China's local government subsidy policies affect the global LED nerve

Chinese LED market, how much influence? You can feel the change in the stock price of a famous company.

Yesterday, Citigroup analyst Timothy Arcuri claimed that the local government Chinese purchase subsidy policy for LED wafer production equipment MOCVD, the first half of 2011 will likely end. One hour later, second of the world's largest MOCVD equipment supplier to the United States Veeco shares fell, eventually fell to 15.57%, decline in the 30 constituent stocks of the crown; and the world's largest supplier of German AIXTRON fell 4.18%.

MOCVD LED epitaxial wafer production (editor's note: epitaxial wafer commonly known as light-emitting chip, as the key products of LED industry key equipment). Veeco and AIXTRON global market share of more than 90%, China's policy changes have so much power?

"First Financial Daily" has been confirmed from the Yangzhou municipal government related sources, since last year the preferential policies could not continue indefinitely. This will produce what kind of effect?

Subsidies or changes in the first half of next year

AIXTRON and Veeco Chinese should thank. For at least the past few years, they have not experienced such an amazing situation. The face of China's LED boom, just a little confused, because production is far from enough. Part of the equipment to be delayed until 2012 to supply.

At Veeco in the third quarter earnings. Its quarter revenue of $277 million, an increase of 180%, and is expected in the fourth quarter and the first quarter of next year outstanding performance. Reported that as of the end of the third quarter, it is also a backlog of $569 million orders not delivered. AIXTRON performance is stronger, the second and three quarters grew by more than 200%. None of them mentioned in the earnings report, excellent performance mainly benefited from the Chinese market orders.

So Chinese LED wind sways grass market policy, do not let them worried. Policy can only play a supporting role in catalysis, there will always be a preferential policy applicable period, will be canceled in July 1st next year. "Yangzhou economic and Technological Development Zone, deputy director Zhang Liansheng said, in 2009 after the implementation of the policy, has attracted many enterprises landing, including Elec-Tech, about 40 sets of MOCVD equipment landing, and enjoy subsidies.

Director Zhang also stressed that as long as the next July 1st registered before landing, even if the equipment purchasing plan after this, you can also enjoy the preferential policies.

Preferential policies canceled, will inevitably impact on the formation of the enterprise, equipment procurement and direct transmission to the upstream, thus affecting the AIXTRON and Veeco business.

Citigroup analyst Timothy Arcuri said the, Veeco customers should be aware of the subsidy policy will expire, their orders will become cautious. He released the data is that in 2010, China's MOCVD equipment installed capacity of about 325 units, the current backlog of more than and 200 units has not yet been installed, and the planned order is sufficient to increase the number of units by 525.

However, semiconductor research expert Gu Wenjun said, in the local government investment thinking, consider the problem of angle of course is not the same, he believes that Yangzhou's position means that the first half of next year will usher in a wave of new layout boom.

AIXTRON China a sales person without comment, said only that the company will next month to China global executives, there should be disclosure of important information.

And Veeco Chinese market sales person on the "First Financial Daily" said that the China LED industry is only a start. Because LED products are now mainly used for flat panel display, ten city million program is more like a demonstration project, once the home, the public domain of large-scale popularization of semiconductor lighting, LED market capacity will be difficult to statistics.

But preferential subsidies to cancel at least let those opportunists discontent. Yangtze River Delta, a traditional industry, vice president of sales of the company recently revealed to the newspaper, the company wants to transition, ready to develop LED industry, intends to landing in Yangzhou.

"We will not allow what companies come in, it must have at least industry experience, technology and market background. Zhang Liansheng said that there is a shipbuilding company before the name of the transition to enter the field of LED want to talk with them, was finally rejected.

Local LED industry chain when self-improvement

For the last two years, China market has become the global LED industry layout of the land, many provinces are vigorously planning of this industry, and introduced many relevant policies.

This boom from the first half of last year has begun. At the beginning of 2009, in order to expand domestic demand, reduce energy consumption, the country began to vigorously promote the development of the LED industry, the Ministry of science and Technology launched the "ten city lights" semiconductor lighting demonstration city plan, the plan covers Beijing, Shanghai, Shenzhen, Wuhan and other 21 domestic developed city. Now has entered the second stage.

The plan to stimulate a boom in industrial planning. In addition to the above 21 cities, other provinces and cities are also competing for the two or three line LED industrial chain layout opportunities, and introduced a number of related preferential policies, involving the entire industry chain.

Originally introduced subsidies aimed at product application level, especially the demonstration project. For example, Guangzhou, according to the size of the application, the school, the government and the industrial and commercial enterprises to give 20% ~ 30% subsidy funds. Shenzhen to participate in government investment in the LED demonstration project to provide 10% of the company's price subsidies, discount for the past 3 years, the company invested in demonstration projects to subsidize the price of LED lamps of 30%. In addition, more cities such as Wuhan, Xiamen, Ningbo, Chongqing and other places to set up special funds to promote the application of LED. Wuhan 60 million yuan, Xiamen, the first batch of 80 million yuan, Ningbo $20 million per year