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Chinese LED Enterprises Restart Capacity Expansion for Demand Growth for LED Lighting in 2013

Chinese LED Enterprises Restart Capacity Expansion for Demand Growth for LED Lighting in 2013


According to market survey, the demand for indoor LED lighting in the first-half of 2013 has been strong, some Chinese LED enterprises pointed out that there has been a shortage in supply of mid power LED indoor lighting products, including LED Flat Panel, T8 LED Tube Light and recessed Lighting. Industry sources estimated that Chinese LED lighting market will achieve a growth of 50% in 2013, so some Chinese LED enterprises may restart capacity expansions.

The growth in the demand for LED stimulates the Chinese LED firms to restart capacity expansion. In particular, Sanan Optoelectronics has received CNY 5 billion (US$815 million) from China Development Bank. Sanan Optoelectronics announced a plan for a capital injection of CNY 3.3 billion at the end of May; CNY 2.8 billion will be used to purchase new MOCVD equipments for its factory in Wuhu, China. Recently, Sanan in Xiamen announced to add 20 new equipments, and the local government provided CNY 100 million in subsidies for it.

Taiwan LED enterprises expressed that the market is still in oversupply, although some products have been experiencing shortages, another capacity expansion may lead to crisis in the LED industry again.

In the past, the LED lighting technologies of Chinese enterprises significantly lagged behind their Taiwan-based peers. However, the technologies and products displayed by Chinese enterprises at the Guangzhou International Lighting Exhibition 2013 (GILE 2013) have been much more advanced compared to Taiwan-based peers, also feature with rising competitiveness.

In 2012, China's LED industry suffered from oversupply and price war and the industry paid attention to LED lighting policies. Therefore, some enterprises suspended capacity expansion plans for 2013. But local governments in China such as Guangdong, Fujian, Jiangxi, and Shanghai have announced new projects and subsidy programs since Q1 of 2013, so industry sources believe that some Chinese LED enterprises will restart their capacity expansion plan in 2013.