LED high bay chip industry has a very high technical threshold. The scarcity of professional LED technicians restricted the further development of domestic LED chip manufacturers. Relevant departments proposed solutions on this issue: an industrial reconstruction is necessary. Just like what happened in Taiwan ten years ago, there may be 6-7 enterprises can be survived at last. Those who cannot produce high quality products will be inevitably eliminated.

 

More than 80% high power LED STREET LIGHT chips are expected to be improved by introducing advanced foreign technology. Our LED chip industry developed from 1995. In 1998, there are only three domestic LED chip manufacturers. Nine in 1999. From 1999 to 2009, about 2-7 companies would enter this industry each year. Currently, there are more than 100 LED chip manufactures in China. They have different focuses. For instance, Sanan Optoelectronics produces chips for low power LED lighting applications and display products, ChangLight only makes chips for outdoor LED landscape lighting applications, and AquaLite is a specialized manufacturers for red-yellow LED chips.

At present, many domestic LED companies have their own LED chip technology in low power LED field. But their high-power high-light-intensity LED technology cannot keep path with international level. More than 80% high power LED chips still relied on import. High power LED chips require much better materials. Take the cooling section for instance: high power LED lighting products generate more heat than low power LED lighting products does. Materials with lower thermal conductivity will cause LED chips work in high temperatures, consequently leading to light degeneration and work life reduction. In addition, high power LED chips have other technological difficulties: the secondary optics design and the power supplier design. However, patent problem has become a main obstacle for domestic LED chip manufacturers. All evidence so far suggests foreign rivals are trying to restrict our development in high power LED industry. Low power LED application market has saturated, while high power LED market is not yet. They attempted to control the entire market though controlling LED chips manufacturing technique. This further explains why Chinese LED chip companies need to own independent LED chip technologies. In consideration of currently technological resources and technician resources in China, without the help of government, it is very difficult for Chinese LED chip manufacturers to produce their own chips.

“Since January, the price of LED STREET LIGHT chips dropped by 20%, while demand was less than our expected. Many enterprises faced with tremendous pressure. We had to adjust our strategy repeatedly.” Said Zhou Zheng, regional manager of Philip Advance in China. Chinese LED chips market has already saturated, plus the recent financial crisis, chip giants are struggling, not to mention small and medium sized domestic LED chip manufacturers. “We do not expect profits, we just want to survive. We are suffering financial crises, if we can survive this period of time, we may see the dawn” said Mr. Zheng. According to sources, many chip enterprises canceled their new products promoting plans, and temporarily turn their attention to other electrical products market. This is not to say that they gave up the LED lighting market. In fact, it is a kind of retreat for the sake of advancing. They save their power for later use.

Unbearable burden gave birth to the reconstruction of domestic LED chip manufacturers.

LED chip companies from America, Korea and Taiwan have successively entered Chinese LED lighting market. As for LED chip manufacturers, competitions are always international. Currently, there are more than 100 domestic LED chip companies, in which Sanan Optoelectronics, ChangLight, Inspur and AquaLite are relatively large chip enterprises in China. However, compare with overseas rivals, they are still far behind. “We need the support of government, both in technological aspect and in commercial aspect. China is the largest LED factory in the world, more than 70% LED applications produced and exported here every year. We should control this market. ” said Xiangyi Hu, marketing manager of Sanan Optoelectronics. Some experts raised objections. “Technology is not the key point to survival. There are two main factors for enterprises to win this battle: product quality and cost.”

In 2007, Chinese LED chip industry output reached 4 billion yuan, increased 100%! But in 2011, the average growth rate is only 10%. In 2008, the total sales of Chinese top ten LED chip companies is over 2.7 billion yuan, accounting for nearly 70% of the annual LED chip industry output. Even now these old LED chip giants still can guarantee stable annual sales of 100 million yuan. Competitions from foreign companies did not cause great pressure to them. But small and medium sized domestic LED chip manufacturers were not so lucky. This attack can say a catastrophe for them.

Overseas LED chip companies followed the LED tide, joining into the fierce competition in Chinese LED lighting market one by one. LED chip prices will be reduced again. It is the third price dropping of LED street light chips within past five years. How domestic LED chip manufacturers cope with such serious situation?

 

Taiwan chip giant landed on China

At present, our LED chip industry still in the stage of developing. More and more LED enterprises start to co-operate with domestic LED chip manufacturers or set up their own chip manufacturing departments. But, Chinese currently used LED chip technologies are all borrowed from foreign chip companies. Lacking of our own chip developing and manufacturing technique is the biggest defect of us. In the intelligent electrical apparatus market, Chinese companies were continuously at a disadvantage in competitions with overseas rivals. Foreign chip giant has aimed at LED lighting market, racing to provide their LED chips for LED CHINA manufacturers. According to experts’ statistics, LED chips will probably be an independent market in near future. Chinese LED designers are striving to invent their own chips to face up this war.

Since the 2009, the high demand of LED lighting products is far beyond their expectation. Gradually, they realized that they are biting off more than they can chew. Finally, Taiwan LED distributors looked to the Chinese market then, entering into mainland market though the co-operations with domestic enterprises or set up their own epitaxial factories.

 

Overheated investment leads to prices reduction in Chinese LED chip market.

The number of MOCVDs sold to China in 2011 in is occupied over 50% of the global MOVCD supply in 2010. In this case, after three years, the yield of epitaxial factories will be 10-15 times as much as right now. Over 1/3 traditional lighting enterprises have entered or prepare to enter this battle, actively seizing the market. As for them, LED lighting industry is just a part of their strategies. In next few decades, it will become a key development direction. In order to prevent being controlled, they chose and have such capability to develop their own LED chips. This undoubtedly makes things even worse. With the continuous release of capacities, chips for white LED applications had to drop prices again in August this year. The average drop is around 25%. 1W LED chip only costs 1 USD.