China's LED industry encounters an increasingly prominent bottleneck in overseas price control

According to the survey of China National Engineering Research Institute for Advanced Industrial Products, some high-power LED chips have started to rise in price, and sapphire materials are also in short supply. This is not a positive signal for Chinese companies that rely heavily on imports for high-power LED chips. At present, LED mainstream chip manufacturers are all overseas. As the market heats up, its control over the downstream packaging and application industries is gradually emerging.

On May 18, Shenzhen was hot. However, in the LED International Sourcing and Trading Center in Huaqiangbei, the bustling mass of people still continues unabated.

This LED procurement center, which was put into operation in January this year, is the first large-scale professional LED trading market in China. The first phase of the project is 4,500 square meters, gathering more than 60 LED display and lighting companies in the country.

"The market is hotter than we expected. Only two months of the first phase of the venue have been full." A person in charge of the trading center told reporters that the construction of the second-phase 4,000-square-meter site is currently underway and plans to put it into operation in the second half of the year: "Two After the completion of the project, it is estimated that the total transaction volume will exceed 2 billion."

The boom in trading is a microcosm of the LED market boom since the end of last year.

According to survey data from the Gaogong LED Research Center, in the first quarter of 2010, the output value of China's LED applications was 19.9 billion yuan, a year-on-year increase of 42%. "The foreign trade LED trade shows a multiple growth," said Zhang Xiaofei, CEO of the senior engineering LED research center.

LED industry heat wave has also caused the full support of the relevant government departments. Following the Shenzhen Municipal Government's "Shenzhen LED Industry Development Plan" released in 2009, a few days ago, the Guangdong Provincial Government held an executive meeting. Together with new electronic information and electric vehicles, LED lighting has become one of the three major new industries supported by Guangdong Province.

Supply exceeds demand

Shenzhen Guangming New District, Third Floor, Wanrun Technology Co., Ltd. A new workshop was slightly empty - it was waiting for the installation of new LED production equipment.

“The equipment originally planned to arrive in March has not yet arrived at the same time.” Looking at the production line reserved for new equipment, Li Zhijiang, chairman of Vantone Technologies, expressed his excitement with a hint of joy: “There are many orders, but the production capacity is limited.”

According to a survey by the reporter, despite the fact that Wanrun's sales rose by 40% year-on-year in the first quarter of this year, its LED bulb products still face a capacity gap of up to 500 million units.

Wan Run Technology's "rich can not earn" experience, it is a current LED industry boom in a silhouette. Taking the global lighting industry as an example, LED lighting is increasingly becoming the mainstream of the industry.

It is reported that in April of this year's Frankfurt International Lighting Fair, the traditional lighting three Osram, Philips and GE booths are pushing LED lighting products.

"The Philips 1200-square-meter booth is an all-in-one LED light source." A Chinese manufacturer of the event told reporters that at the previous exhibition, Philips only applied LED lighting technology to a handful of handheld lighting devices such as flashlights.

Changes in the international market were quickly transmitted to China. One of the reasons was that over 70% of the LED lighting market in China relied on exports.

"Our sales volume in the first quarter of this year was three times that of the same period last year." Feng Jun, chairman of Shenzhen Ete Lighting Co., Ltd., who focuses on the commercial LED lighting market, told reporters that E-Tech's 75% of the market is overseas, with sales of about 120 million yuan last year. "We expect sales to exceed 2 billion this year."

In contrast, although the domestic LED commercial market has only just begun, but the municipal engineering LED street lamp market is promising.

“From the policy level, the country has strong support for the energy-saving and environmental protection LED industry. This market has great potential.” Zhang Yusheng, executive vice president of Chinachem Group, told reporters that the company has signed LED street lamp renovation contracts with several provincial and municipal governments. The total amount exceeds 300 million yuan.

Dual stimulation of technology and market

"2010 should be the first year of LED industrialization." - This is a common view of reporters visiting a number of LED packaging and application companies.

Feng Jun, chairman of Shenzhen Ete Lighting Co., Ltd., analyzed the situation of the reporter. Taking the LED lighting industry as an example, the signs of mature LED industry are based on two points: First, the light flow rate can reach 100 lumens/watt; second, the color rendering index (RA value). ) can reach 75.

"Based on the maturity of these two indicators, LED lighting technology can achieve mass production in many fields such as industry, office and home." Feng Jun told reporters that since the second half of last year, the above two indicators technology has gradually matured. The LED industry laid the foundation for this year's outbreak.

The industry reality related to this is that more than 70% of the world's LED application products are processed and manufactured in China. "The maturity of the upstream chip technology has created conditions for Chinese enterprises to enter the LED downstream application industry." Zhang Xiaofei told reporters that in the Pearl River Delta alone, there are no fewer than 700 companies engaged in LED packaging and applications, a considerable part of which are from the plastic and digital industries. Go to Gold Rush.

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While the mass production technology is mature, the LED market has also brought another opportunity to break out. The reporter learned that since the World Climate Conference in Copenhagen in December last year, European countries have increased their consumption subsidies for energy-saving and environmentally-friendly products to varying degrees.

"The EU has the highest subsidies, of which Italy's subsidy rate is as high as 55%. That is, with the sales documents, the government directly subsidizes consumers at 55% of the selling price," said a vendor who has long focused on the European LED lighting market.

"An important reason for the company's sales in the first quarter is the stimulation of the European market subsidies." Feng Jun gave an example to reporters, E-Tech is a light cup product sold to the European market, "Last year was the sale of thousands of orders, and now More than 100,000 shipments per month."

Upstream bottleneck

Similar to the distribution of China's previous structure in the global IT industry chain, in the global LED industry chain, Chinese companies are still located in the midstream and downstream industries.

It is reported that in the composition of the entire LED industry chain, LED epitaxial wafers and chips account for about 70% of the industry's profits, LED packaging accounts for about 10% to 20%, LED applications account for about 10% to 20%. And China's LED industry, more than 70% concentrated in the middle and lower reaches of the industry, is the most profitable part.

"The core technologies and patents of LED upstream are not in China." Zhou Shengming, deputy director of the National IC Design Shenzhen Industrialization Base, told reporters that at present domestic LED epitaxial materials and chips are dominated by middle and low grades, and over 80% of power LED chips and devices rely on them. import.

As a considerable part of China's LED application companies did not pay royalties, this made their products vulnerable to infringement at any time in overseas markets.

More than that, the overseas LED upstream industry chain is increasingly highlighting the price control of China's LED industry located in the middle and lower reaches.

According to report, with the global warming of the LED industry, currently upstream chip suppliers such as Osram, Cree, and Samsung have all expanded their production capacity and increased the purchase of MOCVD equipment (a core manufacturing device for LED chips).

However, the reality is that the two MOCVD equipment plants, Aixtron of Germany and Veeco of the United States, monopolize the market share of more than 90% of the global MOCVD equipment.

“The MOCVD equipment has a serious shortage of production capacity. At present, the equipment ordering queue must be at least six months or longer.” Zhang Xiaofei believes that the tight supply and demand situation will be difficult to ease in the short term: “It is not ruled out that Aixtron and Veeco are intentionally creating such a situation in short supply. The purpose is to In order to monopolize the price."

In fact, the transmission effect of the upstream price monopoly on China's LED market has become apparent. The reporter learned that since the beginning of the first quarter of this year, prices for high-power epitaxial wafers and sapphire substrate materials have risen by more than 30%.

"As the upstream chip prices rise, our profits are also facing a squeeze." Feng Jun believes that the LED market at the beginning of the expansion of a constraint is that prices are high, so this round of rising costs will further increase market pressure.

How is the development of China's LED industry? In the face of fierce market opportunities, the tests faced are also quite severe.