LED lighting market boom needs to be cautious

The just-concluded “Guangzhou International Lighting Fair” was agitated and told the LED industry was hot. However, an entrepreneur retorted: "The LED lighting market broke out one year earlier than expected, but it is really hot! But we must pay attention to the issues of technology, quality, patents, and standards. If we don't watch out for it, we will have a "heat stroke."

Perhaps the following set of cases and data can make you have a more intuitive experience of the heat of the LED industry.

According to Chen Haishan, senior director of marketing of the global LED chip giant American Taxation Company, told reporters that the scale of China's LED commercial lighting market may double this year, and now the high-end LED chips are in short supply.

Op Lighting has set up a commercial division this year. According to Ding Long, vice president of the Opto Commercial Division, the average price of LED lighting products has dropped by 20% to 30% each year, and the energy-saving effect has increased by 20% to 30% each year. In the past, the investment recovery period for LED commercial lighting was one or two years, and now it can be recycled in seven to eight months. The proportion of LED in op lighting commercial lighting business will be substantially increased to 50% this year.

Qin Shuozhong, deputy general manager of QinShang Optoelectronics, stated that this year is the best year for the LED industry and there will be a blowout situation. The current order volume will be two months later.

Sanan Optoelectronics, Dehao, NVC, and Op Lighting have already hit an annual income of RMB 10 billion and put it on the agenda.

Under the “heat wave”, the competition in the LED industry will be even more magnificent.

Wang Lianghai, vice president of Tsinghua Tongfang, revealed that the cost of LED chips in mainland China this year has dropped by 50% from the same period of last year. Zhang Hongbiao also said that in all kinds of lighting cities in China, the penetration rate of LED lighting has reached 90% this year, but LED sales accounted for only 9.6%. This year's LED price is one-third of 2011, three-watt LED bulbs, brand products 30 to 40 yuan, the low-end just 10 to 12 yuan. "The current market competition mainly depends on prices."

Following Sanan Optoelectronics' acquisition of Taiwan Qianyuan Optoelectronics and BDO Runda Lighting's acquisition of NVC Lighting, it is expected that more mergers and acquisitions will take place this year. Gong Weibin, chairman of Ruifeng Optoelectronics, frankly stated that as a packaging company, Ruifeng will seek opportunities to cooperate with upstream chip makers.

The outbreak of the market has also triggered the impulse of a new round of capacity expansion in the LED industry. As Sanan Optoelectronics is promoting a private placement, it plans to expand the LED chip production capacity at Wuhu Base. If the previous round of capacity expansion was more “government-driven”, then the new round of expansion was more “market driven”. In the past few years, the blind expansion of LED chip production capacity, waste of resources, and the avalanche of prices last year and industry losses have been sufficient warning bells for the government. Zhu Bingzhong admitted that government subsidies have gradually decreased. This year, Shenzhen Municipal Government's abolition of LED planning is also a signal.