Tianbao: Taiwan glue seeks a path of mutation

[Source: LED Engineering's "good LED products," May issue of the magazine reporter / Zhu Chunwei With 2012 annual capacity expansion slowing, since the LED industry since the fourth quarter of 2012 into the traditional off-season, off-season is not short of showing situation. However, at the beginning of 2013, the overall industry's recovery trend was obvious, and the major listed companies' earnings in the first quarter showed profits. LED glue is one of the necessary materials for the packaging process, and its demand has also risen, and the shipments of various factories have obviously improved.

According to the research report of the High-tech LED Industry Research Institute (GLII), due to the rapid growth of the domestic LED packaging market, the demand for LED packaging glue market has also maintained a rapid growth trend. In 2012, the total output value of LED packaging glue in China was 3.5-4 billion yuan. It is expected that the demand for LED packaging glue in the domestic market will increase by more than 60% in the next two years.

Front and rear pinch

The price of upstream raw materials has risen, and the prices of downstream packaged devices have been declining, resulting in shrinking profit margins for LED glue. At the same time that LED glue sales have risen, the price decline is very obvious, especially for non-first-line brand products.

Taking packaged silica gel as an example, the statistics of the High-tech LED Industry Research Institute (GLII) show that the market size of LED packaged silica gel in China in 2012 reached 1.1 billion yuan, a year-on-year increase of 22.3%. Compared with the same period of last year, the LED packaging silicone industry showed a trend of increasing price and price. In 2012, the output of LED packaging silicone products increased by 60.6% compared with 2011. In 2012, the price of LED packaging silicone products decreased by 23.7% compared with 2011.

“Our high-yield silicone monthly sales have been flat with some foreign major manufacturers, with more than 3 tons per month, and low-profile silicones have remained at 6-7 tons/month. Currently, sales in mainland China are very hot, 10 times that of Taiwan. More than 100 customers are shipped stably every month. Except for traditional Taiwanese package manufacturers, many packaging companies in mainland China are also using our products." Taiwan Tianbao Co., Ltd. (hereinafter referred to as "Taiwan Tianbao") Sales Director of the Mainland China Gu Jincheng said, “I am very optimistic about the mainland market. While guaranteeing the excellent quality of the products, the price of the products is quite superior to that of the US and Japanese companies. For example, the solid crystal silica gel, our price is 25 yuan / gram. The same type of Japanese Shin-Etsu products are more than 60 yuan / gram."

As the LED industry continues to heat up, LED glue is also welcoming the sales season, and various price wars have also started. The international first-line silicone enterprise still wins with quality and brand. The market price of Dow Corning silica gel is 5000-6000 yuan/kg, Xinyue is 7000 yuan/kg, and the price of domestic silica gel is maintained at 500-1000 yuan, which is represented by Taiwan Tianbao. The price of silicone in Taiwanese manufacturers is around 2,500 yuan / kg, and the price advantage is quite obvious.

Due to the long time of entering the Chinese mainland market, the first-line brands such as Dow Corning and Japan Shin-Etsu have strong advantages in technology and brand, and the product range is complete, firmly occupying the high-end glue market, and the product price has been stable; domestic glue is powerful. The price and geographical advantage have always focused on the domestic low-end market; while the glue in Taiwan is popular in the mid-end market with its quality advantage.

Gu Jincheng uses the "three pillars" to describe the current LED glue market, and Taiwanese companies are constantly facing attacks from international and mainland Chinese manufacturers.

“Taking the high-profile 1.53 product that we are most welcome now, the market price is only 2,500 yuan/kg, which is 40%-50% lower than the previous two years. This is mainly the price pressure from domestic glue. Gu Jincheng pointed out that packaging and shipping costs are the biggest additional cost to Taiwanese companies compared to the cost structure of continental glue.

Despite this, most of the glue companies in Taiwan still choose to set up their factories in Taiwan instead of the mainland closer to the market, mainly considering the quality assurance of local production. According to the ECFA agreement signed by China and Taiwan, the implementation of the agreed tax rate on some products in Taiwan has also reduced the cost pressure for Taiwanese companies to enter the mainland market.

Unfinished , please refer to the May issue of Gaogong LED 's " LED Good Products" magazine.

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