China's LED supply chain will pose a threat to the world after 2015

Light-emitting diodes (LEDs) are very hot in China. According to iSuppli, although the Chinese LED market is still very young, the Chinese government is investing heavily in this technology.

Compared with the United States and Taiwan, Chinese mainland LED manufacturers are relatively backward in terms of technical capabilities and lack experienced management teams and R&D engineers. Mainland China also lacks intellectual property (IP) in core and upstream sectors, such as MOCVD equipment and LED wafers. However, Chinese LED manufacturers can get sufficient funds from the government, and this advantage allows them to seize the huge LED final demand in China in the near future.

To encourage companies to invest in the LED market, local governments in China provide an average of at least 70% or $1.5 million in subsidies for each MOCVD equipment purchase. In addition, local governments provide tax and utility bills.

iSuppli's optimistic forecast shows that from 2010 to 2012, the annual LED-related investment will reach 3.5 billion US dollars, indicating that China's LED supply chain will pose a threat to global industry after 2015.

In addition, with government support and LEDs increasingly entering new applications such as LCD TVs and general lighting, iSuppli predicts that China's LED revenue will reach $7.1 billion in 2014, compared with $3.4 billion in 2009, a compound annual growth. The rate is 12.8%. Ultra-high-brightness (UHB) LEDs are growing at a faster rate, and sales will rise from $686 million in 2010 to $1.8 billion in 2014, a compound annual growth rate of 26.9%.

The figure below shows iSuppli's forecast of China's LED market in 2009-2014, broken down by type.


LED market dispersion

The Chinese LED market covers a wide range of applications, including LED displays, street lights, general lighting, traffic signals, cell phone keypads and digital camera flashes, as well as backlights for large LCD TVs, notebooks and other displays. In summary, China's LCD backlight market will grow strongly. In 2014, sales will increase from US$468 million in 2010 to US$1.2 billion, with a compound annual growth rate of 25.7%.

In addition to the many applications of LEDs, general lighting will be a long-term new demand driver. In view of the global emission reduction trend, the demand for LEDs in the general lighting market will also increase. LEDs have low power consumption and are environmentally friendly. iSuppli estimates that LED shipments in the general lighting market will account for 18.4% of the total LED market in 2010.

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