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Sanan Optoelectronics nearly doubled its revenue last year, but its net profit decreased by 10%. According to its annual report last year, Sanan Optoelectronics' operating income in 2012 was 3.36 billion yuan, up 92.48% year-on-year; net profit was 810 million yuan, down 13.47% year-on-year; net profit after deducting non-recurring gains and losses was 549 million yuan, up 18.94% year-on-year.
The company has been closely watched by the government in recent years and it was not unexpected last year. Sanan Optoelectronics received a government subsidy of 328 million yuan last year, 805 million yuan in 2011, and 253 million yuan in 2010.
Over the years, the local government subsidized Sanan Optoelectronics with a large number of names, once reached 24. Among them, the two largest names are: government subsidies of 911 million yuan for MOCVD equipment procurement subsidy projects and 480 million yuan for equipment purchase subsidies of Japanese core photovoltaics. In addition, there are various subsidy items such as key new products and LED chip industrialization.
Another listed company in the LED industry, Dehao Runda, is similar to its situation. Its revenue in 2012 was 2.824 billion yuan, down 7.89% year-on-year; net profit was 168 million yuan, down 57.14% year-on-year. For the decline in performance, Dehao Runda said that an important reason was that the government subsidies that were included in the profit and loss in the fourth quarter of last year failed to meet expectations.
Dehao Runda forecasts that net profit for the first half of this year will fall by 30% to 60% year-on-year, mainly due to the combined effect of government subsidies received in January-June 2013 compared to the same period last year and the year-on-year improvement in the main business.
In the first quarter of this year, Dehao Runda said frankly that local governments gradually suspended or canceled subsidies for new equipment, and the government subsidy policy was weakened. At present, the company already has 80 sets of equipment, and the remaining equipment is still in the procurement. If the government cancels the equipment subsidy, it will greatly increase the company's input cost to the equipment. It will cause uncertainty for the company to continue to expand production capacity, which will affect the company's performance and the LED industry. The overall strategy of the layout.
Zhang Hongbiao, research director of the High-tech LED Industry Research Institute, told reporters that from the perspective of listed companies, Sanan Optoelectronics and Dehao Runda are companies that receive more government subsidies, because the previous two years have been "fried" upstream, and the local government To attract investment, subsidies are used as leverage.
Zhang Hongbiao believes that if the government subsidies of Sanan Optoelectronics and Dehao Runda are taken off, the two LED chip listed companies will basically lose money in 2011 and 2012.
Government subsidies have accelerated the rise of the LED industry in mainland China. Zhang Hongbiao said that it is difficult for LED companies in mainland China to compete with enterprises in Taiwan and other places. With subsidies, large-scale development and technology development, Chinese mainland LED companies will have competitive strength. Last year, Sanan Optoelectronics also acquired Taiwan's Yuyuan Optoelectronics.
However, government subsidies have also caused serious overcapacity of domestic LED chips. In the three years of 2009, 2010 and 2011, the domestic average has added more than 20 LED chip projects every year. At most, there are more than 80 domestic chip companies. More than 50, in 2012, more than 20 exits. Many projects have been "floating" in the early stage, and they are wasted. Overcapacity also caused LED chip prices to plummet. In the first quarter of 2012 and the first quarter of 2013, many LED listed companies continued the momentum of “increasing revenue without increasing profitsâ€.
“The government has invested a lot of waste in the past, and it has helped the industry to support the holdings.†Zhang Hongbiao said.
(This article is reproduced on the Internet. The texts and opinions expressed in this article have not been confirmed by this site, nor do they represent the position of Gaogong LED. Readers need to verify the relevant content by themselves.) 
Government subsidies have spurred the investment in domestic LED chips, causing severe overcapacity. In the face of the decline in LED chip prices and LED chip companies' performance, the government's subsidies for LED chip production equipment are decreasing this year. For the major domestic LED chips such as Sanan Optoelectronics (600703) and Dehao Runda (002005), whether it can switch from “policy engine†to “market engine†has become the biggest test.