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China’s Booming LED Market sees MOCVD Tool Demand Surge

The ‘Global and China LED Industry Report 2009-2010’ says that the LED market has expanded from US$7 billion in 2009 to US$10.7 billion in 2010 and is expected to reach US$20.4 billion in 2012.

Global and China have published the ‘LED Industry Report 2009-2010’ which analyzes the LED market in China over the last several years and also provides future projections.

It is not unusual that LEDs are currently the most popular investment topic in the electronic field. Take the MOCVD equipment of LED upstream as an example. The estimated shipment of MOCVD equipment in 2010 is expected to reach 662. This is equivalent to the sum total of the previous three years, and promisingly, 2011 will maintain or even exceed this.

The unit selling price of MOCVD equipment is about US$1-2 million, and the Chinese government offers a maximum subsidy of 50%. Consequently, there is an upsurge of LED investment and a boom in MOCVD purchases in China.

In 2010, the quantity of MOCVD equipment registered with National Development and Reform Commission (NDRC) alone was nearly 700, and some manufacturers have even purchased directly instead of waiting for the subsidy of NDRC.

In China, the MOCVD equipment market has so far been almost completely monopolized by German firm, Aixtron and American company, Veeco. However, the output capacities of both companies are limited, so some orders have been arranged for as late as 2012.

The LED market made a great leap in the second half of 2009. The application of LED backlights by notebooks surged from 15% at the end of 2008 to approximately 60%, and is expected to hit 88%, or 98% according to the prediction of some institutions, by the end of 2010.

The application of LED backlights by LCD TV manufacturers increased from 0.01% at the end of 2008 to 10% in the second half of 2009. It is expected to reach 27% by the end of 2010. Similarly, the application of LED backlights by LCD display producers grew from 0.01% at the end of 2008 to 5%.

The LED market has expanded dramatically, from US$7 billion in 2009 to US$10.7 billion in 2010, which is a growth rate unreachable, says the report, by any other electronic product. Along with growing LED brightness and falling prices, the share of LED in general lighting field is expected to be increased greatly; the general lighting market is of huge potential with the market size reaching US$100 billion. Promisingly, the LED market can reach US$20.4 billion in 2012.

The global LED market falls into three camps.

The 1st camp is represented by Japan, Europe & America. It possesses high-class technologies, abundant patents and has been dedicated to the UHB-LED field for many years, aiming at both general lighting and automotive lighting markets. The global Top 5 LED giants all belong to this camp. These are Nichia, Toyoda Gosei, Lumileds, Cree and Osram. Other companies in this camp include Toshiba, Panasonic and Sharp. Japanese enterprises give a little attention to the LED in the backlight of consumer electronics, while European and American enterprises show no interest at all.

Manufacturers in South Korea and Taiwan form the 2nd camp. With integrated consumer electronics industry chain and interest in the LED for the backlight of consumer electronics, they are experiencing high-speed growth despite the gap with European and American enterprises in technology.

The manufacturers in the Chinese Mainland belong to the 3rd camp. These small firms are scattered, and use low level technologies. For example, there are not more than 5 packaging plants in South Korea, while in the Chinese Mainland, there are nearly 1,000. Many of these deal with resin packaging requiring minimal technology and only a few are engaged in more sophisticated SMD packaging. The annual revenue of all these manufacturers fails to reach that of Everlight, the leading enterprise in Taiwan.

There are also large discrepancies between Everlight and South Korean manufacturers. The technologies possessed by manufacturers in the Chinese Mainland are low-level and many of the manufacturers produce quaternionic green/yellow LEDs. These are mainly applied in outdoor landscape, decoration or advertisements.

Mainland China is the world’s largest production base of consumer electronics, but the purchasing rights are centralized in the hands of Taiwanese and South Korean manufacturers. As a result, the mainland manufacturers can only see the rapid development of the LED market in consumer electronics field but cannot benefit from it. As for the general lighting field, it is more beyond their reach due to their primitive technologies.

The mainland manufacturers cannot share the high-growth LED market, but they have the highest investment enthusiasm and so LED projects start up everywhere.

Large quantities of MOCVD equipment have been bought in and the LED project in Wuhu alone needs more than 200 sets of MOCVD equipment. A single set of MOCVD equipment possesses over 2,000 parameters, so, it is not so easy to produce qualified products. In addition, there are numerous thresholds for LED patents, and lack of vigilance could cause trouble with infringements. Some enterprises, especially Nichia, are never bored with patent lawsuits.
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