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Overview of China's LED chip industry
Jessie Lin, DIGITIMES Research, Taipei [Thursday 24 November 2011]
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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
China LED chip industry Output value, 2008-2013 (CNYm)

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.

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