Trade Resources Industry Views China LED Industry Recovering

China LED Industry Recovering

As demand for LED end devices has resumed growth amid shortages of LED chip supply, China's LED makers have recently begun expanding their capacities and local governments are also planning new subsidy and investment programs to assist the makers, according to sources from the upstream supply chain.

The government of Nanchang in China's Jiangxi Province has recently announced its new investment projects and China-based LED makers including Shenzhen MTC and Shineon are set to establish over 1,000 new production lines for their LED packaging and module manufacturing. MTC is also expected to cross into the upstream LED chip manufacturing business.

In 2009, China's local governments also offered subsidies to encourage local LED firms' developments. But the funds were cut sharply after the firms had over-invested in capacity expansion and resulted in oversupply in the market.

However, beginning the first half of 2017, several China-based LED firms have received subsidies from their local governments. Sanan Optoelectronics has received a CNY100 million (US$15.02 million) subsidy from its local government; HC Semitek has obtained CNY50 million from the science park in Zhejiang; and Hongli Zhihui Group has been given a total of CNY30 million by the Jiangxi government.

MTC has announced a partnership with the Nanchang government for the local government to invest CNY700 million in the new LED packaging plants but will hold no more than a 50% stake in the new plants. The capacity expansion will mainly target backlight and lighting applications and will add 1,000 new packaging production lines.

MTC also plans to invest CNY1.5-1.6 billion to establish new plants for LED chip manufacturing in Nanchang.

Shineon has also announced to invest CNY2 billion to establish 300 LED packaging and module production lines.

With the new investments in Nanchang plus capacity expansion projects from China's first-tier LED players including Forest Lighting and Foshan NationStar Optoelectronics, China's presence in worldwide LED lighting and LED backlight markets is expected to grow even larger.

Although non-China-based first-tier LED packaging service providers such as Nichia still has a large share in China's LED packaging market, over 60% of China's LED packaging output was contributed by China-based players in 2016.

Since China's LED backlight product prices have been rather unstable recently, Taiwan-based LED chip maker Epistar has turned to focus on special specification products such as CSP for new LCD TV models to be launched by Korea- or some China-based vendors. In the third quarter, Epistar's CSP LED shipments are also expected to rise to 40-50 million units, doubling the volume in the same quarter from a year ago.

Contribute Copyright Policy
Topics: Lighting