Taiwanese LED Packaging Manufacturers Market Share in China Eroded by East Asia Competitors, says TrendForce

China LED packaging market scale reached US $7.2 billion in 2013, according to the latest China LED package market report from LEDinside, a division of research organization TrendForce. China becomes a prime market for global LED package manufacturers, who are speeding up efforts to acquire bigger market share. Leading Chinese manufacturers are also maintaining fast growth rates, increasing restructure pace is also scaling up industry concentration in the country. Chinese manufacturers actions have impacted Taiwanese manufacturers Chinese market share, which slid to 9% as a result. Raising product strength has become an urgent matter for manufacturers.

China’s LED packaging market mainly consists of three camps: Chinese, Taiwanese, and international manufacturers, said LEDinside. Domestic Chinese packaging manufacturers make up the largest group with around 63 percent market share, followed by Taiwanese companies, while large international manufacturers with patent advantages have clinched 28% market share. International manufactures have obtained a large amount of orders from lighting manufacturers and have been the largest beneficiaries.

Taiwanese manufacturers are gradually being replaced by Chinese manufacturers, who have been rapidly developing over the past few years. Chinese manufacturers’ total revenue in 2013 grew 15 percent YoY to US $4.5 billion, but market share dipped slightly by 2 percent. Steep product price plunges have resulted in underperforming revenue growth rates. However, Chinese manufacturers including MLS Lighting, Nationstar, Hongli Opto-Electronic, Refond Optoelectronics and others revenue growth still outperformed industry average, reflecting rapid industry restructuring, and increasing market concentration.

Caving under pressure from Chinese manufacturer developments, Taiwanese LED package manufacturers revenue performances have fallen. Taiwanese manufacturers’ revenues from the China region declined 1% in 2013 to US $638 million, while market share downed to 9 percent in 2013 from 11 percent in 2012.

In stark contrast, European, U.S., Japanese, and Korean LED package manufacturers’ revenue in the Chinese market was up 40% to US $2 billion in 2013 compared to the year before. Among them, Korean manufacturer Seoul Semiconductor and Japanese manufacturer Nichia showed the best performance. China is currently the largest LED lighting end product exporter, but does not have much advantage overseas because of patent issues, and higher lighting-level LED performance requirements in developed country markets including Japan, Europe, and U.S. Therefore, international lighting manufacturers continue to dominate high-end lighting-level LED market. In addition, China is also the largest LED end product OEM, with many international lighting manufacturers seeking for OEMs in China. Hence, international LED package manufacturers are further expanding in the Chinese market, which in turn will drive up revenue share in China. 

Figure.1: Three Camps Share Change in China

Source: LEDinside