LEDinside: LED Chip Industry Exploding in China; LED Chipmakers Surging from 3 to 62 in Last 12 Years

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According to survey by industry research house LEDinside, LED chip industry in mainland China has been exploding in the past 10 years, with the number of LED chip makers surging from 3 in 1998 to 62 by August 2009. During this period, the year 1999 marked the beginning of the fast development of LED industry with the join of 6 new LED chip manufacturers. From 1999 to 2009, an average of 2 to 7 enterprises entered into the LED section every year.

In seven years out of the ten years from 1999 to 2009, six or more companies were established to enter the LED market. And the peak was in 2009, with 7 companies having entered into this section by August.

Though some LED companies were set up earlier, high LED production volumes were not realized until 2000. Compared to earlier players, the companies established after 2007 are generally with stronger investment capital and higher capability. Some of them are currently under construction, and their productions are scheduled begin in the next couple of years. By then, China’s total LED chip output is expected to jump to a new level. Current status of China’s LED production capability can be seen in the industry research reports on LEDinside.com.

By August 2009, the 62 LED chip manufacturers in mainland China are distributed in 15 provinces (municipalities) around the country, with 10 in Guangdong alone, accounting for 16.1% of the total. This is followed by Fujian with 8 such companies, or 12.9% of the total. There are 41 companies which are distributed in the 7 provinces (municipalities) where national SSL industrial bases are set, such as Guangdong, Fujian, Shanghai, Hebei, Jiangsu, Jiangxi and Liaoning, accounting for 2/3 of the total. The number of such companies in Shandong, Hubei and Zhejiang are also above 4 individually.

Till August 2009, China’s LED chip suppliers are scattered in 31 cities around the country. Among them, 25 companies are located in 7 national SSL industrial bases such as Xiamen, Shanghai, Shenzhen, Dalian, Shijiazhuang, Nanchang and Yangzhou, representing 40% of the total. And the number of such companies in Wuhan, Beijing and Dongguan are also 3 or above individually.

Among others, 10 LED chip manufacturers are located in Guangdong province, including Shenzhen Century Epitech, Shenzhen Fangda Group, Shenzhen Orient, Shenzhen Dingyou, Dongguan Fortune, Dongguan Zhoulei, Dongguan Gaohui, Guangzhou Puguang, Guangzhou Apt Electronics, Jiangmen Neo-Neon. These companies are located in Shenzhen, Dongguan, Guangzhou and Jiangmen. However, though home to the largest number of LED chip makers, Guangdong is still not esteemed by the market as a major LED manufacturing base in China. Thus, it should be a developing direction for Guangdong to provide more quality LED chip products to the market via taking advantage of the numerous LED packaging manufacturers in the Pearl River Delta.

As an important base of LED chip supply in China, Fujian is home to 8 LED chip makers including Xiamen Sanan, Xiamen Anmei, Xiamen Mingda, Xiamen Ganzhao, Xiamen Jingyu, Xiamen Jinglan, Quanzhou Hexie, Fujian Keyshine. These companies are distributed in Xiamen, Quanzhou and Fuzhou. Among them, Xiamen Sanan, Xiamen Anmei, Xiamen Mingda, Xiamen Ganzhao and Xiamen Jingyu have already entered into mass production of LED chips, while Fujian Keyshine’s facility in Fuzhou is primarily focused on LED packaging, and its chip factory is located in Beijing. Meanwhile, Quanzhou Jinglan and Quanzhou Hexie both plan to invest USD550 million to build LED industrial bases in Fujian.

There are also a lot of LED chip enterprises based in other cities of China, including Sunrise Optech Co. in Nanchang, Lattice Power Corporation in Jiangxi, Dalian Lumei Opto, Shanghai Rainbow Optoelectronics Co., Hebei Huineng, Hebei Lede Electronics Co., Hangzhou Silan Azure Co., Shandong Huaguang Electronics Co., Wuhan AquaLite Co., Wuhan HC SemiTek Co.

Among China’s existing 62 LED chip makers, 29 companies are domestic capitalized, representing 46% of the total; 14 companies, or 23%, are foreign capitalized, and the rest 19 companies are Chinese-foreign joint ventures, representing 31% of the total. Guangdong, Fujian, Jiangxi, Liaoning and Jiangsu are the major provinces in which foreign capitals are invested.

The surge in the number of LED chip makers indicates the optimistic outlook towards the LED industry. The total programmed production capacity of these companies has been many times the figure for 2008. If all the facilities are devoted into production, China will become the most important LED chip manufacturing base in the world. However, the challenges facing these manufacturers is the quality as well as the intellectual property. 

Only a few companies out of the 62 LED chip makers are with high volume production capability. And the epitaxial wafers are mostly imported from Taiwan and the U.S. In addition, most of the companies are primarily focused on low power LEDs. Though there are a few manufacturers, such as Wuhan AquaLite Co., Guangzhou Apt Electronics, Xi’an Walsin, which are dedicated to production of high power LEDs, the current supply of such chips still rely largely on imports.

Currently, the LED chip manufacturers in mainland China are generally facing the challenges of technology and equipment. Except for a few companies such as Xiamen Sanan and Wuhan HC SemiTek Co., most chipmakers are currently running with low capability utilization. However, as the LED industry becomes more mature, and more companies join in the promising industry, China’s actual production capability of LED chips will ramp up in time.