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LED lighting industry development in the post-Olympics era
Applications of LED during the Beijing Olympics have raised audience’s eyebrows. According to non-official statistics from China, the Beijing Olympics has consumed a total of 500mn RMB worth of LEDs at 36 stadiums, excluding other public lighting applications that are installed at the Olympics villages and parks. But as Olympics grand completed, concerns about whether there exists a fundamental demand for LED surfaces.
Landscape lighting is the key demand driver in the China LED industry. LEDinside believes that the recent Beijing Olympics should help encouraging second-tier cities to adopt low-power LED for landscape decoration thereafter. Amid the anticipated demand, corresponding CAGR for LED packaging is estimated to hit 25% during 200X-2010.
Beijing Olympics lights up LED industry
LEDinside estimates that a total of 4mn units of LEDs were adopted during the opening and closing ceremony at the Beijing Olympics. By including those being installed at stadiums, subway, outdoor billboards, total amount of LEDs that are being installed should have surpassed several million units.
Among all landscape LED lighting applications, the National Aquatics – Water Cube, must be the venue that draws most attention. Built on an investment budget of 51mn RMB, the Water Cube has installed a total 36,000 sets of specialized lighting tools, which include 470,000 of LEDs, to illuminate the translucent bubble-clad exterior.
LED also plays a vital role during the opening and closing ceremony. During the opening ceremony, a LED-powered scroll that composed by 44,000 LEDs, was displayed for performers to dance on. Another 45,000 of LEDs were also being used to illuminate the Olympics’ five interlocking rings. After seeing a heavy adoption of LED during the Beijing Olympics and Doha Asian Games, LED should be widely used in decoration lighting and displays at large-scale performances and events.
China government plays prominent role on LED penetration
Underpinning a meaningful LED penetration is the China government. The Chinese Academy of Sciences (CAS) has identified LED as a prioritized item for energy-saving applications development in the 「Mid-to-Long Term Development Program for Science and Technology for the years between 2006-2020」as announced in 2006.
Two phases of LED lighting infrastructure is planned for 2003-2005 and 2006-2010 periods. In the first phase of construction, the Central government has spent 140mn RMB to activate a joint program among six government departments (including Ministry of Science and Technology and Ministry of Industry and Information) and 14 provincial governments to adopt LED lighting.
Another investment budget of 350mn RMB has been spent on the second phase of the Program already. Of which, 60% of the budget was spent to subsidized corporate that develop LED, and the remainder to institutes, universities and Chinese Academy of Sciences (CAS).
There are about 3,500 private enterprises there in China developing LED. Of which, half of these enterprises design LEDs for use in end applications such as landscape lighting, displays and road signs and automotives. More production bases are also being developed for LED industry players. In addition to the existing five bases, the China government has also approved establishment of two more production bases in Yangzhou and Shijiazhuang in 2007.
LED to flourish at World Expo Shanghai 2010
Shanghai World Expo 2010 is believed to mark another climax for LED adoption after the Beijing Olympics as bountiful of LEDs will be applied for flowing lighting sources at core centers and facilities. Three key landscape lighting applications will be seen at: 1, Huang Pu Jiang (river side of Huang Pu); 2, Expo axis and bridges between eastern and western Pudong and; 3, skywalks bridging key pavilions.
Domestic LED makers, especially for those which located nearby Zhangjiang Hi-tech Park, should be benefited from the substantial business potential accordingly. Players ranging from the upstream epitaxy wafer production to downstream packaging and system makers should be able to gain full support from nearby partners by maximizing the synergy of consolidation.
Olympics help encouraging second-tier cities to grow LED lighting
Ongoing development of solid-state LED lighting has drawn players’ attention after the Beijing Olmypics. As the Olympics has made a good example to demonstrate LED application in displays and billboards, second- and third-tier cities in China are expected to follow by using more LED-powered billboards and displays.
According to a revealed report from the China LED Industry & National Solid-State Lighting Program, landscape lighting for city decoration will account for 37% of LED production value, being the largest application among all. Handset will be the demand driver after with its production value to account for 28% of all.
If each of the 100 mid- to big-scale cities in China to invest 100mn RMB in landscape lighting installation, total market size will hit 10bn RMB, with an approximate of 10-20bn of high-luminance LED required. As of 2007, LED shipments reached at 82bn units. Based on this shipments amount, it is expected that about 20-30% of the LED capacity will go to landscape lighting. As investment budgets among second-tier cities grow, demand for LED will on the rise also.
Production value of the LED packaging industry in China has already reached 16.8bn RMB in 2007. Driven by aggressive expansion among domestic players and consistent growing demand, the value is expected to grow almost double to 32bn RMB in 2010, representing a CAGR of 25%.
Despite a booming market growth is expected, the China LED industry is still caught in a low sufficiency rate of upstream LED chips at the current stage. As of the 82bn LEDs shipped in 2007, only 46% of them were fabricated locally. Many China-based LED makers have to source wafers from third parties (including Taiwan players) for re production. Therefore, how to raise sufficiency rate will be an imperative issue to solve.
