In 2020, the "black swan" of the COVID-19 epidemic flapped its wings, causing great storms and waves, disrupting the originally peaceful world. Offline social interactions have been suspended, schools have been closed, and industries have been suspended. All aspects of people's social lives have been disrupted by this "black swan". Among them, the global economy has suffered a heavy blow, and the LED display application industry has inevitably been implicated. Under the new development pattern of domestic and international dual cycles, LED display-related companies quickly adjusted their strategies in terms of products and channels to actively respond to the new normal of the epidemic.
Although the epidemic crisis has not yet been completely resolved, my country's economy is gradually recovering, and the LED display application industry is also making steady progress, with continuous breakthroughs in areas such as small spacing and Mini/Micro LED, and the development space in various market segments continues to expand. As the epidemic is gradually brought under control and the global economy gradually returns to pre-epidemic levels, the LED display application industry will shine on a broader stage.
The industry remains stable overall and is gradually recovering.
As a growth industry, the fundamentals of the LED display application industry remain stable
The "black swan" event of the 2020 COVID-19 epidemic has had a major impact on the global economy. In order to prevent the spread of the epidemic, many industries were forced to shut down in the first half of the year, global economic development slowed down, and the GDP decline of various countries generally reached historical extremes. The IMF predicts that the global economy will shrink by 4.2% in 2020, with global GDP declining seven times that of the 2009 financial crisis.
Data from relevant institutions show that the total global LED market value in 2020 is approximately US$15.127 billion (approximately 98.749 billion yuan), a year-on-year decrease of approximately 10.2%; the LED wafer market capacity is approximately 28.846 million pieces, a year-on-year decrease of approximately 5.7%. Among them, the annual output value of my country's LED display application industry is expected to drop by about 18%, reaching 35.5 billion yuan.
2020-2024 Global LED Market Value Forecast
2020-2024 Global LED Wafer Market Capacity Forecast
Statistics on annual output value of China's LED display application industry
During the epidemic, with the introduction and implementation of a series of domestic measures, including domestic and international dual circulation and new infrastructure led by 5G, my country's economy has recovered rapidly and is the only country among the world's major economies to achieve positive growth in 2020. The domestic LED display application industry has also gained a lot of opportunities. For example, market segments such as commercial display and professional display have grown. In the second half of 2020, related companies have increased orders, projects, and performance, showing strong vitality.
Judging from the performance of my country's six major listed LED display companies, affected by the epidemic and other factors, the operating income and net profit of LED display companies in the first three quarters declined compared with the same period in 2019, with the largest decline being Lianjian Optoelectronics. However, judging from the situation in 2020, both operating income and net profit increased in the third quarter, and it is expected that the increase will be greater in the fourth quarter.
LED display company performance in the first three quarters of 2020
Performance of LED display companies in the third quarter of 2020
In special times, leading companies have shown their unique strength. New products and new businesses have gathered among leading companies. The role of brands has gradually become more prominent, and the trend of the strong getting stronger is obvious. Among the six major LED display listed companies, although the growth rate in the first three quarters was much slower than before, except for Lianjian Optoelectronics, which lost 158 million yuan, the rest of the companies made profits. In comparison, other small and medium-sized enterprises are facing survival difficulties. In October 2020, news broke that many enterprises were unable to support themselves - Getron's capital chain was tight, causing a contradiction between supply and demand; Dehao Runda shut down its LED display business; CREE sold its LED product division to SMART, etc. All companies have expressed concerns about the development of the industry in the post-epidemic era.
As a growth industry, the development of the LED display application industry mainly relies on the advancement of LED display technology, the launch of new products and the quality of services. Although the epidemic has had a huge impact on the market, the fundamentals of the industry remain stable and the overall trend is improving.
Price fluctuates, falling first and then rising
In the early days of the COVID-19 outbreak, industry development pressed the pause button. Due to the decline in demand for LED display application terminals, orders from LED packaging companies have dropped sharply, resulting in a large accumulation of inventory. In order to clear inventory, LED packaging companies "trade price for volume" and sell products at reduced prices. In 2020, the price of indoor lamp beads dropped by an average of 22.19%.
As shutdowns and production shutdowns lengthen, the supply of raw materials such as copper-clad laminates has dropped significantly, and demand exceeds supply in the global market. The supply and demand relationship for PCB boards has also become tense, leading to rising prices.
Then, the U.S. Department of Commerce further sanctioned Huawei in an attempt to cut off the chip manufacturing supply chain, causing a number of Chinese companies to "cut off supply" of memory chips. Due to Huawei's large-scale stocking up, wafer shipments are tight and prices are rising. It is expected that products that rely on wafer manufacturing processes, such as driver ICs, will remain in tight supply and demand by June 2021.
Under the influence of the epidemic in 2020, raw materials such as PCB boards, driver ICs, wafers, and RGB lamp beads upstream of LED displays have experienced varying degrees of price fluctuations. Before the global epidemic is fully controlled, LED display upstream, midstream and downstream companies need to improve their predictability of price changes and the timeliness in responding to price changes.
The market segments show diversified development
The complex situation in 2020 has caused the LED display application market to show different characteristics in the segmented fields, and the market segments show diversified development.
Overseas markets are shrinking rapidly, and domestic channels are intensifying
With the global epidemic raging, countries have reduced external exchanges and temporarily closed the door to import and export, and overseas markets have shrunk rapidly. According to customs statistics, in the first 11 months of 2020, the total value of my country's foreign trade import and export was 29.04 trillion yuan, a year-on-year increase of 1.8%, which was a decrease of 0.6% compared with the 2.4% growth rate in 2019.
Coupled with the fact that U.S. trade protectionism is still prevalent, Chinese semiconductor companies are restricted from investing and doing business in the United States. In the field of semiconductors, the United States has imposed additional tariffs on semiconductor-related equipment and parts, integrated circuits and parts, LEDs, discrete devices, printed circuit boards, etc. The Sino-U.S. trade friction has had an adverse impact on companies in the segment that export a high proportion of their revenue to the United States, slowing down the market expansion and industrial development to a certain extent. According to statistics, the overseas market share of the LED display industry in 2020 is approximately 20.6%, a decrease of 17.5% from 2019.
The overall situation of the LED display industry in 2019 and 2020
Due to the inability to "go out", companies in overseas markets have to shift their focus to the domestic market and expand domestic channels. In 2020, the domestic market share of the LED display industry will be approximately 79.4%, an increase of 17.5% from 2019.
As an LED display company with deep roots in overseas markets, Absen invested nearly 50 million yuan in 2020 to expand domestic channels to cope with the challenges brought about by the epidemic. At the beginning of 2020, Absen conducted extensive market research and targeted the characteristics of the domestic channel market. On the one hand, it launched Kunlun KL and Rolling Stone GS series new products into the channel market. On the other hand, it implemented the CD337 channel expansion strategy "Tree Planting Plan" and established a nationwide channel network covering all prefecture-level cities, which has been highly recognized by channel partners. Coincidentally, during the 2020 epidemic, Unilumin vigorously promoted the integration of channel sinking and channel empowerment by carrying out the "Spark Plan", "Prairie Fire Plan" and "Channel Promotion Conference" in 31 provinces and cities across the country, further consolidating its channel foundation. On the basis of the original relatively complete "1+N+W" channels, Leyard has further deepened the channels to improve market coverage and expanded its space in different segments through different business groups. Ledman Optoelectronics established three major marketing centers in East China, South China, and North China from June to September 2020, and held a Ledman COB product promotion and national online investment conference to invite partners. In the future, we will fully support channel dealers with professional capabilities to become bigger and stronger. Companies such as Lianjian Optoelectronics and Alto Electronics have also increased their efforts to develop domestic channels and engineering projects, launching medical, conference all-in-one machines and other related products to expand the domestic market.
The booming domestic channel market layout has "melted" the cold winter of 2020 to a large extent, making the LED display industry reactive in various places, and will become a strong guarantee for the development of the LED display industry in the post-epidemic era.
The rental market is declining, and outdoor large screens are performing well
Due to the need for epidemic prevention and control, social gathering activities have been significantly reduced. The Tokyo Olympics and European Cup have both been pressed on the pause button. Cinemas have stopped showing. The LED display rental market for domestic tours, music festivals, sports events, etc. has also declined accordingly.
At the end of January 2020, many singers and bands issued announcements to suspend or postpone performances. According to incomplete statistics from the China Performance Industry Association, in the first quarter alone, nearly 20,000 performances were canceled or postponed across the country, and it was not until the second half of the year that some performances gradually resumed. However, according to regulations, the number of spectators in performance venues in the initial stage of opening shall not exceed 30% of the number of seats, which is far lower than the 60% attendance rate (usually reaching 60% before there is room for profit). For rental equipment vendors, activity budgets have been significantly reduced, and the profit margins of LED displays have also been compressed. As one of the important application markets for LED displays, the decline in the rental market has had a huge impact on LED display-related companies.
However, in the second half of the year, as the epidemic was gradually brought under control, domestic activities in non-enclosed places increased, and the outdoor display market recovered quickly. Since the waves in South Korea’s Samsung LED display became a hot search topic in May 2020, there has been a craze for outdoor “naked-eye 3D” in China. Samsung's "same style" outdoor screens have appeared in Guangzhou Beijing Road, Chengdu Taikoo Li, Chongqing Guanyin Bridge, Shenyang Middle Street, Wuhan Jianghan Road, Xi'an High-tech Software New City and other places. These screens have attracted many people to stop and watch through their realistic 3D rendering effects, and have become new local "Internet celebrity" landmarks.
In addition to outdoor "3D" displays, large outdoor creative displays are also springing up. "Artificial Moon" super project in Panzhou Moon Mountain Scenic Area, Guizhou, Shenyang "Hunnan Summer" Culture and Art Carnival LED screen, Ningbo Yinzhou Southern Business District Moonlight Economic Complex LED screen, Galanz Shunde headquarters 800㎡ special-shaped screen, Tianjin Love Colorful Camp Large-scale LED display projects such as the 707-square-meter "Water Cube" transparent screen in the sales center, the LED awning system project of Sichuan Wanshengcheng Yunfu project, and the 8,500-square-meter giant LED awning project of Zunyi High-speed Railway New City have been completed and lit up, becoming another beautiful local scenery.
List of outdoor LED display projects in the second half of 2020 (part)
With the expansion of application scenarios, people have higher and higher requirements for outdoor LED displays, and LED display products such as transparent screens, grille screens, naked-eye 3D screens, etc. are becoming more and more diverse. Among them, LED transparent screens are widely used in publicity and display scenarios in building media, shopping malls, catering retail and other places due to their characteristics of being able to be cut at will, transparent display, and not changing the building structure. They are increasingly popular among end users and have become one of the main driving forces for the growth of LED outdoor displays.
In July 2020, Unilumin Technology released 18 new LED transparent screen products in 7 pitches in three series of "Illusion", "Invisible" and "Crystal" by Unilumin Creative, which can be widely used in commercial complexes, building curtain walls, showcases, exhibition halls, museums and other scenes. Leyard's Vclear-PRO series of transparent screens, which have twice won the German iF&Red Dot International Design Award, also won the Japanese Good Design Award (G-Mark) in 2020. The progress of my country's LED transparent screen products is not only a symbol of technological progress, but also a sign that the development of my country's LED display application industry has won the world's attention.
The commercial display market first declined and then grew
Similar to outdoor activities, indoor gatherings need to be avoided as much as possible during the epidemic. School closures, industrial shutdowns and other measures have hindered LED displays from entering corresponding market segments. The performance of the LED display application industry in the first half of 2020 was unsatisfactory.
However, as the saying goes, "When God closes a door for you, he will open a window for you." Although the epidemic has restricted people's activities, it has also spawned many online market demands - distance education, online office and other demands have experienced a blowout growth, and the LED display industry has taken this opportunity to gain new markets.
LED conference all-in-one products have shown huge development potential during the epidemic. The total sales volume in the first three quarters was approximately 1,676 units, with total sales of approximately 610 million yuan, a year-on-year increase of 164.3%. The related market will explode in 2020. In 2020, many companies actively responded to the domestic economic cycle strategy and launched LED all-in-one machines. For example, Leyard launched 4K ultra-high-definition resolution TXP 135-inch and 162-inch conference all-in-one machines based on Micro LED technology, achieving a qualitative leap in display quality and other aspects; Shende Color launched D-COB+Micro The advantages of LED technology launched the Melink smart conference all-in-one machine, focusing on the medium and large education and conference fields; Corrente demonstrated its new HUBOARD brand all-in-one machine product at the ISVE exhibition, which is the world's first ultra-narrow frame full-screen LED all-in-one machine; Absen launched Absenicon standard size (110”/138”/165”/220”) conference screen was launched, and the sales of its conference screen increased by more than 50% compared with 2019; Lianjian Optoelectronics launched metaGO intelligent display conference terminal, which is specially suitable for medium and large conferences meeting rooms, training rooms and other application scenarios; Alto Electronics launched SID intelligent all-in-one machine and CV intelligent conference all-in-one machine based on MINI LED technology; Ledman Optoelectronics launched Micro LED all-in-one conference machine based on COB packaging technology, etc. LED all-in-one machines have significant advantages in image quality, convenience, and intelligent interaction, and are the products closest to standardization among LED displays. The explosion of the LED all-in-one machine market also conforms to the trend of LED displays developing from dedicated and commercial to household applications.
Market development of commercial display products for medium and large conference scenes in China
According to third-party data, there are about 100 million existing conference rooms in the world, and China accounts for more than 20 million. Among them, about 3% to 5% of medium and large conference scenes are suitable for LED conference all-in-one machines. It is expected that the future conference market space will reach 60 to 100 billion yuan, and the development prospects are very broad.
The professional market is rising steadily
The professional market such as security monitoring, emergency command, medical rescue, etc., due to its own particularity and professionalism, has been less negatively affected by the epidemic. Not only has there been no sharp downward trend, but it has gained a firm foothold and moved forward steadily during the epidemic.
After years of development, LED displays are superior to other display products in terms of reliability, energy consumption, display effect, response speed, and installation convenience, and occupy an irreplaceable position in professional scene applications. Omdia predicts that China's smart video surveillance market will reach US$16.7 billion in 2024, with an average annual growth rate of 9.5% from 2019 to 2024.
China's professional security equipment market size
Nowadays, the security monitoring and emergency command market is developing in the direction of intelligence and integration. As an essential terminal product for video surveillance systems, LED displays will be better integrated into security systems and gain unprecedented development opportunities with their continuously improving display technology.
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