LED chip market demand increases in China

Before 2016, lots of LED chip manufacturers expand their business, which results in significant excessive capacity while price continued to decline rapidly. Then it changes the LED industry sharply. Many small poor-management businesses have cut or transferred due to technical backwardness and other reasons. A large number of LED companies withdraw from market.

At the same time, the government reduces subsidies of MOCVD equipment. So the small lack-of-funds businesses unable to expand production. The LED chip manufacturers overseas are also in a substantial decline in profits. Product gross margin is low.

However, since 2016, with the steady growth in demand, supply and demand in LED industry gradually improved. Recently product’s price increases intensively. Industry sources said that not only is the price of LED chip, but price of the screen is also up.

The manufacturers’ previous forecast for demand is too conservative, resulting in lack of capacity preparation; at the same time, intelligent products expand rapidly, so there is a substantial increase in demand of chip screen and other products,. These factors are superimposed, making the supply and demand intensified.

A letter, which covering the seal of San An Optoelectronics Co., Ltd. In the industry's circulation, said it was decided to raise the price of S-30MB / S-32BB series by 8% on January 10, 2017. Deputy director of Nation Star photoelectric R & D Center (packaging company), Xie Zhiguo, who confirmed that he received a price increases notice from San An Optoelectronics Co., Ltd. at the first day of 2017.

The industry believes that the increased price of Sanyo photoelectric on the one hand is due to the cost; the other hand, with the withdrawal of small and medium manufacturers, LED chip industry is mainly concentrated under the hands of several large manufacturers. The seller position is more powerful.

According to research data show that by the end of 2017, effective capacity of LED chip is about 83.28 million, the demand is about 92.35 million. Among them, the demand for lighting chip is 47.04 million, which increase 20%; outdoor full color display demand 26.02 million, which increase 5%; indoor small demand is 102 million, which increase 50%; mobile phone backlight demand is 1.39 million. Tablet PC backlight demand is 44 million, computer and television backlight demand is 699 million. Automotive lighting demand is 1.06 million.