China’s 12th Five Year Plan took effect in 2011 and renewed the country’s commitment to LED and SSL technologies. While the massive MOCVD spending of 2010/2011 has significantly declined, China remains the leading region in manufacturing investments.
China will be the largest market for LED fab equipment in 2013 with projected spending of $667 million, approximately 40% of the total worldwide spending and almost double Japan’s spending, the second largest region. In 2011, China spent over $1.2 billion on led bulbs manufacturer equipment.
China’s generous national and local subsidy programs behind the massive industry development (China now has 82 LED fabs, up from only 16 in 2006) have all but disappeared, but the country remains committed to developing all sectors of the LED industry.
China is a major consumer of LEDs in signage, mobile displays, TVs, and lighting that utilize low and mid-power LEDs that Chinese suppliers specialize in. Energy conservation through SSL is a national priority.
Most observers predict a consolidation of the China LED industry, with perhaps one of two companies emerging as global powerhouses. While much of China’s LED capacity is dormant, in transition or reliant on older technology, companies such as SanAn and ETi will invest new and upgraded manufacturing technology over the next two years.
Industry structure implications
Another troublesome aspect of the LED industry led distributor is that nearly 70% of the LED market is supplied by only ten companies, most of whom are directly involved in manufacturing lighting systems. Increasingly, the LED components may be seen as loss leaders offering little incentive for manufacturing investments.
With falling average selling prices (ASPs), soft demand, vertically-integrated customers, and increasing supply of quality products from China and elsewhere, the outlook for continued LED manufacturing investments will be limited for the foreseeable future.
Strategies in Light
Tom Morrow will be providing a keynote address during the Manufacturing Track at the Strategies in Light (SIL) conference on February 12, 2013. SEMI members can receive a special discount rate with a saving of up to $200 to attend the Manufacturing Track. Register for SIL with the promo code “SEMI”.
SEMI HB-LED Standards
Following Strategies in Light, the North American HB-LED Led Spot committee and its task forces will meet in conjunction with the NA Standards Spring 2013 meetings (April 1-4) in San Jose, California. For more information and to register for these meetings, please visit the SEMI Standards website.
This article is presented courtesy of the SEMI organization and originally appeared on the SEMI website.
