With the implementation of the national "ban on white" policy, the lighting industry will usher in a comprehensive transformation and upgrading, and the call for the LED lighting market to "explode in the first year" is getting louder and louder.
It can also be seen from the recent first-half performance sheets released by major LED companies that the LED industry, from chips to packaging plants, has been in short supply recently. Analysts point out that as the world enters the second peak period of banning incandescent lamps in the second half of this year, the LED industry will once again enter a period of peak demand.
On the one hand, the rise in demand has made my country's LED industry "ready to move"; but on the other hand, various obstacles restricting the industry still exist, and it is still doubtful whether it can "drive" smoothly on this "fast lane".
Market optimism
With the global "ban on white", industry insiders are optimistic about LED lighting due to the market vacancy caused by the elimination of incandescent lamps.
LEDinside, the research department of TrendForce, a global market research organization, predicts that the penetration rate of LED lighting in the global market is increasing rapidly. In 2014, the output value of LED lighting will reach 17.8 billion US dollars, and the overall number of LED lighting products shipped will reach 1.32 billion units, an increase of 68% compared with 2013.
In fact, the concept of the "first year of explosion" in the LED industry has been proposed for several years. Han Yun, an analyst at CCID Consulting Semiconductor Research Center, told reporters that in fact, LED lighting has been in a period of rapid development in recent years.
Data shows that in 2009, China's semiconductor lighting market reached 11.4 billion yuan, and by 2013 it rapidly developed to more than 45 billion yuan, with the industry scale growing at an annual rate of more than 30%.
Han Yun’s analysis pointed out that from the perspective of the three major applications of LED - display, backlight and lighting, the current penetration rate of LED backlight in LCD TVs has reached more than 90% in 2013. The global LED backlight output value has reached its peak, and the main driving force for future growth will come from lighting.
It is reported that by 2015, the penetration rate of LED lighting will reach 60% and 80% in 2018. "LED lighting is currently facing development opportunities, and the future market is still relatively optimistic." Han Yun said.
At the same time, the global lighting market is gradually showing the "white ban" effect. The price of LED lighting products is declining at a rate of 15% to 20% per year. The price difference between LED lighting products and traditional lighting products is gradually narrowing, and it has the advantage of competing with ordinary lighting.
"Since 2013, the price of China's LED terminal products has entered the sweet spot of US$10, the cost of upstream light sources has declined rapidly, and the scale manufacturing effect of terminal products has gradually emerged. This trend will become more obvious in 2014, and the growth rate of LED lighting will further accelerate." Han Yun said.
Fierce competition
However, in sharp contrast to the huge market space, China's LED lighting companies are large in number, small in scale, lack leading companies, and there are no well-known international brands. At the same time, the business model and marketing system are not yet complete, channel construction is relatively lagging behind, and the overall product cost is still higher than traditional lighting products.
However, since the current LED industry structure has not yet been formed and giant companies have not yet emerged, more and more companies are targeting the LED industry, and even some unrelated companies have poured into the LED field to compete for this big cake.
For example, as early as 2003, BYD began to get involved in the LED lighting industry, and home appliance industry giants such as TCL and LG also launched LED lighting products. At the end of 2013, Hebei Iron and Steel Group announced that its subsidiary Tangsteel Chuangyuan Fangda Company and South Korea's Pohang ICT Company would jointly establish Tangsteel Pohang New Light Source Co., Ltd. to officially enter the LED industry.
Regarding this phenomenon, Han Yun believes that LED is a sunrise industry and a highly subsidized industry. It is understandable that many companies have participated in it, and it can also promote competition in the industry, but it will inevitably create potential risks of a mixture of good and bad.
A typical precedent is that a few years ago, there was a boom in epitaxial chip production expansion due to competition for subsidies. Many companies had low production capacity utilization or even stopped production due to lack of preparation. At present, in the field of LED downstream applications, there is still a mixed situation. Products are mainly concentrated in the mid- to low-end. Companies in the low-end market compete fiercely and often encounter price wars. The industry is considered to be reshuffled sooner or later.
"However, with the gradual development of the industry, investment has gradually become more rational." Han Yun said, "The current development trend of the LED industry is that advantageous companies begin to seek partners, looking forward to learning from each other's strengths and joining forces to build leading companies and occupy a place in the global semiconductor lighting market."
Patent barriers
Another major obstacle hindering the development of my country's LED industry is the barrier of technology patents.
With the expansion of production capacity, the domestic market has been unable to absorb it, and Chinese companies have entered the international market. However, the export advantage of my country's LED lighting products mainly comes from lower product prices. In high-end lighting fields such as industrial lighting, environmental lighting, and special lighting, the market share is still small, and technology and patents have always been the shortcomings of domestic companies.
At present, the technology patents of the global LED industry are basically monopolized by several industry giants in the United States, Japan and Germany. Among the patents submitted by Chinese companies, utility model and design patent applications account for the majority, while invention patents are the weakest link. The upstream areas of the industry chain, such as chips and raw materials, are even worse among the shortcomings.
Relevant data shows that as of May this year, global LED patent litigation cases are on the rise, including as many as 20 cases in which overseas companies have sued Chinese LED companies.
In fact, after several years of development, my country’s LED industry has also given birth to a number of large companies with international influence. Han Yun pointed out that in order to improve competitiveness, the LED industry has seen an obvious trend of integration in recent years. Advantageous resources have been gathered among industry giants, and through acquisitions, strategic alliances, mutual shareholdings, etc., they have quickly broken down technology and patent barriers and achieved industrialization breakthroughs.
Sanan Optoelectronics acquired Luminus Devices of the United States for US$22 million through a wholly-owned subsidiary, and also obtained 151 patents owned by it around the world, making Sanan Optoelectronics' global layout increasingly complete.
"If Chinese lighting companies want to enter the high-end lighting field in the future, consolidating market share and strengthening independent research and development are insurmountable links." Han Yun said, "The LED industry, like other industries, faces the same embarrassing situation of scale but lack of high-end technology, and products but lack of high-end products. I believe that in the next period of time, how to break through the industry's technical difficulties and patent barriers will still be the direction that requires focused efforts."
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