1. Mini LED Industry Chain Disassembly
The decline in pricing of new Mini LED TV terminal products is supported by the willingness of terminals and the cost reduction potential of the industry chain. For terminal TV manufacturers, the application of Mini LED backlight modules has lowered the value share of panels in TVs, reducing the impact of a single factor on terminal prices. At the same time, the gross profit margin of Mini LED TVs is significantly higher than that of traditional LCD TVs, and the maturity of the backlight module industry chain is still in a rapid rise. There is still ample room for cost reduction, and terminals have a strong willingness to promote new products; for the industry chain, the value of Mini LED backlight modules is much higher than that of traditional backlight modules, and the prosperity of terminals can be fully transmitted to all links of the industry chain. Therefore, both the industry chain and terminal manufacturers are willing to promote this "win-win situation".
2. The reuse rate of Mini LED backlight production equipment is relatively high. At this stage, the core is to find a balance between cost and performance.
Mini LED is essentially a miniaturization of LED, which is basically the same as the traditional LED production and manufacturing process, and has a high reuse rate of production lines. However, due to the smaller chip size and dot pitch, manufacturers need to improve and optimize the process and equipment. From the perspective of the industrial chain structure, it can also be divided into three links: upstream chips, midstream packaging & modules, and downstream applications. Taking the 65-inch COB Mini backlight module as an example, the cost of chips, drivers, and substrates account for 27%, 20%, and 38% of the module respectively. At present, the performance of Mini LED backlight is comparable to that of OLED and other solutions. The core problem that the industry needs to solve at this stage is to find a balance between cost and performance. To explore this problem, it is necessary to disassemble each link of the industrial chain one by one.
3. Upstream chip link
Mini LED chips have lower cutting and transfer precision requirements than Micro-LEDs, which can be achieved by optimizing the production process of traditional LED chips. Its production process can be briefly summarized as manufacturing GaN-based/GaAs-based epitaxial wafers on sapphire, SiC or silicon wafers, and then obtaining different types of LED chips through etching, cleaning and other links. Compared with traditional LEDs, the epitaxy and detection steps in the manufacturing process of Mini LED chips are more difficult, requiring equipment optimization and process improvement to work together.
4. Mini LED chip industry scale
The LED chip industry is relatively mature. According to data, the industry scale will basically fluctuate between 20 billion yuan and 23 billion yuan from 2017 to 2022, and reach 24.08 billion yuan in 2023. The scale of the Mini LED chip industry is relatively small, and it still has strong growth potential. In 2022, the output value of Mini LED chips will be about US$600 million, equivalent to about RMB 4 billion, of which TV application scenarios account for about 8% of Mini LED chips, equivalent to about RMB 320 million.
5. The concentration of LED chip manufacturing links is relatively high
Our country's LED chip manufacturing industry shipments are concentrated in 6 leading companies, namely Sanan Optoelectronics, Huacan Optoelectronics, Zhaochi Shares, Qianzhao Optoelectronics, Weilan Lithium Core and Jucan Optoelectronics, accounting for more than 88% of the total annual share. In terms of Mini LED chips, industry leaders have further expanded their layout in the Mini LED field with their first-mover advantages in equipment, capital, technology, and industry discourse power.
6. The cost of Mini LED chips has been greatly reduced, and there is still room for optimization in the future
Taking a 65-inch 1024-zone COB Mini LED light board as an example, the chip accounts for about 27% of the cost. In recent years, with the improvement of production standardization, solution maturity and product yield, the price of Mini RBG chips has continued to optimize, from about 43 yuan/thousand sets to 10 yuan/thousand sets, with a total reduction of about 75%, and an average annual reduction of 30% during the period. The industry is still exploring possible cost reduction routes, and is currently focusing on "increasing the efficiency of single chip use and improving the chip process level". Specific solutions include using high-voltage chips, adding DBR structures/point lenses to the packaging process to reduce the number of chips, and using a new generation of MOCVD machines. In summary, the proportion of Mini LED chip costs increases rapidly with the increase in the number of zones, and the further decline in chip prices is expected to make a considerable contribution to the cost reduction of backlight modules.
