Continuously falling prices, unstable subsidies, and low demand in Europe have been causing China-based LED firms to face financial troubles. The LED industry continues to suffer with oversupply. Many LED firms in China have been said to face production suspension or bankruptcy in 2011.
The latest firm to face financial woes is Shenzhen Hiboled Photoelectricity. The firm is said to owe a large sum to suppliers and has been in salary disputes with employees.
According to China-based industry sources, in 2011, there were more than 100 LED firms in China each with more than CNY100 million (US$16 million) in capital. In first-half 2012, due to weak economies in Europe and the US, and China banks reducing loans, more than 200 LED display makers suspended production.
LED makers noted that LED display makers need to maintain a gross margin above 20%. The recent price drop caused the average gross margin in 2012 to be only 15% and this induced many LED display makers to turn to lighting applications. Furthermore, local government subsidies have yet to be finalized due to the change of leadership in China in the second half of 2012.
China-based industry sources added that government projects tend to have low prices making firms reluctant to participate.
