Following the boom in expansion of the Chinese LED market in 2011, many industry insiders and analysts speculated on whether the Chinese would be able to sustain the growth, or if many companies simply ordered an excessive amount of MOCVD reactors just to benefit from government subsidies. The failure of many of the companies was widely predicted. So, what’s happening in the China LED industry after three years?
According to a new IHS report on the Chinese LED market, China’s LED die production revenues will grow 36.6% to reach $1,475 million and packaged LEDs will grow 14.8% to reach $4,812 million in 2014. Sanan, the largest Chinese LED company with a more than 30% share of die production in China, is actually expanding capacity. Its second phase project in Wuhu is still going ahead this year, leading to the addition of new tools. Epistar, its largest rival will be directly competing this year to see who will be the world leader for total wafer capacity. MLS was estimated to be the largest Chinese packaged LED company in 2013 with slightly more than 9% market share among thousands of other Chinese competitors.
Lighting is the major driving force for the China LED market growth from 2013 to 2014 and is forecast to exceed 50% share of all applications in 2014. The acceptance of LED replacement T-lamps, the falling cost of LED lamps generally, the continued economic growth, and the phasing out of incandescent A-lamps are all factors that are increasing the penetration rate of LED lamps in China.
The backlight market also grew significantly from 2012 to 2013 - by 74% in LED die. High growth is expected to continue in 2014 due to Chinese companies’ technology improvements to replace imported products from Taiwan and Korea.
Although the Chinese domestic market is huge, international sales of most Chinese LED companies remain fairly low. However, they are catching up quickly. Larger companies are developing their own brands and IHS expects these suppliers to increase their presence in international markets in the near future.