Top LED Industry Subsidy Rankings for the First Half of 2018: Who is the Subsidy King?
Published Time:
2021-08-03
In 2018, the LED industry saw a resurgence of government subsidies, with many companies receiving financial support. Reasons for receiving subsidies varied, including support for technological research and development, production equipment subsidies, and loan interest subsidies. As of July 2nd, according to incomplete statistics compiled by OFweek Semiconductor Lighting Network, 11 listed LED companies disclosed receiving government subsidies totaling 2.3 billion yuan in their non-recurring gains and losses statements, a significant increase compared to the same period last year.
In 2018, the LED industry saw a resurgence of subsidies, with many companies receiving government support. Reasons for receiving subsidies varied, including support for technological research and development, production equipment subsidies, and loan interest subsidies. By July 2nd, according to incomplete statistics from OFweek Semiconductor Lighting Network, 11 listed LED companies disclosed government subsidies totaling 2.3 billion yuan in their non-recurring gains and losses, a significant increase compared to the same period last year.
Overall, the amount of subsidies varied greatly, ranging from over 100 million yuan to several million. San'an Optoelectronics topped the list with 972 million yuan in government subsidies, followed by MLS with 449 million yuan, and HC Semitek with 447 million yuan. Ranked 4th to 10th were: JUCAN Optoelectronics, Qian Zhao Optoelectronics, Hongli Zhihui, Ruifeng Optoelectronics, Sanxiong Lighting, Aoyang Shun Chang, and NationStar.
Note: 1. The above data is from the subsidy announcements released by each company; 2. The ranking in the table is based on the amount of government subsidies included in the non-recurring gains and losses of 2018.
San'an Optoelectronics has long been considered the most profitable company in China's LED industry and has been labeled a "subsidy king." However, as San'an Optoelectronics has grown in recent years, its profitability has steadily increased, and the proportion of government subsidies to net profit has continued to decline. For San'an Optoelectronics, government subsidies have played a supplementary role.
A relevant person in charge of San'an Optoelectronics stated, "The company mainly engages in LED chips and compound semiconductor chips, which aligns with the direction encouraged by national industrial policies, and local governments provide significant support for the industry. In fact, the proportion of non-recurring gains and losses to net profit in the past three years has not exceeded 20%. It's not so much that we rely on government subsidies, but rather that the growth rate of our main business net profit is much greater."
As the largest LED packaging company in China, MLS has become a target for many packaging manufacturers. By July 2nd, MLS and its subsidiaries had received 449 million yuan in government subsidies. In 2017, MLS achieved operating revenue of 8.2 billion yuan, exceeding the industry average by 42.65%; net profit reached 651 million yuan, a year-on-year increase of 37.57%. Regarding the increase in revenue and net profit, MLS stated that as project production capacity is gradually released, the company's advantages in production costs and scale are beginning to be reflected.
Besides its performance, the most noteworthy event for MLS last year was its nine-month "swallowing the elephant" overseas acquisition. MLS's acquisition of Ledvance aims to strengthen its downstream product end, especially its overseas market layout. MLS can leverage Ledvance's marketing channels and brand effect, allowing MLS's high-cost-performance products to enter major global markets and become a global leader in LED lighting.
Through continuous expansion, MLS's revenue scale has increased from 4 billion yuan in 2014 to 8.2 billion yuan in 2017. However, due to production capacity relocation and expansion, management expenses and financial expenses have increased significantly, affecting the company's recent profitability.
Another major LED chip manufacturer in China, HC Semitek and its wholly-owned subsidiaries, received various government subsidies in the first half of 2018, including equipment subsidies, loan interest subsidies, and industrial development subsidies, totaling 447 million yuan, significantly boosting its net profit.
According to OFweek Semiconductor Lighting Network's review of corporate subsidy announcements, government subsidies in the first half of 2018 were directed towards the chip industry, which has higher technological barriers, and leading packaging companies. This shows that government subsidies are becoming increasingly concentrated, focusing on a few listed companies. However, for companies to achieve better development, they must improve their ability to generate their own profits, rather than relying solely on policy "red envelopes" to maintain profitability.
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