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>> LED display companies' profits fell in the first three quarters, why do companies increase their income without increasing profits? 30th,Oct,2019
The arrival of October is accompanied by the performance reports of the major companies in the first three quarters. The company judges and analyzes the industry trends throughout the year based on the performance report, providing a data foundation for the company's next year's layout plan. According to the report, the major companies in the first three quarters showed a general decline in profits, and the increase in revenue did not increase the trend, compared with the previous year's industry trend is not ideal. Investors pay attention to the income, LED display companies began to analyze the reasons for the increase in income, and began to adjust the corresponding development plan.
LED display companies' profits fell in the first three quarters, why do companies increase their income without increasing profits?
Overcapacity, subsidies shrinking, rising costs become the heaviest camel straw
There is a saying in China that "something is the last straw to crush the camel." In other words, the last straw is a direct factor in crushing the camel, but any straw on the camel's back is not innocent. This year, the increase in revenue in China's LED display industry is not due to the impact of many factors. In addition to the price war, the entire LED display industry chain, including overcapacity, shrinking subsidies, and rising costs, has also become one of the camel straws with falling profits. The upstream wafers and package supply chain, due to the price increase in previous years, the company's crazy expansion has led to a serious overcapacity. Therefore, since the beginning of last year, the price of chips and lamps has been falling, and some manufacturers have even fallen below the cost price. There is no profit at all. At the same time, the raw material of the wafer did not fall, but the price of the wafer was rising all the way. The upstream enterprises were double-scoring, and the profit in the first three quarters fell sharply.
In the downstream display enterprise, the conventional display market is saturated; and in recent years, the small-distance display of the sharp-increasing device, due to the maturity of technology and market, many companies are pouring into the small-pitch industry, leading to a small-pitch display industry. Increase the play. The price reduction of upstream wafers has added cost to the competition of small-pitch enterprises, so even if the demand for small-pitch is still rising, it can not compensate for the profit margin caused by the decline in small-pitch prices. The emerging technologies represented by mini-LED and micro-LED are in a relatively embarrassing position. Although the technology has gradually matured, the relevant market has still not formed. It may gradually emerge or even mature from the market after two or three years, but can the enterprise bear the cost in the middle time? In addition, although the price of upstream wafers has declined, the increase in operating costs, such as labor rents, caused by rising prices has added to the burden of corporate profits. Although the market has sunk to third- and fourth-tier cities, the professionalism of local practitioners is far less than that of first-tier cities. Therefore, the requirements for LED displays are not high, and the price and durability are their focus. The low demand creates a big opportunity for low-end manufacturers, so lower-priced manufacturers may reverse the market.
In addition, due to the country's vigorous development of high-tech, the subsidies to enterprises are more precise. Judging from the subsidies of the LED display industry this year, even the upstream chip manufacturers have received subsidies that are much lower than the same period last year, which has led to further reduction in corporate profitability. Due to the inability to integrate production and assembly, the company has been subjected to the combined effects of upstream pressure, dual pressure on downstream pressure, cost pressure and subsidy contraction, resulting in a slight decline in corporate profits and a gradual slowdown in corporate development.
Overseas markets and added value are profitable places
Enterprises do not increase profits, but in fact, the market is highly mature. Due to the rapid development of China's LED display screen in the past decade, the market is highly mature. The domestic market is mature, and the market in more than 200 countries and regions is still to be developed. Compared with European and American countries, the price is low, the quantity is large, and the shipment is fast. It is the advantage of China's LED display. The mature small-pitch technology is the biggest trump card of China's LED display enterprises, and use these advantages to cover up the potential of stealing the bell. Leading markets in Southeast Asia, Africa and South America will enhance the company's profitability and expand its global influence. In addition, after-sales service is a major shortcoming of China's LED screen enterprises, so companies can also improve the added value of products from the aspects of improving pre-sales service and after-sales service. Of course, it is important to do a good job in product quality and strengthen the research and development of core technologies. The core technology is the strong market competitiveness and the profitability of large enterprises.
Conclusion:
The decline in profits and the increase in profits of enterprises do not increase profits, causing concern among many companies. However, this phenomenon is good or bad. It depends on the status quo of the enterprise itself and the long-term development of the future. It is carefully analyzed, and the situation is tailored to suit the company's own development plan. The most important thing is that the company's own positive response, the industry trend is changing instantaneously, the wind is fleeting, so instead of lamenting the time, it is better to move now, actively respond, and promote the positive development of enterprises.
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