LP DISPLAY Initiated A Class Action Against An IC Enterprise

In the proposal, LP Display announced that it would provide legal aid of 1 million yuan to help small and medium-sized display screen enterprises jointly initiate a class action against an IC enterprise, hoping to get reasonable compensation and rights protection through this class action. LP Display this time pointed at a GEM listed IC packaging enterprise, and also made the contradiction between supply and demand in the industrial chain public, which triggered a big discussion about whether supply exceeds demand or hoarding.

This incident occurred against the background of the lack of "chip" in the industry and the price of various raw materials rising again and again. Since 2020, Huawei has been subject to the strictest sanctions and bans in the United States, which has triggered a wave of chip hoarding by domestic enterprises and led to a shortage of wafer production capacity. In addition, the epidemic led to home office, led to a hot consumer electronics market, but also increased the contradiction between supply and demand of IC and other devices. Secondly, the concentrated price rise of bulk commodities has also led to the continuous rise of various raw materials and other factors, which has led to a rare imbalance between supply and demand in the market in recent years. At present, the IC required for LED display has belonged to the "seller's market", and the market supply exceeds demand. Many enterprises report that the price of driving IC market rises too fast due to tight supply, basically one price a day. Even in cash transactions, it is difficult to get cash, and often encounter breach of contract and temporary price increase.

On the issue of why the supply of driver IC is so tight, a driver IC enterprise believes that the current shortage or price increase of driver IC is mainly caused by the shortage and price increase of wafer. Due to the strong demand for chips from new energy vehicles and 5g communication, the related production capacity of wafers has gathered in this field, squeezing the production capacity originally belonging to LED driver chips. The production cost of driver chip includes two parts: Wafer Foundry and packaging test. Driver chip has been regarded as a "chicken rib" by wafer foundry because of its low profit. Compared with other chips, the OEM price of display driver IC has always been low. At present, large automobile chip manufacturers compete for 8-inch wafer foundry capacity, which leads to wafer foundry constantly reducing the amount of LED display driver IC. In addition to the rising demand for smart electronic devices such as panels and mobile phones, the demand for wafers will remain at a high level. The short supply of driver ICs will continue for some time. At present, the gap between supply and demand is as high as 50%. The person stressed that the price rise of this round of drive IC is also a correction of the price that has been held too low in the past decade. In the face of chip "there is no price in the market", some small and medium-sized enterprises can only look at the "core" and sigh.

However, it is paradoxical that some driving IC manufacturers throw the price rise and shortage reasons to the upstream wafer enterprises. However, from the semi annual reports of some listed driving IC enterprises, we can see that the profits of the relevant enterprises have doubled or even dozens of times. Where did these huge profits come from when they increased compared with the same period last year or the year before last? The reason given by a listed IC company for the performance increase is due to the increasing market demand for LED control and driver chips, and the price continues to rise.

Many downstream display application enterprises agree with the reasonable price increase behavior, but they do not understand the frequent price increase behavior in the current drive IC market, which is often based on the shortage of wafers. Many people suspect that there is a suspicion of hoarding or price manipulation in the current market, which should be malicious speculation or illegal profits.