HC SEMITEK(SZ:300323)2022-12-03 09:48Group 1: Industry Overview - The overall LED industry maintains a good level of prosperity, with specific segments like small-pitch LED, visible light, automotive lighting, and landscape lighting showing high demand. The penetration rate of general LED lighting is steadily increasing, with an expected growth of 10% or more in downstream demand over the next three years [2]. - The actual released capacity in the LED chip supply chain is more optimistic than previously anticipated [2]. Group 2: Company Performance and Products - Huacan Optoelectronics has already begun mass shipments of Mini LED in Q1 2018 [2]. - The company is the primary supplier for major brands in consumer electronics, such as Microsoft's Surface and OPPO, with sales in the hundreds of millions [2]. - The sales proportion of mid-to-high-end products for Huacan Optoelectronics is approximately 70%-80% [3]. Group 3: Financial Insights - The gross profit margin for LED chips remains relatively stable, benefiting from a decrease in raw material costs, such as PSS and sapphire [3]. - Inventory levels are stable, maintained at 1-2 months, with downstream customer inventory also not being high [3]. Group 4: Market Challenges and Opportunities - The impact of the US-China trade issues on the company's products is minimal, as exports of LED chips to overseas markets are negligible [4]. - The company is currently in the research and environmental assessment phase for a significant investment project of 10.8 billion, with potential project launches expected in 3-4 quarters after board and shareholder approval [4]. Group 5: Future Directions - The company plans to gradually expand into new areas such as gyroscopes and flow meters to generate profits [2]. - The timeline for specific project implementations is projected to span 5-7 years, depending on market and R&D needs [4].