LED Chip Market Sees Oversupply as China Accounts for 47% of Global MOCVD Capacity
September 22, 2015 | TrendForceEstimated reading time: 2 minutes
According to the latest 2015 Global LED Industry Supply and Demand Database Report by LEDinside, a division of TrendForce, capacity expansion efforts of Chinese LED chip manufacturers have resulted a supply glut with this year’s LED chip supply-demand ratio reaching 22%. LEDinside also estimates that the global MOCVD installed volume in 2015 will grow to 3,130 chambers, among which 1,473 are located in China and will account for 47% of this year’s global MOCVD capacity (MOCVD systems used in the calculation are of the K465i model).
Roger Chu, research director at LEDinside, pointed out that this year’s MOCVD capacity is equivalent to 72.31 million pieces of 2-inch LED wafers, representing a 14% increase in output volume over 2014. Chinese chip manufacturers such as San’an Opto and Changelight in particular are producing with the latest MOCVD systems in their newly built plants in Xiamen. Based on LEDinside’s projection, the monthly wafer capacity during the second half of 2015 will increase by as much as 500,000 pieces, creating a huge impact on the entire chip industry’s supply and demand situation.
Due to government support and fundraising in the stock market during recent years, Chinese LED chip manufacturers are able to expand their capacities to the point of creating a supply glut. Therefore, the strength of these enterprises cannot be judged by past records. San’an Opto, the largest Chinese LED chip manufacture, is a prime example. In the past few years, local governments in China have been providing San’an Opto subsidies that have made up 10~14% of the company’s annual revenues. Moreover, San’an Opto’s market value has been rising sharply since 2014, and this in turn has attracted more and bigger investments. In the overall competition, Chinese LED companies have fewer patents and smaller customer base than their global competitors, but they have significant strength as they are backed by a continuing stream of investments. Taiwanese LED companies by contrast have seen their market values falling followed by exodus of their talents and fundraising challenges. Consequently, they resort to layoffs and unpaid furloughs as means to reduce cash outflows.
As the oversupply situation remains unresolved, industry participants in the future will have to differentiate themselves by developing distinct products or niche applications in order to get around highly saturated and competitive markets. For this point on, their strategies will change from focusing on market scale and market share to generating stable profits to ensure sustainable development.
Suggested Items
Nanotechnology Market to Surpass $53.51 Billion by 2031
04/25/2024 | PRNewswireSkyQuest projects that the nanotechnology market will attain a value of USD 53.51 billion by 2031, with a CAGR of 36.4% over the forecast period (2024-2031).
Technica USA Presents Inaugural Supplier Alliance Award at IPC APEX EXPO 2024
04/24/2024 | Technica USADuring IPC APEX EXPO 2024, Technica USA took the opportunity to thank all of their supply partners that made the effort to join them for the exhibition in their booth, as well to all of our SMT partners that had their own booths, with the latest in automation and process technology.
IDTechEx Report Unveils 3D Electronics Status and Opportunities
04/22/2024 | PRNewswire3D electronics is an emerging manufacturing approach that enables electronics to be integrated within or onto the surface of objects. 3D electronic manufacturing techniques empower new features, including mass customizability, greater integration, and improved sustainability in the electronics industry.
IDTechEx Examines the Opportunities for Wearables in Digital Health
04/19/2024 | IDTechExIDTechEx’s report, “Digital Health and Artificial Intelligence 2024-2034: Trends, Opportunities, and Outlook”, covers this ongoing trend in the consumer health wearables market and includes analysis of the opportunities and roadmap for biometric monitoring.
Real Time with... IPC APEX EXPO 2024: Pluritec's Expansion and Growth in the North American Market
04/19/2024 | Real Time with...IPC APEX EXPONicola Doria, president of Pluritec, discusses the company's strategic focus on the North American market, their investment in a new sales organization, service expansion, and a new process integration line. The conversation also covers market response and future installations, as well as Pluritec's new partnership with IEC.