Analyzing the Chinese LED Industry And LED Investment

LED is a popular word in recent years, people talks a lot about this one. Of course, many enterprises invested large amount

capital in this industry. Some succeed, some failed. Here we again talk about LED, especially LED in China. Maybe you can find

some useful information here.

China LED Industry Demands Thoroughly Integration………………………………………………………………….2

The Factors fetter China LED Lighting Industry Development…………………………………………………….3

LED investment should be treated rational…………………………………………………………………………….4

Editor: lyn

Company: Arkelectronics

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China LED Industry Demands Thoroughly Integration

On 17th March, 2010, Toshiba group declared to stop normal bulb production, which means that incandescent lamp products,

used as a Toshiba's "money-making machine" through the 120 years of glorious experience, finally withdrew from the stage of

history. Subsequently, the transnational giant announced that it would sweep into the Chinese LED lighting market.

In fact, Toshiba is just an epitome of global blustery LED lighting market. The data showed that, the value of China LED lighting

industry production in 2010 would reach more than 15 million Yuan. “By 2015, LED share in China lighting market will reach

20%, promoting industrial scale up to 50 million Yuan." WuChangjiang, the chairman of The largest energy-saving lamps

manufacture enterprise - Leishi lighting, said.

Yes, for the thousands of domestic lighting enterprises, the LED illumination seems to already become the rays to meet beautiful

world, especially when most of these lighting enterprises were trapped in the mud pond. However, in fact final victory does not

belong to the first technology inventor, but to the success followers in business model. For a new technique for, how to cultivate

market is the most important.

In January, LED international procurement trading center, which located in Shenzhen CKK, was putting into operation. It is the

first domestic large LED trade market, where more than 60 home LED display, lighting enterprise entered. More than a year ago,

the relevant government department launched "ten city million lamp" pilot project, namely 10 to 20 cities promote more than 30

million LED municipal illumination luminaries in 2010.

How popular is LED lighting? "Only the 2008 Beijing Olympic Games brought 50 billion Yuan of business opportunities to LED

lighting industry. Shanghai World Expo invested in LED lighting put up to 10 million Yuan; in Guangzhou Asia Games, we

provided more than 80 project lighting scheme design, and more than 1000 lighting products, supplied million sets."

WuChangjiang introduced.

For illumination enterprises, it is undoubtedly a great gold field. On 24th July, the government announced the timetable- “10

million incandescent light should be replaced by the same amount energy-saving lamps in three years ".”The government is

promoting energy-saving lighting, which will let the whole industry into the shuffle period. Industrial upgrading is imminent."

WuChangjiang said. And the prediction from experts in the country is that, if we popularize the use of 12 million energy-saving

lamps, one year may save 852 million degrees which is equal to annual energy output of Three Gorges hydropower station, the

equivalent of 34 million tons of coal.

Corresponding with domestic lighting enterprise, LED lighting transnational giants also began to take action. Osram announced

to set LED chips product-line in Huizhou; Japan Nichia also plans to build plants in mainland, and expand LED lighting line; LG

Innotek will invest exceed $100 million in Huizhou, which used for led sealing, backlighting and lighting applications. It is said

that the project is the first investment of global 10-billion-dollar-LED-project in the LG Innotek.

2010 is the first year for LED industrialization. Since last December, after the Copenhagen climate conference, European

countries increased the consumer efforts for energy conservation and environmental protection products in different degrees. For

example, Italy subsidy rate is as high as 55%. Namely, with sales documents in accordance with the price, the government gives

consumers subsidies 55% of directly. Our government is also in the use of subsidies form to support lamps and promotion. This

year the number of subsidies is about 150 million. And in the lighting industry, energy-saving sales growth rate increased 20%.

It is reported that China energy-saving output is approximately 35 million this year, which means 80 percent of the world

energy-saving lights are produced by China, 60% is exported abroad. Energy-saving lamps in China are in short supply.

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The Factors fetter China LED Lighting Industry Development

At present our country LED industry still faces many

difficulties, and even has been formed shackles of

restricting industry sustainable development.

Commercialization Popularizing is Difficult

The price of LED lighting products was too high. Since

the chips in LED products accounted for 30 percent of

the cost or even higher, and LED chips mainly rely on

imports, the price is relatively high, which caused the

same light brightness LED lighting products prices are

so high. So it has no larger attract force to average

consumer.

Products Lack of Benchmarking Brand

China LED industry enterprise are numerous. They

already had made much progress. However, the whole

enterprise scale is generally small and lack of leading

enterprises. As most LED products manufacturers gave

their research and development and main modulesto

vendors, LED admittance threshold reduced, market

competition became intensed. At present there are

1950 packaging companies, while all kinds enterprises

launched fewer than 530 pieces new LED application

products. There are More than 300 LED streetlamp

enterprises, but the products are basically in a stage of

copying from each other. lack of benchmarking brand

and credibility put the construction of independent

brand on the agenda

Investment Boom Will Trigger a Glut

Because of 2010 World Expo and the Asian Games,

"ten city million lamp" policy, LED market demand

soared. Many cities treated LED industry as backbone

industry, which gave the domestic market of LED an

optimistic prospect. The process of domestic and

overseas investment merge and integrating upstream

and downstream enterprise accelerated. The enter of

traditional lighting enterprise, state-owned capital, folk

capital made industry investment boom. Take the

extension of upstream slice production key equipment

MOCVD for example, imported equipments installed in

factory reached 300 sets in 2010, and in three years

imports of national plan exceed 1000 sets, which is ten

times more than in 2008. Without scientific

decision-making and rational planning to LED industry

layout, introducing MOCVD key equipment in

large-scale, can lead to outbreak of low-end microchip

capacity. LED industry in China may repeat the failure

of 2008, 2009 polysilicon boom.

Lack of Key Technologies And Core Patent

Patent technology is an important approach for major

global LED manufacturers to gain competitive

advantage and maintain market share. The constitution

of Domestic LED patent technology was not perfect.

Most of the upstream patents were controlled by foreign

manufacturers, 80% high-end chips are from abroad or

Taiwan. So the domestic enterprise cannot extends to

high-end profit plate. Due to a lack of original rational

patent, the product exports was prevented by patent.

Foreign LED enterprises dominated the market by

advanced research technology and good brand image.

Domestic LED enterprises face how to further improve

the technology, and construct their own patent defense.

Industrial Technology Development Faster

The healthy development of LED industry, cannot leave

the relevant technology and product standards. But the

rapid development of the emerging industry technology

brings the problem of detection technology and

standards features. At present the product, which lacks

a complete industry standards and the intermingle of

good and bad quality, greatly dampened market

confidence and enthusiasm. On the other hand,

government think highly of the LED industry. They

promoted a product using demonstration, which formed

the situation that the standardization and quality

evaluation means lag in technology development and

application of the market. How to alleviate

contradictions and break the bottleneck is not only

standardized research work of new topic, but also is the

technology of quality supervision within the confines of

the new service.

To sum up, our LED industry facing fronts needs

breakthrough from industrial development strategy. This

is because the LED industry besides having new

industry characteristics, also involving semiconductor

and traditional electric light source domain. Its

development process has inner laws.

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LED investment should be treated rational

Influenced by energy conservation and emissions reduction, LED, the new environmental protection energy

conservation industry in China's development showed a flourishing prospect in recent years. LED’s application in

various aspects such as the streetlights, interior decoration, stage, landscape and lighting become more extensive,

especially in the landscape lighting and lamp lighting applications. With the push of its energy conservation and

bottom access standards and policies of the government, it became the highlight of investors to value LED market. But

it is said that supply chain of domestic LED enterprises is still in the low side of the market. It’s now in a situation that

backward in technology, the scale chaos, and market space is lesser, less profit. Therefore, all the new round of

investment boom should be treated rational.

There are reports of LED lighting industry development in China. It has made the unfavorable factors analysis, as

follows:

1 Commercialization popularizing is difficult due to LED price

2 Products are lack of benchmarking brand

3 Lack of key technologies and core patent

4 Investment boom will trigger a glut

5 Industrial technology development faster than standard and detection means

These all investors should understand before in preparation for investment. In addition, market area is also an

important aspect should be carefully analysed before investment .

In view of the domestic enterprise in LED field at the current stage, displayed by low scientific research and technology

level, standard, as well as the low end market situation of industrial chain, copycat investment will only cause market

chaos and representation of foam phantom. But also because it is in the initial stage in the development of the industry,

whether technology or market, has very big development space. So, for the LED lighting industry investment boom,

everybody should be rational.

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