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© 3quarks dreamstime.com Analysis | August 12, 2013

China LED package industry still grows

TrendForce: LED package manufacturers for backlight application raises on basis of supports from Chinese TV brand.
LED package industry in China still grows very fast. Take Refond, a representative company of medium-large size LED package manufacture, for example, their revenue in the first half of 2013 meet RMB 294 millions, 67% higher on a year-on-year basis. The LED revenue for meidun-large sized backlight application went to RMB 135 millions with a 113% growth on a year-on-year basis; at the same time, their LED revenue from new small-sized backlight LED also jumped over 10 millions. Beside of this, Shenzhen Jufei Optoelectronics co., Ltd., another representative Chinese small-sized backlight LED package manufacturer’s net profit improved 25%-55% on a year-on-year basis as well. LEDinside, a green energy branch of international market investigating institute TrendFoce said that as Chinese manufacturers’ package technology keep improving, it is obvious that LED package for backlight in China is going ready emerge. Meanwhile, leading LED package manufacturers such as Refond, Jufei, MTC and Dongshan Precision Manufacturing Co., Ltd (DSBJ) perform better and better on the basis of strong China brand TV sets shipment. Despite the fact that these China factories are still unable to catch up capacities and revenue of Taiwan factories, they actually are on their way to appear on the backlight market..

Refond’s total revenue in 2012 was RMB 500 millions with a 72% growth on a year-on-year basis, and LED revenue for backlight application contributed RMB 290 millions to their total revenue with a 169% growth on a year-on-year basis. Jufei’s revenue from backlight application reached RMB 420 millions that grew 37% on a year-on-year basis. MTC and DSBJ focus on producing LED and modules for backlight application, and both of their sale performances soared dramatically. Although Chinese LED package technology for backlight is not as good as Taiwanese of international factories, they have earned acceptance from local downstream firms, especially orders of smaller sized backlight that used on smartphones. In China, many second tier mobile manufacturers, even some leading ones, prefer to use Chinese package manufacturers’ product because of their better price/performance ratio. In additon, on large-sized backlight LED aspect, many of China-based TV set companies had started adopting local made LED for large sized backlight since 2Q12. Amongst these six leading TV set companies, there are five of them who had already introduced domestic-made LED. And the trend is increasing. Hisense is the only firm amount these six firms that haven’t applied local produced LED extensively.

According to LEDinside, backlight application is still the largest LED application, and most LED package manufacturers locate in Asian countries like Taiwan, Japan and South Korea for this moment. Actually, LED technology barriers for backlight application are higher for Chinese manufacturers to develop easily. This situation is especially obvious when it comes to large sized LED backlight and there are few Chinese package manufacturers which can manage to produce them. However, the quality differences between China-based and Taiwan-based or other international firms are becoming smaller and manufacturers in China always occupy some production cost advantage. All these factors have been increasing the price/performance ratio of Chinese LED backlight technology, helping these Chinese manufactures take over shipment from Taiwan, Japan or South Korea step by step. Despite the fact that demand for backlight LED at present is not as high as it was and new markets are in some way limited, there are still many opportunities for Chinese package manufactures to replace others. We can find that the total revenue of China manufactures are left far behind Taiwan manufacturers. On the basis that there also exists Japan and South Korea manufacturers, there are some rooms available for China LED package manufacturers to stand on. For this reason, many Chinese LED package factories admit that they have been trying to take part in producing LED for backlight application or to improve their capacities.

LEDinside addressed that most TV sets, mobile phones, notebooks and other electronic products will be produced from China in the future, and this indicates that China will become one of the strongest LED backlight demand market. In the future, it is irreversible that China LED package maker will replace international makers in Taiwan and other countries. Manufacturers in Japan and South Korea may be able to maintain their own markets under patent protection. On the contrary, however, scales of upstream manufacturers in Taiwan are almost the same with China-based ones, and Taiwan package makers who are lack of brand group support. If such situations continue, Taiwan companies will fall into an embarrassed and passive position.

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