Policy support for the strong demand for LED industry into the golden period of development

LED is called the fourth generation light source or green light, can be widely applied in various directions, display, decoration, backlight, general lighting and city night scene etc.. In recent years, LED is facing explosive growth, mainly due to the support of national policies, as well as the rapid growth of the demand for downstream TV backlight, the future of the cost of the decline in the implementation of large-scale general lighting alternatives. It can be said that the next 5 years, will be the golden period of growth in the LED industry.

Countries to support the LED industry

In the face of global climate change and rising energy prices, governments have begun to put some of the high energy consuming products as the primary object of the ban, such as incandescent bulbs is the most obvious case. Incandescent bulbs from the European Union and Japan began to disable the first, then the government began to follow up. From countries to disable incandescent bulbs to observe the timetable, after 2012, most countries began to gradually disable incandescent bulbs, but also for LED lighting brings huge business opportunities.

Thanks to the strong support of governments, the global LED market has expanded rapidly this year, according to the Taiwan Institute of industry (IEK) statistics, in 2008 the global LED output reached $6 billion 767 million.

Upstream accounted for about 70% of industry profits

LED industry chain, including upstream light-emitting materials, substrates, epitaxial wafers and chips, midstream packaging module / light source, digital control and dot matrix, drive IC / control, downstream applications, including lighting and backlight. LED industry by the downstream part of the upstream product differences, high technical difficulty, high barriers to entry, thus high margin, industry accounts for about 70% of the profits; midstream and downstream products with low technical difficulty, lack of core technology, low barriers to entry, intense competition, thus saving the middle ring package accounted for 10 - 20% of the profits, LED the application of the downstream is about 10 - 20%.

LED industry in the world has formed a complete industrial chain, the United States, Japan, Europe, China, Taiwan and South Korea, a large number of enterprises, mainly in the substrate, epitaxial wafer, chip and packaging areas. Really have the strength to engage in the LED industry chain of the whole business of the company is relatively small, mainly the United States, Japan and South Korea's leading enterprises. In recent years, the rapid development of China's LED industry, under the support of national policy and the application of downstream demand driven, produced a number of representative enterprises, the domestic LED industry chain is rising.

At present, LED epitaxial wafer growth technology mainly uses MOCVD, the world can produce the equipment of the enterprise but also 3 to 5. The world's two largest MOCVD producer for the German AIXTRON and the United States VEECO, which occupy more than 90% of the global MOCVD supply market share, in a monopoly position.

LED industry is expected to grow rapidly

With more attention paid to the green energy industry, LED market concern. More and more manufacturers are actively involved in the LED market, making the semiconductor lighting technology has been rapidly improved. The rapid development of LED industry, a wide range of applications, has gone beyond the imagination, the value chain is also extended from the manufacturing sector to the service sector, has a huge impact on social development. LED market for the future whether there is concern about the excess, but we have been analyzed that the market is worried about some overdone. Below, we analyze the supply and demand sides to see the market trend of LED market in the next two years.

Supply growth is constrained by upstream equipment and raw material supply. First, the upper reaches of the rapid expansion of MOCVD equipment capacity, efficiency increased significantly. At present, the global production of MOCVD machine company has three, Germany Aixtron, the United States Veeco, Japan Sanso, while the former two dominate the global market. However, the strong demand for the MOCVD market, as well as the monopoly of the high returns, attracting new entrants into the market, followed by the main material shortage in the upper reaches of the current LED capacity expansion is an important constraint factor. For the formation of LED capacity constraints are the main materials upstream, sapphire substrate, MO gas, etc.. The LED upstream materials industry barriers to entry high, controlled by a small number of foreign companies, but also the main producers of the substrate gross margin continues to improve, indicating the degree of market supply of raw materials.

After analysis, we believe that in 2010 LED supply is tight, in 2011 will be eased, and the past two years, the oversupply situation will not be very serious. With the introduction of the original LED manufacturers and new manufacturers on the LED chip large-scale expansion of the production plan, investors increasingly worried about the future overcapacity LED. We look at a large number of foreign and Taiwan research institutions, institutions for the future supply and demand forecast data is relatively large differences in overcapacity and its impact on the issue is not uniform.

Comprehensive view of the parties, we believe that the next few years will be the golden age of the explosive growth of the LED industry. At present, the demand for LED downstream gradually spread and showed a sharp growth trend, while the capital has also increased the amount of investment in upstream supply capacity. As for the future whether there will be excess capacity or inadequate, which is mainly determined by the large-scale replacement of the general lighting market when to start, and replace the backlight market to further expand the demand for LED. But regardless of how the market changes in the future, the lighting market is only a matter of time, and not long.

We believe that even if the excess capacity is not terrible, we are still optimistic about the leading enterprises in the LED industry. We believe that according to the law of industrial development, as any emerging industry development process, the future of the LED industry will inevitably produce