Indoor LED lighting demand showed strong growth in first-half 2013 causing product shortages, hence some China-based LED firms may restart capacity expansions, according to industry sources.
China-based LED firms stated that LED lighting market demand has been growing surprisingly fast in China in first-half 2013 and shortages have been appearing for medium-power LED indoor lighting products including light bulbs, light tubes, and embedded lighting. Industry sources estimate the China LED lighting market will grow 50% in 2013.
Rising demand has been stimulating firms to restart capacity expansion. In particular, Sanan Optoelectronics has received CNY5 billion (US$815 million) from China Development Bank. The firm announced plans for a capital injection of CNY3.3 billion at the end of May of which CNY2.8 billion will be used to procure new MOCVD equipment for its plant in Wuhu, China. Recently, Sanan in Xiamen announced plans to add 20 new equipment sets with CNY100 million in subsidies provided by the local government.
Taiwan-based LED firms stated that the market is still in oversupply, and although some products have been experiencing shortages, restarting capacity expansion may cause another crisis in the industry.
In the past, the LED lighting technologies of China-based firms were significantly behind their Taiwan-based peers. However, the technologies and products exhibited by China-based firms at the Guangzhou International Lighting Exhibition 2013 (GILE 2013) were not far off compared to Taiwan-based peers, showing rising competitiveness.
China's LED industry suffered from oversupply and price competition in 2012. The industry was concerned about unclear LED lighting policies as well. Hence, firms halted capacity expansion plans for 2013. But since the first quarter, local governments in China such as Guangdong, Fujian, Jiangxi, and Shanghai have announced new projects and subsidy programs.
