are continuing to open up." Industry experts said that the market in the second quarter, "confidence recovery situation is beyond expectations." This is also one of the keys supports for the industry to appear in May to raise prices.

 

Structural demand changes significantly, and a broader market starts the need for "low-cost"

Since 2023, in the domestic and foreign LED display market another "significant" consistent trend change is "low price products accounted for" are increasing. In particular, in the international market, the demand for low-cost products grew significantly faster than for high-performance products.

In this regard, on the one hand, industry analysis that the global macroeconomic and consumer expectations are still at a "low level", we are "less confident" in the future economic trends in the short term. This also leads to the psychological purchasing customers prefer low-cost solutions; in reality, buyers' budgets are also more compact and require low-price products.

 

In the domestic market, data show that in 2022, the largest structural increase in demand for products, market share rose to 16.6%, but only 10.6% in the first quarter of this year. Among them, products account for more than 40%.

 

In the international market, the third world countries, itself in the low-end, low-cost products on the demand is more obvious; Europe and the United States market, with the small pitch LED and other emerging products, the market to the popularization of the extension, the proportion of low-end price products is also increasing rapidly - the overall start of the overseas market from the high-end, now increasingly towards The overall start of the overseas market is from the high-end, and now increasingly towards universal, the accelerated growth of the market demand in the low-end price range is an inevitable rule.

 

In this regard, the industry believes that this is not a "consumer downgrade": because the high-end demand for overseas incremental is still considerable; the domestic market demand for high-end innovative products "technology high-end" is still up - - instead, this should be the market to further increase the number of products. -Instead, this should be the beginning of further market expansion and breaking the application bottleneck. More popular and diversified demand for the LED direct display industry is good news. In particular, as a global leader in the scale and integrity of the industry chain, China's enterprises are undoubtedly competitive in the low and medium-price markets. That is, the global small-pitch LED popularization process, is bound to be a blue ocean dividend period for China's enterprises.

 

From the development history of the LED display industry, there is also a continuous process of continuous improvement of technology, quality, the same level of technology, product prices gradually reduced, and the popularization of the process. This is the law of industry demand, but also the law of supply-side technology. This also leads to, in the coming period, how to provide better products at lower cost has become a major challenge.

 

For example, the price of COB products has been declining significantly since 2022-2023. This has driven an accelerated shift from traditional processes to more reliable COB processes for above-pitch products. Bringing better product experience and solutions to the market. It has also become one of the consensus of the industry companies to enhance the production capacity of the whole series of COB products.

 

Product lines are becoming more and more "complete", and future competition focuses on scale and cost.

The data also shows that the LED display market, especially the small-pitch LED market demand structure is also changing: in the first quarter of 2023, the small-pitch LED display in the video conference scene in nearly half of the applications, accounting for 46%; information release is mainly used for information services, exhibition displays, media advertising, accounting for 34%; the traditional command/monitoring application saturation is relatively high High, shipping area market share of less than 20% ...... new display applications, creative applications still account for a limited proportion.

 

The current small-pitch LED display has achieved mass production, and the above products, especially the mass supply of products, has been in the pixel pitch index "straight to the LCD", in the supply of resolution for large-size display, can meet almost any display demand. In this regard, industry experts call it "competitive saturation of key indicators".

 

In this context, how to improve the existing spacing index products' "performance, cost" competitiveness, and then obtain a larger scale market, has become the basic task of industry enterprises. The improvement of the mass production process, trying new packaging structures, the use of mini/micro LED chips, improve the scale and manufacturing intelligence level have become available options. Such a competitive structure is very conducive to the expansion of the industry's consumer market: sufficiently rich in technology and competitive points focused on cost reduction are the basis for further growth in the industry's market size.

 

To sum up, in the first half of 2023, the "confidence" of the LED display industry has changed from "apprehension" in the first quarter to "confidence and certainty" in the second quarter. We expect that the domestic consumer market for small-pitch LEDs will reach 18.8 billion yuan in 2023, up 13.6% year-on-year; the shipping area will reach 1.09 million square meters, up 17% year-on-year. The industry has crossed the trough that started in 2022 and entered a new upward cycle with a very clear turning trend. --The remainder of 2023 is worth waiting for!