Trade Resources Industry Views The Oversupply in The Overall LED Market Is Likely to Continue

The Oversupply in The Overall LED Market Is Likely to Continue

Due to rising demand for LED products from the handsets and lighting sectors, market research institutes predict the global LED market output value will reach US$12.4 billion in 2013, representing an on-year growth of 12%. However, the oversupply in the overall LED market is likely to continue.

The penetration rate of LED lighting is expected to increase rapidly in 2013. Due to falling product prices, maturing technology, and increasing recognition of LED lighting products by consumers, many traditional lighting firms began to adopt LED light sources for new products. Industry observers believe in the next two years, commercialization of LED lighting products in the lighting market will expand rapidly and widely into all lighting categories.

China's government recently announced plans to increase the semicondcuctor lighting market output value to CNY450 billion (US$72 million). Accroding to market research institutes, the penetration rate of LED tubes and spot lighting is likely to exceed 30% in China in 2013 and at the same time, the sales of LED lighting may reach CNY1 billion. However, the oversupply condition means firms are unlikely to see profits.

In recent years, the number of LED epitaxial wafer firms in China grew rapidly due to financial support from the government. Market research institutes believe in the next few years, there will be less than 30 LED epitaxial firms in China. In addition, despite strong efforts, China-based MOCVD equipment makers are unlikely to benefit as capacity utilization rate of downstream firms has been low, and hence capacity expansion plans are limited.

Despite the current oversupply market condition, China continues to invest in the LED industry, causing rising inventories. Therefore, to compete, China-based LED players are likely to continue lowering product prices.

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China LED Industry Continues to Expand Despite Oversupply
Topics: Lighting