Ultra-high-definition TV drives demand to explode LED industry chain will take off again

On March 1, 2019, the Ministry of Industry and Information Technology, the State Administration of Radio and Television, and the Central Radio and Television Station jointly issued the "Ultra HD Video Industry Development Action Plan (2019-2022)". The "Action Plan" clearly will vigorously promote the development of the ultra-high-definition video industry and the application in related fields in accordance with the overall technical route of "4K first, taking into account 8K". In 2022, the overall scale of my country's ultra-high-definition video industry will exceed 4 trillion yuan, the 4K industry ecosystem will be basically perfect, and breakthroughs will be made in the research and development and industrialization of 8K key technology products, forming a group of internationally competitive companies.

According to the goal of the action plan, 4K TV sales will account for 40% of the total TV sales in 2020, 4K high-definition TV will be popularized in 2022, and 8K will account for more than 5%. Huachuang Securities believes that this will drive the popularity of Mini-LED backlights in the TV market. According to the current global annual sales of 250 million TVs, the global penetration rate of 4K TVs will reach more than 70% by 2022, corresponding to 175 million 4K TV sales.

According to the calculation of Huachuang Securities, each 2-inch LED chip can supply 2.5 4K TVs, and 175 million 4K TVs need to consume 70 million 2-inch epitaxial wafers, which is equivalent to 5.8 million pieces/month. With 60% of the production capacity and the demand for Mini-LED backlights from other LCD panels such as monitors, Huachuang Securities expects the demand for LED chips to double.

      In addition, Huachuang Securities also pointed out that with the increasing volume of Mini-LED backlight, it will drive the rapid maturity of Mini-LED chip technology, and the RGB Mini-LED display will also rapidly increase in volume, driving a greater demand for LED chips. According to the global annual sales of 1 million Mini-LEDRGB large-screen/super-sized TVs, the corresponding LED epitaxial wafer demand is 25 million pieces/month, which is 2.5 times the current domestic output of 10 million LED epitaxial wafers.

Huachuang Securities is optimistic about the huge demand and investment opportunities brought by the "Ultra HD Video Industry Development Action Plan (2019-2022)" to the LED industry. The relevant expected beneficiaries are: Mini-LED chips - Sanan Optoelectronics, Huacan Optoelectronics; Mini-LED packaging - National Star Optoelectronics, Ruifeng Optoelectronics, Dongshan Precision; RGB Mini-LED display - Unilumin Technology, Absen, Leyard.