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Jessie Lin, DIGITIMES Research, Taipei [Thursday 24 November 2011]
Thanks to a MOCVD subsidy programs, China is the global center of MOCVD equipment demand, accounting for 57% of shipments in 2011, helping the local LED industry gradually improve its global standing. However, the country's LED chip manufacturers remain an extremely mixed bag in terms of competitiveness. The 12th FYP aims to remedy this situation by consolidating the industry into a handful of serious competitors, namely Sanan, Electech, Tsinghua Tongfang, Silan Azure, Epilight and Changelight. Abstract 
The global LED industry was less buoyant in 2011 than in 2010, and there has been a corresponding slowdown in the deployment of new MOCVD machines. Digitimes Research projects that global MOCVD shipments for 2011 will reach 690 units, a 14% drop on the 800-unit figure for 2010.
Nevertheless, China will account for a greater share of this demand than any other region in 2011 with some 57% of shipments. The next three regions by MOCVD demand - Taiwan, Japan and South Korea - will each account for less than 10% of global demand. It is therefore clear that the importance of the China LED industry on the global stage is increasing.
While China is scaling back its subsidy policies for MOCVD units, the country's enormous MOCVD capacity is likely to drive growth in LED chip output value in the coming years. Digitimes Research projects that LED chip output value in China will reach CNY13.0b (US$2.05b) in 2012 and CNY18.25b in 2013, representing tenfold growth over the 2008 figure.
Thanks to its MOCVD subsidy programs, not only is China the global center of MOCVD equipment demand, but the country's LED industry has also gradually improved its global standing. However, the country's LED chip manufacturers remain an extremely mixed bag in terms of competitiveness. The 12th FYP aims to remedy this situation by consolidating this disparate range of companies into a handful of serious competitors, in order to put the China industry on a par with those of Europe, North America and Japan, which each boast two or three major manufacturers.
For the reasons outlined above, in particular smaller players' plans to sell off MOCVD capacity to larger manufacturers, Digitimes Research projects that the China LED chip industry will become increasingly concentrated in the hands of the big six manufacturers: Sanan, Electech, Tsinghua Tongfang, Silan Azure, Epilight and Changelight. More and more smaller manufacturers in China are withdrawing from the LED chip sector altogether and selling off their MOCVD capacity to larger, more stable firm. Digitimes Research therefore projects that the level of concentration in the China LED chip industry will continue to increase, rising to 57% by 2013.
Table of contents The China LED chip industry China's share of global MOCVD capacity Chart 1: Global shipments of MOCVD units for LEDs, 2006 -2011 Chart 2: Distribution of MOCVD units by geographic region, 2011 Distribution of MOCVD capacity for China's LED manufacturers Table 1: Major China-based LED chip manufacturers' MOCVD unit delivery status in 2011 Output value forecasts for the China LED chip industry Chart 3: Output value of China's LED chip industry, 2008-2013 (CNYm) Chart 4: LED chips as a percentage of overall LED industry output value in China, 2008-2013 (CNYm) Policy objectives for LED chips in the 12th Five Year Plan Table 2: Government policies and targets for the LED industry in China Competitiveness of China's major LED chip manufacturers Financial situation Chart 5: Distribution of revenues and operating profits for China's major LED chip makers, 2010-2011 Chart 6: Distribution of revenues and operating profit margins for China's major LED chip makers, 2010 and 2011 Capacity Chart 7: Total number of MOCVD units for China's major LED chip makers, 2010-2011 R&D and technology Table 3: Comparison of the technical capabilities of China's major LED chip makers Industry presence Table 4: Industry presence for China's major LED chip manufacturers Output value forecasts and concentration analysis for China's major LED chip makers Chart 8: Total output value for China's big six LED chip makers, 2008-2013 (CNYm) Chart 9: Big six LED chip manufacturers' share of the China LED chip industry, 2008-2013 Sanan Optoelectronics Financial analysis Revenues and structure Chart 10: Sanan's revenues, 2009-1H11 ( CNYm) Chart 11: Breakdown of Sanan's revenues, 1H11 Profitability Chart 12: Sanan's operating profits, 2009-3Q11 (CNYm) Subsidies Chart 13: Government assistance to Sanan in 1H11 MOCVD capacity Chart 14: Breakdown of Sanan's production capacity Industry presence Chart 15: Sanan's LED industry presence R&D and technical capabilities Development of LED technology Chart 16: Sanan's development of LED technology Chart 17: Global LED chip output value by region and Sanan's share of China LED chip output value Talent development plans Chart 18: Bottlenecks in Sanan's development in the LED sector Chart 19: Sanan's talent development plans Conclusion Electech (ETi) Financial analysis Revenues and structure Chart 20: Breakdown of Electech's revenues for 1H11 Chart 21: Electech's revenues and the proportion accounted for by the LED business unit, 2009-1H2011 (CNYm) Profitability Chart 22: Electech's overall margins and LED business margins, 2009-1H11 (CNYm) Subsidies and the structure of associated projects Chart 23: Government subsidies received by Electech in 1H11 (CNYm) MOCVD capacity Chart 24: Electech's MOCVD equipment orders and delivery status Industry presence Chart 25: Electech's LED-related fundraising activities, 1H11 Chart 26: The Electech Group's presence in the LED industry Chart 27: Electech's LED product categories for 2011 R&D and technical capabilities Chart 28: Origin of the Electech Group's LED-related technologies LED patents Chart 29: Electech's LED patents in 2011 Conclusion Tsinghua Tongfang (Tongfang) Financial analysis Revenues, structure and profitability Chart 30: Breakdown of Tongfang's revenues for 1H11 Chart 31: Revenue performance for Tongfang's semiconductor and lighting business unit, 2008-2011 (CNYm) Breakdown of invest in the Nantong LED production center Chart 32: Funding and technology involved in Phase I of Tongfang's Nantong investment Breakdown of LED business revenues in 2011 Chart 33: Breakdown of revenues from Tongfang's LED business MOCVD capacity Chart 34: Distribtion of Tongfang's MOCVD capacity Industry presence China Chart 35: Tongfang's LED industry presence in China Global presence Chart 36: Tongfang's global LED industry presence Downstream application products Chart 37: Tonghua's LED product range in 2011 Chart 38: Tongfang capacity for LED TV and lighting products R&D and technical capabilities Chart 39: Tongfang's development of LED technology, 2008-2011 Conclusion Silan Azure Financial analysis Chart 40: Silan Azure's revenues, 2009-1H2011 (CNYm) Chart 41: Silan Azure's margin rates, 2008-3Q11 MOCVD capacity Chart 42: Silan Azure 2011 MOCVD capacity by vendor Chart 43: Silan Azure's expansion of MOCVD capacity Industry presence Chart 44: Silan Azure's presence in the LED industry Table 5: The business of Silan Azure's package subsidiary Multi-Color Chart 45: Breakdown of Multicolor's LED package product types Distribution of R&D personnel Chart 46: Distribution of Silan Azure's human resources Conclusion Epilight Technology (Epilight) Financial analysis Chart 47: Epilight's major shareholders in 2011 Chart 48: Epilight's revenues and net profits, 2007-2010 (CNYm) MOCVD capacity Chart 49: Epilight's production bases and capacity distribution Industry presence Chart 50: Epilight's LED industry presence R&D and technical capabilities Chart 51: Epilight development of LED technology Conclusion Changelight Financial analysis Chart 52: Changelight revenues and operating profits, 3Q10-2Q11 (CNYm) Chart 53: Distribution of Changelight's revenues, 1H11 MOCVD capacity Chart 54: Government subsides received by Changelight, 2009-2010 Chart 55: Changelight's MOCVD unit orders and delivery status up to 2012 R&D and technical capabilities Chart 56: Changelight's R&D expenditure, 2008-2010 (CNYm) Chart 57: Changelight core technologies Conclusion
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