Dehaurunda has announced the closure of its LED chip factory and aims to complete processing of its chip manufacturing business in the third quarter of 2019.
Announcement shows that bdo, held on July 9, 2019, the sixth session of the 14th meeting of the board of directors by examining the authorized management to promote the close on the LED chip plant related matters relating to the bill, approved company management in the fourth quarter of 2018 related work of dealing with the LED chip business and agreed to shut down the LED chip plant, authorization management to promote the implementation at the same time.
Dehaorunda said that in 2009, the company began to lay out the LED chip business, through the merger and acquisition of peer companies, non-public issuance of shares, own funds, bank loans and other ways of LED chip investment.
After years of development, the company has formed industrial bases in dalian, wuhu and bengbu.
In the past two years, the market environment of the domestic LED chip industry has undergone great changes.
The rapid release of new production capacity leads to the continuous overcapacity of LED chips, further driving the continuous decline of LED chip prices, and the situation accelerated in the third quarter of 2018.
On the other hand, due to the impact of trade friction, the macro-economic environment has become more uncertain since 2018. The downstream application end of LED has been affected by the regulation and purchase restriction of real estate, and the saturation of automobile, smartphone, TV and other consumer markets. As a result, the market demand for LED chips has been greatly reduced and the industry growth has been sluggish.
In the face of the LED chip adverse change at the ends of the demand and supply, the company's LED chip products are advanced technical indicators, the advantages of the flip chip segments leading, but limited in finance LED to new capacity input point behind rivals, and the scale of production capacity, customers and new market development, and other aspects is far behind the main competitor, the company LED chip products unit cost is higher, LED chip market share is low, the scale effect is not obvious, the business management is not ideal.
In fact, dehaurunda is considering closing its LED chip factory by the end of 2018.
According to the announcement, considering the objective factors, the financing capacity of the company and the pressure of the continuous operation of various businesses, dehaorenda predicts that even if the price of LED chips rebound and improve the short-term performance in the short term, if the long-term financing capacity is not restored and the follow-up capital investment is not available, it will be difficult for the LED chip business to maintain normal operation.
As a result, the company's management drew up plans to close the LED chip factory in December 2018.
Based on the business situation in 2019, the management of the company recommends that the board of directors approve and authorize the management to handle the chip manufacturing business as soon as possible through "shutdown and transfer" as planned, and strive to complete the business in the third quarter of 2019.
Deharenda said closing the LED chip plant would cause potential losses to employees in the short term in terms of expenses, inventory and asset disposal.
However, in the long run, it is conducive to reducing the pressure on the company's overall business performance, relieving the company's long-term investment in LED chips, ensuring that the company has more resources to develop other business segments, and helping to bring the company's overall business back to the normal track.