LED Industry In-Depth Report: Beyond the Glitter, a Brighter Shine
Published Time:
2021-08-04
Since the second half of 2016, tight chip production capacity has led to sustained high prosperity across the entire LED industry chain. This is due to two factors: Firstly, a large number of MOCVD machines expanded in 2010-2011 were gradually eliminated due to low efficiency, and the newly added machine production capacity has not yet been released, leading to tight capacity across the industry; Secondly, in recent years, local governments have withdrawn MOCVD machine subsidies, causing small and medium-sized chip factories with weak self-blood-making capabilities to withdraw from the market, reducing industry capacity. The combined effect has allowed the industry to shed its burdens and prepare for a new round of growth.
Industry reshuffle completed, sustained high prosperity
Since the second half of 2016, tight capacity in the chip sector has led to sustained high prosperity across the entire LED industry chain. This is due to two factors: Firstly, a large number of MOCVD machines expanded in 2010-2011 have been gradually phased out due to low efficiency, and the newly added machine capacity has not yet been released, leading to tight capacity across the industry. Secondly, in recent years, local governments have withdrawn MOCVD machine subsidies, causing small and medium-sized chip factories with weak self-blood transfusion capabilities to exit the market, reducing industry capacity. The combined effect has allowed the industry to shed its burdens and prepare for a new round of growth.
The landscape is becoming clearer, demand is exploding, and the LED industry has not yet won enough
At this point in time, we believe that the LED market is far from over. The reasons are: 1. The overall trend of capacity transfer to mainland China is established. Chinese manufacturers face not only the domestic market but should view industry and corporate growth from the perspective of the international market. 2. The trend of increased concentration is spreading from upstream to downstream, and leading manufacturers at each link will benefit, with growth exceeding the industry average. 3. Downstream demand remains strong, exceeding market expectations. If the industry's prosperity in the past year has been driven by the supply side, then the next stage of industry growth will be driven by demand. From lighting to display, new products and technologies are emerging, stimulating broader demand.
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