LED chips produced by China’s manufacturers and led enterprises can generally be divided into two types: 1. cheap but low performance. Mainly used as backlight of keyboards, children’s toys, shoes, and power indicators; 2. good quality LED chips used in high-end products. Normally, manufactures produce this type of LED chips would co-operate with large foreign companies. Currently, the soared increasing of China’s LED chip production led to the global market overcapacity. Dropping prices of LED chips is inevitable.
In recent years, governments all around the world made great efforts to support the LED industry, subsidized related infrastructure, improved the efficiency of LED chips, drove the penetration in emerging markets, established special funds to develop industry standards, etc. The goal is attracting more LED manufacturers to invest and build factories.
The Chinese Government is undoubtedly the most hard-working government in the world that in the promoting of LED lighting technology. On one hand, every domestic manufacturer that invested the new epitaxial reactors could get a 1.5 million USD from the government, which has occupied nearly 75% of the total cost. On the other hand, the government expected a rapid development of every LED manufacturer and provided low-interest loans, tax breaks and ultra-low prices of land rent (or even free) for new-born LED manufactures. It can be said that the substantial support of the Chinese Government that indirectly the surge of China’s LED chip production and accordingly the overcapacity crisis in the global lighting market.
Ross Young, senior vice president of IMS Research indicated that “All of these LED chip makers can benefit from the growth of LED equipment investment. A large amount of Chinese LED companies have declared to enter the sapphire market (a typical LED chip material). They must have seen the opportunities and huge potentials behind the market.” Among these enterprises, a large part is successful poly-silicon manufacturers with potential advantages in the development of sapphire substrates. As for the organic metal, gas sources and MOCVD equipments, China’s LED chip manufacturers still relied on overseas imports. Mr. Young also indicated that applied materials companies have handed over the first set of MOCVD to the Chinese Government. Korea epitaxy reactor vendor Jusung started to target the Chinese market due to the falling of domestic sales. Meanwhile, Taiyo Nippon Sanso from Japan also turned to the Chinese market.