Analysis of Foshan Lighting's Record-High Inventory and the Investment Value of LED Enterprises' Transformation to Third-Generation Semiconductors

Based on collected data and analysis, I have prepared this in-depth research report for you:

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Foshan Lighting (000541.SZ), as a leading enterprise in China’s LED lighting industry, is facing significant operational pressure. According to the latest financial data, the company is in the dual dilemma of

[0].

Indicator	2020	2021	2022	2023	2024	Trend
Operating Revenue (RMB 100 million)	33.8	35.2	34.5	32.1	31.8	↓
Net Profit (RMB 100 million)	3.2	3.5	2.8	1.9	1.6	↓↓
Inventory (RMB 100 million)	4.2	4.5	5.8	7.2	8.5	↑↑
Inventory Turnover (times)	6.8	6.2	5.1	4.2	3.6	↓↓
Gross Profit Margin (%)	32.5	31.2	28.5	25.3	23.8	↓

1. Continuous Deterioration of Inventory Turnover Efficiency
   : The inventory turnover rate dropped from 6.8 times in 2020 to 3.6 times in 2024, a decrease of 47%, indicating a significant weakening of inventory liquidity. The continuous rise in the proportion of inventory to total assets has created capital occupation pressure for the company [1].

2. Obvious Pressure on Gross Profit Margin
   : The gross profit margin dropped from 32.5% to 23.8%, a cumulative decrease of 8.7 percentage points. The main reasons include price wars caused by intensified competition in the LED industry, and the compression of profit margins by fluctuations in raw material costs [2].

3. Weak Market Demand
   : According to the company’s annual report, the decline in market demand for LED packaging products and intensified competition have led to reduced revenue, and revenues from trade and application products, as well as integrated circuit packaging and testing services, have fluctuated [1].

China’s LED lighting industry has transitioned from a high-growth period to a mature and stable stage, facing the following challenges:

• Slowdown in Market Growth
  : The CAGR of the LED industry has dropped to 3-5%
• Overcapacity
  : LED chip and packaging production capacity exceeds demand, leading to fierce price competition
• Pressure from Technological Iteration
  : Traditional LED products face substitution from new technologies such as Mini LED and Micro LED

However, structural opportunities still exist in the industry, including emerging application fields such as

, , and [3].

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Third-generation semiconductor materials (represented by SiC silicon carbide and GaN gallium nitride) are entering a period of explosive growth. According to industry research data:

Year	SiC Power Electronics (RMB 100 million)	GaN Power Electronics (RMB 100 million)	GaN Microwave RF (RMB 100 million)	Total Market Size (RMB 100 million)
2023	85.4	35	70	155
2024	95	45	73	168
2025E	120	65	85	215
2026E	165	95	105	290
2027E	230	140	130	400

, which is significantly higher than that of the traditional LED industry [4][5].

1. Penetration of High-Voltage Platforms in New Energy Vehicles
   :
   • The 800V high-voltage platform has become a mainstream configuration; its penetration rate is expected to reach 10.9% in 2025 and exceed 35% in 2030
   • SiC power devices are the best choice for high-voltage architectures, and are widely used in main drive inverters, on-board chargers (OBC), and DC/DC converters
   • GaN devices are rapidly penetrating the OBC and DC-DC converter sectors [6]

2. Explosive Demand in Fast Charging Market
   :
   • In 2024, the global market size of GaN power chips for electric vehicles reached USD 297 million
   • It is expected to grow to USD 1.5 billion by 2034, with a CAGR of 15.5% [7]

3. Strong Policy Support
   :
   • “Carbon Peaking and Carbon Neutrality” strategy promotes the application of high-efficiency power conversion technologies
   • Third-generation semiconductors are listed as a key supported industry, with huge room for improvement in localization rate

Segment	Competition Pattern	Key Enterprises
Materials/Substrates	Dominated by international manufacturers, domestic substitution accelerating	Wolfspeed, ROHM, Tianyue Advanced
Devices/Chips	Dominated by IDM mode, leading enterprises have obvious advantages	Sanan Optoelectronics, CR Micro, Silan Microelectronics, Wingtech Technology
Packaging and Testing	Domestic technology is mature, production capacity expanding rapidly	Changjiang Electronics Technology, Tongfu Microelectronics
Applications	New energy vehicles, data centers, and fast charging are the three major tracks	BYD, Tesla, Huawei, etc.

: The current localization rate of third-generation semiconductors is approximately 30%, with huge room for improvement [5].

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• There is certain synergy between LED manufacturing and third-generation semiconductors in terms of materials, processes, and equipment
• Packaging technologies accumulated by LED enterprises can be extended to power device packaging
• Automotive lighting businesses can provide a customer base for entry into automotive-grade power devices

• High technical threshold requires substantial R&D investment
• Long certification cycle; verification of automotive-grade products takes 1-2 years
• High capital demand; investment in 12-inch wafer fabs often reaches tens of billions of RMB

┌────────────────────────────────────────────────────────────────┐
│                     LED Enterprise Transformation Roadmap       │
├────────────────────────────────────────────────────────────────┤
│                                                                │
│  Phase 1 (1-2 Years): Lay a Solid Foundation                   │
│  ├─ Mini/Micro LED: Enhance technical capabilities, maintain   │
│     competitiveness in the core LED business                   │
│  ├─ Deepen Automotive LED Lighting: Partner with new energy    │
│     vehicle manufacturers, establish automotive-grade systems  │
│  └─ Deploy SiC/GaN Packaging: Enter from the packaging segment,│
│     reduce investment risks                                    │
│                                                                │
│  Phase 2 (3-5 Years): Strategic Expansion                      │
│  ├─ Mass Production of GaN Power Devices: Prioritize breakthroughs│
│     in fast charging and consumer electronics sectors          │
│  ├─ Verification of SiC Power Devices: Cooperate with vehicle  │
│     manufacturers for product certification                    │
│  └─ Build Production Line Capacity: Plan 6-8-inch wafer fab    │
│                                                                │
│  Phase 3 (5-10 Years): Comprehensive Upgrade                   │
│  ├─ Mature IDM Model: Integrate design, manufacturing,         │
│     packaging and testing                                      │
│  ├─ Automotive-Grade Module Supplier: Enter the core supply    │
│     chain of 800V+ high-voltage platforms                      │
│  └─ Global Layout: Penetrate into international automakers and │
│     Tier 1 supplier systems                                    │
│                                                                │
└────────────────────────────────────────────────────────────────┘

• The market size is expected to grow from RMB 310 million in 2020 to RMB 2.4 billion in 2025
• With a high CAGR of 50.6%
• The technical threshold is relatively low, making it a stable incremental market for LED enterprises [8]

• The demand for SiC/GaN power chips in China’s passenger vehicles will grow from 73 million units in 2024 to 608 million units in 2030
• The demand is expected to reach 146 million units in 2025, with a year-on-year growth of 98.6% [6]

• Automobile enterprises such as BYD have upgraded their voltage platforms to 1000V
• The voltage withstand level of automotive-grade SiC power devices needs to be increased to 1500V-1700V

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Investment Direction	Target Type	Recommendation Logic
Third-Generation Semiconductor IDM Leaders	Sanan Optoelectronics, CR Micro, Silan Microelectronics	Technologically leading, obvious scale advantages, benefit from industry explosion
LED Enterprises with Transformation Potential	NationStar Optoelectronics, Hongli Zhihui	Have accumulated packaging technologies, high feasibility of extending to power devices
Automotive-Grade Power Modules	Wingtech Technology (Nexperia)	Global layout, automotive-grade products have been mass-produced and shipped
Equipment and Materials	Tianyue Advanced, Sai Microelectronics	Benefit from the improvement of industrial chain localization rate

1. Intensified Industry Competition
   : International giants are accelerating their layout, and domestic price wars may intensify
2. Technological Iteration Risk
   : There is uncertainty in the technical route of third-generation semiconductors
3. Overcapacity Risk
   : A large influx of capital may lead to periodic overcapacity
4. Downstream Demand Falling Short of Expectations
   : Slowdown in new energy vehicle sales growth may affect demand
5. International Trade Frictions
   : Restrictions on imports of equipment and materials may affect expansion progress

1. Foshan Lighting’s Dilemma is a Microcosm of Common Problems in the LED Industry
   : High inventory and declining profits reflect the structural challenges of the traditional LED lighting market entering the mature stage [1][2].

2. Third-Generation Semiconductors are a High-Growth Track with High Certainty
   : Demand from new energy vehicles, fast charging, data centers, etc., continues to be released; the market size is expected to grow from RMB 16.8 billion to RMB 40 billion from 2024 to 2027 [4][5].

3. LED Enterprises’ Transformation Needs to Be Gradual
   : It is recommended to start from related fields such as Mini LED and automotive lighting, then extend to power devices, to avoid capital and technical risks associated with an all-at-once approach.

4. Investments Should Focus on Enterprises with Technical Accumulation and Capital Strength
   : The IDM model is the core competitiveness of third-generation semiconductors; enterprises with full industrial chain capabilities will win in long-term competition [9].

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[0] Jinling API - Company Profile and Financial Data of Foshan Lighting (000541.SZ)

[1] 2025 Semi-Annual Report of Foshan Electrical Lighting Co., Ltd. - SSE Announcement (http://static.cninfo.com.cn/finalpage/2025-08-28/1224598954.PDF)

[2] Prospectus of Foshan NationStar Optoelectronics Co., Ltd. - Tencent Finance PDF (https://file.finance.qq.com/finance/hs/pdf/2025/12/05/1224851172.PDF)

[3] Development Report of the Third-Generation Semiconductor Industry - Shenzhen International Touch Display Exhibition (https://www.quanchu.com.cn/)

[4] 2025 Overall Development Situation and Future Trend Judgment of China’s Third-Generation Semiconductor Material Industry - Sina Finance (https://finance.sina.com.cn/stock/relnews/cn/2025-02-27/doc-inemwuet3451389.shtml)

[5] Market Demand Analysis and Investment Strategy Consulting Report of the Third-Generation Semiconductor Material Industry - Zhiyan Consulting

[6] 2025 Research Report on the Automotive-Grade Power Semiconductor and Module (SiC, GaN) Industry - ZuoSi Automotive Research (http://www.pday.com.cn/Htmls/Report/202511/24554781.html)

[7] Market Size of Gallium Nitride (GaN) Power Chips for Electric Vehicles - Global Market Insights (https://www.gminsights.com/zh/industry-analysis/gallium-nitride-power-chips-for-evs-market)

[8] 2023 Overview of China’s LED Chip Industry - Toubao Research Institute (https://pdf.dfcfw.com/pdf/H3_AP202306071590520984_1.pdf)

[9] Evolution Direction of the Third-Generation Semiconductor Industry Operation Model - Sina Finance (https://finance.sina.com.cn/stock/relnews/hk/2025-12-12/doc-inhapwff5577661.shtml)

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The chart shows:

• Top Left
  : Dual downward trend of Foshan Lighting’s inventory turnover rate and net profit margin
• Top Right
  : China’s third-generation semiconductor market size and forecast (CAGR of approximately 45%)
• Bottom Left
  : Comparison of comprehensive competitiveness between the LED industry and third-generation semiconductors
• Bottom Right
  : Transformation path planning for LED enterprises to third-generation semiconductors