Chinese LED manufacturers delay purchase of MOCVD equipment

Dramexchange (TrendForce)'s LED industry research firm LEDinside said, China chip factory in the local government's subsidy policy last year, about LED lighting market demand, large open plant expansion program, high production equipment MOCVD machine number. But by the end of 2011 LED industry demand has not been clear, the product inventory continues to improve, so manufacturers have begun to delay plans to purchase MOCVD equipment.

In addition, China due to inflation, constantly raise the deposit reserve rate and monetary tightening, but also makes the local government financial subsidies for funding difficulties; the impact of various factors, Chinese LED chip manufacturers to hold a conservative attitude for the second half of the expansion plan. LEDinside estimates, in 2011 the number of new MOCVD installation of 711 units, of which the number of newly installed units in China area of 380 units.

Chinese LED manufacturers in 2011 the number of newly installed MOCVD

China's consumer price index has hit a new high since 2011, with an inflation rate of 5.5% in May, and the people's Bank of China hopes to control inflation by tightening monetary policy. Since June 20th, the people's Bank of Chinese has raised the deposit reserve ratio of 6, the mainland Chinese large financial institutions deposit reserve rate reached a record high of 21.5%, the benchmark lending interest from July 7th to 6.56%, for the third time this year to raise interest rates.

LEDinside pointed out that from the point of view of the amount of new loans in May, compared with April dropped 25%, decreased from RMB 740 billion to RMB 552 billion, and compared with the same period last year decreased by 13.7%, also shows the local enterprises more difficult to obtain funds, plus labor costs continue to increase, the operating costs of enterprises management is also facing challenges.

In addition, the Yangzhou municipal government announced Chinese since the second half of 2011 will begin to stop the MOCVD purchase subsidy policy, Chinese and Taiwan chip factory began to worry that the local government will stop subsidies, thus began to purchase large quantities of MOCVD machine in the first half of this year, hope to catch up with the subsidy policy.

However, due to the tightening of monetary policy, the amount of financial subsidy China LED enterprises are not easy to obtain, affect the expansion schedule, coupled with the overall terminal sales slump and chip prices fell sharply and other factors, part of the LED chip manufacturers capacity utilization fell to 50%, for the production of machine for engineering use. Therefore, various manufacturers have delayed the expansion of production schedule.

LEDinside said that the first China chip factory will also be expected to base expansion into the sales center, and MOCVD machine and original equipment manufacturers scheduled purchase plan, and also discuss equipment factory deferred delivery time, add variables for the second half of 2011 China chip market supply.

On the other hand, the second tier Chinese chip manufacturers in the shortage of funds, the lack of professional and technical personnel and the lack of MOCVD production equipment, it is possible to stop the expansion of production plans, or even face the collapse of the crisis. LEDinside believes that, in the case of this surge in terminal demand, with high technical content, and the cost advantage of the manufacturers, will be able to spend the second half of 2011 challenge.