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China's LED industry investment overheating occurs

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In the shadow of the financial crisis of 2008 and 2009, I believe that even ordinary people know, LED the most fire, then fire LED Why? What led to this follow the trend of the domestic local?

  Over into the LED industry, is the fancy of the industry a huge market prospects and higher margins. Leading packaging and application of domestic enterprises, the average gross margin of 40% -50%, net profit margin of 20% -30%.

LED luminous efficiency as a breakthrough product application scope has also been expanded. A cell phone screen to the 10 or so LED devices, but a need for 42-inch LCD TV is 1000 LED, LED, with its excellent performance, in addition to be applied in the lighting field, but also continuously improve the backlight in the TV area of infiltration rate. 2010, the global LED backlight rapid growth is expected to occur, is expected to demand 30 billion TV, notebook needs 6 billion, the phone needs 7 billion. “This figure, more than 2008 applications in the LCD panel 8 billion increased 4 times.

It is the prospect of seeing where the industry, and the brightest of funds pour into the LED. 3 An optical device has been the core upstream MOCVD LED units from 18 to 22 sets, 20 sets of new Tianjin item in turn; Hangzhou Silan Microelectronics also plans MOCVD 2010 increased from 6 sets of 10 units, and to expand wafer capacity doubled; BDO Runda are about 30 sets of plans for the future purchase of MOCVD.

     LED applications without risk is the core raw materials, no testing platform, patent-free, high cost, no order of the market, no standards, the final analysis, no technology, particularly non-core technology.

From the upper reaches of the epitaxial wafer and chip manufacture, the middle of the package, and then to downstream applications, technical features and capital characteristics very different, gradually reduce the barriers to entry. Upper wafer with a typical “double high” (high-tech, high capital) characteristics of the upstream chip also has a high technical content, relatively capital-intensive features, encapsulated in the technical content of middle and upper to lower capital investment, and application products technical content and the minimum capital investment.

The typical Chinese LED industry chain structure is not balanced. 2008 chip, package, and application of output ratio of 1:9:22, industrial development malformation. Overall, China’s LED business is very large, but the output is very low, not a big business. In 2004, China LED of the output can not match a Nichia. Although the past few years the development of our LED is constantly getting better, but overall the situation has not fundamentally changed.

Because no technology companies gathered in the Chinese LED industry chain downstream, the homogenization of a serious problem. In the fierce competition in the area of the downstream industry chain, a number of companies playing the “price war.” Shenzhen Quantum Optoelectronic Co., Ltd. General Manager Liu Zhen describes a small part of the business opportunities for quick results using the local governments everywhere to install all kinds of LED products with quality defects and make unfair price war, a direct result of “bad money drives out good money” emergence of the phenomenon everywhere. Chung Kwan said, LED display used to be a very good value industries, the market is still the largest in China. However, the price of China’s current display is growing, the quality requirements are getting lower and lower, the market situation is very confusing, and the price of foreign LED display is of similar products of 5 to 10 times.

Initially appear overheated investment

Industry experts generally believe that the overheating investment in China has begun to appear. Some people think that, from the current domestic market and the number of LED industry point of view, has been duplication of investment. LED industry in the state support alive, the new LED industry investment over the increasing intensity of the situation, the enterprise value of the technology or how to seize advantage of core competence, need serious consideration.

According to reports, investment projects in this year’s LED, 52% invested in the application, 37% invested in the chip industry. Source of the above investment, accounted for half of the Taiwanese capital. But Unfortunately, the mainland by huge dowry, marry a third-rate technology and Taiwan’s second-hand equipment. He also said investment in 2009, mainly concentrated in eastern China, the traditional LED industry base of Guangdong’s investment less, the future of China’s LED industry center may move northward.

It is expected ,2009-2010, LED chip scale packaging business expansion, making 2008 the surplus production capacity may be reproduced Depression scenario. He also said that the Chinese 18 provinces and cities have more than 100 crystalline silicon solar project as a “first in command”, with echoes, more than 100 cities to the local public lighting LED chips as a monopoly investment . It goes on, the National LED industry standards, product standards can not really identify and implement. Parts are stepping up development of local small standard LED, LED domestic enterprises make an issue of domestic demand will be difficult. The effectiveness of the national six policy and government investment may follow after the weak, making the market to support the continued prosperity of a problem.

Industrial concentration will increase

Currently, there are LED epitaxy and chip domestic companies more than 60, LED packaging company more than 1,000, LED application class enterprises are close to 2,000. However, the real implementation of the downstream through the company little over 100 million yuan output value of the company each year, only dozens. In industry expanded rapidly and foreign manufacturers active layout background, need to reshuffle the domestic industry.

The five major LED manufacturers, Lumileds and Cree have been satisfied with the monopoly of chip and wafer, but through a series of acquisitions in the industry chain from upstream to downstream and application development, and through a combination of patented products, and enhance brand . Concern is that companies such as Philips and Cree, through equity participation, M & traditional lighting companies, etc., and actively develop the Chinese market, domestic enterprises will face even greater pressure of competition.