Unilumin Technology: Driver ICs are in short supply and prices may continue to rise in the future

Recently, Zhouming Technology stated in an institutional survey that since the fourth quarter of last year, some upstream raw materials have seen price increases. The magnitude and frequency of price increases increased in the first half of this year. The company only began to gradually increase its shipping prices in the second quarter, especially since June when costs were fully passed on. However, some raw materials were in short supply, and the stocking cycle was shortened. Revenue was confirmed from orders placed in the first quarter to shipments in the second quarter, and the lack of synchronization between order prices and replenishment prices of raw materials resulted in some orders being unprofitable or even loss-making.

Overall, driver ICs are still in short supply. Through the strategic layout of raw material supply in the second quarter, the price increase of upstream raw materials has gradually recovered. The prices of some products that rose too high before have slightly adjusted back and are currently stabilizing. However, the company is still expanding production and preparing a large number of reserve orders for shipment. Our expectations for driver ICs are still relatively conservative, and we do not rule out the possibility that prices will continue to rise in the future, which is uncertain.

In terms of Mini LED display screens, this year Unilumin Technology released a new generation of UMini display products - UMiniⅡ. Unilumin UMiniⅡP0.7, P0.9, and P1.2 have achieved mass production conditions and will be widely used in 4K, 8K, and ultra-8K displays in industries such as high-end commercial displays, smart control rooms, high-definition studios, educational and medical screens, home theaters, and high-end retail stores. In the first half of 2021, the company's expanded 5 Mini LED production lines have begun production, and the company's Mini LED display industry base will gradually go into production in the second half of the year to further support the company's Mini LED market sales.

At the same time, Unilumin Technology's Daya Bay Phase II project is expected to officially launch the production ceremony this month and gradually realize capacity ramp-up. The product planning is mainly based on Mini LED. According to the company's overall capacity planning, some small-pitch capacity will be expanded. In the short term, small-pitch still accounts for more than half of the display application market, and the annual growth rate is 27%. This year's Mini LED capacity planning is mainly to meet the company's planned sales of 400-500 million yuan, and will be gradually increased according to market demand. The total output value of the second phase of the project is about 12 billion yuan, which will meet the development needs in the next three years.

Regarding orders and shipments, Unilumin Technology said that in the first half of the year, the company received a total of 4.67 billion yuan in new orders, a year-on-year increase of 135%. Among them, overseas orders were 1.6 billion yuan and domestic orders were 3.07 billion yuan. In the second quarter, orders were 2.6 billion yuan, a year-on-year increase of 152% and a quarter-on-quarter increase of 25.6%. In the first half of the year, Unilumin Technology shipped a total of 2.95 billion yuan, a year-on-year increase of 86%. In the second quarter, shipments were 1.75 billion yuan, a year-on-year increase of 80% and a quarter-on-quarter increase of 45.8%. 

Unilumin Technology believes that the record-breaking order and shipment data in the first half of the year have driven the company's operating revenue to grow significantly, fully verifying that the company's strategic measures to seize market share are effective. Once the supply chain returns to normal in the future, the company will fully enjoy the benefits of a larger market share.