The LED industry is boosting its upstream sector to achieve self-sufficiency.
Accelerated LED development is driving China to pursue the localization of its upstream sector to boost self-sufficiency and strengthen the industry. Advanced wafer and chip technology remains a drawback as domestic enterprises continue to rely on foreign technology, particularly for the latter component.
|More than 60 makers produce LED chips in China.|
To address this, local governments have revised the stimulus program covering the acquisition of MOCVD machines, which are key to diode chip manufacture. Initially, they extended a subsidy of about $1.2 million to $1.5 million per unit to reduce LED companies’ equipment costs substantially, encourage procurement and therefore increase available domestic capacity.
Beginning this year, however, the scheme will be terminated. For Yangzhou, Jiangsu province, the withdrawal will be in July. The overall objective is to encourage homegrown enterprises to venture into MOCVD production, which in turn will minimize LED costs. China hopes to realize manufacture of large-scale units by 2015. In terms of chip turnout, this translates to about 70 percent localization.
Until the goal is reached, lower tax rates, accelerated depreciation and free land will continue to be offered as support for companies importing MOCVD equipment. From purchases planned in the next few years, installed units are expected to surpass 1,200. By end-2011, the number will be between 700 and 800, from about 330 in 2010. At present, the supply of the machines is dominated by Aixtron and Veeco.
Spurring these efforts are upbeat projections placing China’s LED industry scale at $75 billion by 2015, or a 42 percent CAGR surge amid rising demand from backlighting and lighting devices. Last year, this was at about $18.7 billion. In terms of share, epitaxial chips have 70 percent, and packaging and application 10 to 20 percent each.
At present, China has more than 3,000 LED suppliers, with 2,000 in applications, 600 in packaging and more than 60 in wafer epitaxial and chip. Over 85 percent of them are based in the Pearl River and Yangtze River Delta regions, northern area and Min Delta.
The line is among the strategic emerging segments listed by the State Council and has become a hotspot for investment.
One of the booming LED applications is displays, with forecasts of $3.5 billion in sales by 2013 or double the level reached two years ago. The annual rate of increase surpasses 15 percent, according to the China Electronics News.
Makers in the segment attribute this development to wide adoption in past and upcoming world events held in China. These include the 2008 Olympic Games in Beijing, the 2010 World Expo in Shanghai and the Asian Games in Guangzhou, Guangdong province, and the Universiade this year. Suppliers are also counting on the positive effect of buoyant prospects for the line globally, with further product exposure in the 2012 Olympic Games and the 2014 FIFA World Cup.
Full-color variants, in particular, are expected to lead with annual sales growth of about 30 percent in 2010-13 based on statistics from the China Electronic Components Association. By the end of the period, this will touch nearly $2.8 billion, representing 78 percent of the country’s total for LED displays.
The type has the advantages of high brightness and vivid color, in addition to low power consumption. For these attributes, LED displays are replacing neon light counterparts in various indoor and outdoor installations, including those used in advertising, stadiums and other public places.
At Nanjing Lopu Co. Ltd, the line represents more than 80 percent of revenue. The supplier is one of the major sources of LED displays used in the 2008 Olympic Games and 2010 World Expo. Dalian Luming Light Co. Ltd is among the makers that have released variants with IPR. As a showcase, it installed a 3,700sqm curtain unit in Dalian, Liaoning province. Said to be the largest in Asia, the model boasts HD and transparency, and resistance to elevated temperatures. It uses locally sourced LED chips.
To strengthen competitiveness, local manufacturers will continue with R&D efforts. This year, enhanced luminous efficiency and stability, low power dissipation and long operating life are the objectives.
Note: This article "China preparing for full localization of LED manufacture" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.
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