Look at the domestic LED chip expansion plan adjustment

With the domestic huge subsidies for MOCVD devices this month will come to an end, and the whole LED terminal market performance as expected and LED epitaxial prices fell and other factors, expected the second half of this year the domestic upstream LED chip manufacturer expansion plan will be a significant correction.

The domestic LED chip manufacturers in the expansion of production capacity last year greatly, is out of the market prospects and the local government of the MOCVD device can be said that the huge subsidies, market prospects and government subsidies became the main thrust of this round of expansion boom. In OFweek seems that the current situation is expected, after all, the current market demand is not enough to support such a large capacity expansion.

In the last year, a large number of domestic enterprises have been launched on the occasion of the MOCVD, the industry on the discussion of excess capacity on LED rampant. However, the terminal demand an effect beyond market expectations, backlight demand appeared in a spurt of development in the last year, can be said to some extent offset the market for overcapacity pressure. As OFweek's previous analysis, in the field of LED backlight, domestic enterprises rarely involved, let alone to consume domestic manufacturers to expand production capacity. However, foreign LED companies in particular, Taiwan manufacturers to increase the emphasis on the field of LED backlight, to some extent, also ease the competitive pressure of the domestic LED companies in the market.

However, good times don't last long. Into 2011, LED backlight demand weakness, Taiwan related LED corporate performance has fallen sharply, while South Korean manufacturers also due to the slow growth of LED backlight TV and terminated the relevant expansion plans. In the current case, the backlight market is the main driving force for the growth of the entire LED industry, the weak demand for backlight is bound to strongly impact the growth of the entire LED industry. Although the domestic enterprises in the market does not appear to fluctuate significantly, but foreign manufacturers have begun to seek the adjustment of LED product structure, the gradual shift from the backlight to the direction of the product.

According to OFweek analysis, foreign manufacturers of this move will bring a strong impact on domestic LED manufacturers. Foreign enterprises will strongly stimulate the domestic LED companies nervous, if foreign enterprises will focus on the field of LED lighting, it is not open in LED general lighting conditions, the survival pressure will be related to domestic LED manufacturers to further increase. Therefore, the domestic LED chip manufacturers to adjust the expansion of the production plan is the result of the impulse, but the current situation is indeed a wise move.

On the other hand, the domestic MOCVD devices for huge subsidies will not continue, so in July of this year (i.e. this month) Yangzhou will stop MOCVD equipment subsidies, and expected the government of other parts of the country also has the corresponding action. This will be in the expansion of the LED chip manufacturers to bring huge pressure on profitability, while a large number of MOCVD launched by the impact of weak demand, the current domestic LED chip manufacturers capacity utilization rate fell to 50%. This is a huge waste of resources to spend heavily on the introduction of MOCVD devices. At the same time, the lack of relevant professionals is also a leading cause of capacity utilization is not high.

So, the expansion of domestic LED enterprises to adjust the production plan will play what kind of effect? What will happen next? We wait and see!