Total production capacity for China-based LED chip makers currently exceeds demand and overcapacity is expected to continue over the next two years, according to Taiwan-based LED makers.
Overcapacity is occurring mainly because local governments had actively supported LED chip makers including subsidizing them for procurement of MOCVD equipment, the sources pointed out. Overcapacity is expected to render smaller makers subject to large competitive pressure and large makers, such as Sanan Optoelectronics and Elec-Tech International, being able to dominate the market, the sources indicated.
In view of growing demand for LED lighting, many China-based LED chip makers shifted their production focus to LED lighting applications in the first half of 2013, the sources noted. For example, Sanan had LED chips used in lighting account for 70% of its total LED chip shipments in the first half of the year and the proportion was more than 20% for HC SemiTek and about 30% for Hangzhou Silan Azure, the sources indicated. Mid-power LED chips as a percentage of LED chips used in lighting are on the rise, the sources pointed out.
Listed China-based LED chip makers generated total revenues of US$274 million for the first half of 2013, rising on year by 15.42%, while listed China-based LED packaging houses posted sales of US$355 million, an increase of 32.07%, LEDinside statistics indicated.
