LED domestic market lost opportunities for lighting companies have a geometric?

“You don’t think that the city is very advanced and you can use the LED lights. In the yurt, you also use solar LED lights, and donkeys and horse meat are hung beside them.” Tang Guoqing, general manager of Cree China (Nasdaq: Cree) Being good at finding details, his other identity is the director of the Semiconductor Lighting Professional Committee of the China Lighting Association, which is supported by data on the optimism of the Chinese LED market. In the LED full-color screen, LED traffic lights, solar LED lights and LED landscape lighting production, China is currently the world's first.

An LED, or a light emitting diode, is a solid-state semiconductor device capable of converting electrical energy into visible light. Its main features are green and energy-saving. China's energy-saving lamps account for 70% of the world's total, but semiconductor lighting accounts for only 1% of the market, so only one energy-saving lamp has a huge space for development. It is estimated that by 2010 China's LED sales will exceed 150 billion yuan, which is double the figure in 2008, and will increase at a rapid rate of 30% per year. In the next 15 years, China's LED industry market and China's export market are expected to be about 5 trillion yuan.

The huge Chinese LED market has brought two kinds of high growth. One is the large increase in the performance of foreign giants, and the other is the increasing number of Chinese companies involved in LED. Cree and Nichia, Osram, Philips and others claimed that the world's four largest LED chip giants, just announced the annual report as of June 30, 2010 projections show that its fiscal year 2010 revenue reached 850 million US dollars, an increase of 53 %; Net profit increased by 402% to $152.3 million. It is not only Cree that has gained growth. Philips’ second-quarter financial report shows that net profit was 262 million euros (about US$340 million), compared with only 45 million euros in the same period last year. Philips did not forget that the large increase in profits was due to the strong growth in sales of lighting and consumer electronics products.

The growth of the LED market in China and Asia is the biggest driving force for growth of these foreign companies. In fiscal year 2010, Cree’s Asian market revenue accounted for approximately 2/3 of its total revenue, and its revenue in mainland China and Hong Kong grew by as much as 100%. Cree has planned to shift the focus of the LED industry to China, and most of the company’s 2010 investment of approximately US$ 167 million will be used in China.

Compared with the high-quality performance growth of foreign giants, the huge army of Chinese companies has a kind of “outside force and dryness”. At present, there are only three or four thousand LED lighting companies in China. The variety covers home, business, and electric fields. However, most of them are concentrated in the middle and lower reaches of the industrial chain. There are only 62 companies that have LED chip production capabilities. Even if there are large-scale packaging companies, there are only a few hundred in the upper reaches of the industrial chain. The distribution of LED profits in the industry chain, LED epitaxial wafers and chips account for about 70%, LED packaging accounts for about 10% to 20%, LED applications probably also accounted for 10% to 20%.

The industry believes that China's LED companies are technically different from Europe, the United States and Japan's top companies for 3 to 5 years. Many LED companies rely on government subsidies to complete the growth of profits. The government has indeed spared no effort in promoting the LED industry. In early 2009, the Ministry of Science and Technology launched the “Ten City Million” semiconductor lighting application demonstration city program covering 21 domestically developed cities including Beijing and Shenzhen; local governments also joined them, such as the Dongguan municipal government to LED The industry has been designated as a "strategic emerging industry" and integrated into Dongguan's "five-year doubling" (doubling of five-year production value) plan. Someone once pointed out fiercely that the growth rate of domestic LED companies that have just been listed in the market is due to government subsidies. From 2007 to 2009, they received government grants of 1.8 million yuan, 8.6866 million yuan, and 371.2204 million yuan respectively. .

The vigorous promotion of the government has led to the current domestic application of mostly government procurement, and has not really entered the civil sector, so the market demand is very small. One side is the ever-increasing Chinese LED enterprise legion, on the one hand, the core technology is controlled by others. This is how similar the Chinese LCD industry is!

The National Development and Reform Commission has issued industrial guidance and requested that by 2015, domestic chip market share should reach 70%. It is hoped that the government will help China's LED companies to eliminate the shadow behind the bustling. It should be one of the best solutions for such a huge industry.