Overcapacity, China's LED industry will reshuffle

"Why are you mostly losing money?" At the recent Lutai Conference on innovation and development of the optoelectronics industry on both sides of the Taiwan Straits, Chen Zhenxian, chairman of Taiwan's Xinqiang Optoelectronics Co., Ltd., pointed to such an issue in the current LED industry.

Driven by the concept of energy conservation, emission reduction and low-carbon economy, the LED industry has risen suddenly and attracted investment from all parties. On one side, it is a real investment, while on the other side it is the constraints of core technology and equipment. Li Bingjie, chairman of Taiwan's Jingyuan Optoelectronics Co., Ltd., frankly stated that “Chinese LED packaging companies gathered at the lowest end of the industry chain will have to pay for the sequelae of significant expansion because of the lack of core technologies. Even companies with core technologies will face The challenge of lowering the high cost as quickly as possible."

The reshuffle of China's LED industry due to technology and cost will be inevitable.

Investment "Great Leap Forward"

Some agencies expect that the output value of China's LED industry will exceed 150 billion yuan in 2010. This figure is twice that of 2008, and it is growing at a high rate of 30% per year. Li Bingjie said that this figure is not an exaggeration, at least only the annual growth rate in Taiwan "has already exceeded 50%."

This high growth has benefited from the guidance of national policies. In February of this year, the country’s first batch of demonstration bases for new industrialization industries was awarded, among which the optoelectronics industry base occupied 3 seats, and the LED industry has become a key industry for national development. At the same time, LED's initial investment of 100 million yuan can establish a low threshold for the factory, stimulating all localities to compete first.

The hunger and thirst for LED development also attracts private investment. According to statistics, in recent years, venture capital investment in domestic enterprises has exceeded 1.5 billion yuan. In the past year, the private capital investment field has fully covered the entire LED industry chain. Experts predict that this year's investment in the domestic LED industry will reach 60 billion yuan, an increase of 500% compared to more than 100 billion yuan last year.

The remarkable energy-saving effect and application prospect of LED lighting need not say much. Take the Shanghai World Expo as an example. In the park, 1.05 billion LED chips are used. About 80% of the indoor lighting sources in the Expo venues use LED green light sources, which is about 90% less than that of ordinary incandescent lamps.

However, facing such a large-scale investment, Zheng Tiemin, general manager of Shandong Inspur Huaguang Optoelectronics Co., Ltd. cannot help asking: “When the LED application channel has not been fully expanded, do these investments take into account the market demand?”

Zheng Tiemin said that many investments are likely to become excess production capacity, and how long projects based on national policy support can be sustained, and Zheng Tiemin also expressed his concern. “If companies cannot establish their own profitability as soon as possible, they may not even have government support. It will last a long time."

Direct technical weaknesses

Overcapacity is not the only answer to “why is the loss”. What's more, the LED industry is repeating the mistake of polysilicon “low-end excess capacity”.

In the industry chain, LED epitaxial wafers and LED chips account for about 70% of the industry's profits, LED applications account for about 10%-20%, LED packaging is less than 10%. Let us look at the layout of China's LED companies --- Currently there are more than 3,000 LED-related companies in the country, of which more than 1,000 LED packaging companies, LED application companies close to 2,000, LED epitaxy and chip companies have only 60. "Always in the lowest profit margin market, talk about profitability?" Chen Zhenxian not worried.

The domestic LED companies have to face an “old” problem—the technology content is not high, the innovation ability is low, and the core competitiveness is lacking. According to statistics, of the relevant patent countries for LED applications, Japan accounts for 27.9% of the world's total. China only accounts for 9.34%, and it is basically concentrated in low-middle-stream and downstream industries such as LED packaging and LED applications.

Taking the growth technology of LED chip MOCVD equipment as an example, it is basically monopolized by AIXTRON and VEECO, and its international market share adds up to more than 92%. Li Bingjie said, "Lack of core technology means that it will be constrained by foreign companies and the days of domestic small and medium-sized LED companies will be difficult to sustain."

For large LED companies with some patents, they are not too optimistic. Li Bingjie frankly stated that "cost is the biggest challenge." For LED main lighting products, the root cause of delay in the widespread use of civilian products is that "the price is too high." The only way to solve this bottleneck is to "reduce costs." . "We want to reduce costs, we cannot rely on foreign countries, and we have to rely on ourselves to make technological breakthroughs." Li Bingjie predicts that "it will be clear in five years."

The idea of ​​relying on technological innovation to save the LED industry was also approved by Huang Weiping, chief scientist of Hisense Group Co., Ltd. and chairman of Hisense Broadband Multimedia Technology. However, Huang Weiping believes that only technological innovation is not enough, and the important thing is to “pull high innovation entry points.” He said that the future growth momentum of the LED market will not only come from the lighting market of LCD panels, automotive lighting, etc. The application of optoelectronics in the information network will be the “next cake”. Currently, the field of data and optical communications is the high end of LED applications. In the field and countries, their R&D is in full swing, and companies can consider placing their technological breakthroughs at the center of gravity.