By Daniel QI, SEMI China
General Lighting is a Key Growth Driver
As a result of cost reduction and performance improvements, LED lighting is becoming more and more competitive in general lighting market. Energy-efficient fluorescent lamps (like CFL) productions have experienced growing and stabilizing stages in recent years; however, energy-efficient fluorescent lamp production is now facing a significant decline in 2014 as LED lighting products represent a faster growing segment of this market. SEMI China believes that the general lighting market will replace the LCD TV backlight market as the largest application market for LEDs in 2014, and general lighting market will continue to drive the LED industry over the next several years.
China’s LED Fab Industry Is Consolidating and Recovering
Due to overly optimistic expectations for future market growth and opportunities, coupled with many local governments providing subsidies for MOCVD equipment procurement, China’s LED fab industry entered into a hyper-growth period between 2010 and 2011, resulting in 76 LED fabs being established by the end of 2011. Many of these companies struggled given challenges in ramping up and with over-supply in the market. Fab capacity utilization lagged for many companies.
Following this post hyper growth period, fab utilization eventually recovered and improved throughout 2013, reaching about 90% by first quarter in 2014 (see next figure). Two key reasons are evident for improved capacity utilization. First, as previously mentioned, demand in general lighting application has increased. Second, China’s LED fabs have undergone consolidation since 2012. Consolidation occurred as some of LED fabs went bankrupt or exited the industry entirely, thus mitigating oversupply in the China market. These bankrupted or former LED fabs are not included in the utilization statistics shown in the figure below.
China LED Fab Industry Expansion Plan
There has been very limited news of LED fab expansions over the previous two years, but the situation has changed as a number of China’s LED companies have announced new fab projects and/or expansion plans in 2014. SEMI believes that over the next three to four years upstream LED manufacturers in China will enter robust era of growth. Unlike 2010 and 2011, this expansion round will be dominated by leading manufacturers, not new entrants. Also, the total increase in MOCVD tool quantity in 2014 and 2015 will be from just six companies and will account 74% of the total quantity of MOCVD tools installed in China. It is expected that the number of new MOCVD tools installed will exceed 1,000 from 2014 to 2018.
The New Edition of China LED Fab Industry Report
SEMI China has recently published a new report of China’s LED Fab Industry in October 2014.This report covers: the LED lighting market, global LED fab capacity forecast, China’s LED fab industry utilization statistics, a listing of all of China’s LED fabs, LED fab expansion plans by supplier, China MOCVD tool market analysis and forecast, China GaN epitaxial wafer capacity statistics, and LED forecast by wafer size.
For more information, please contact Daniel QI: [email protected]