TrendForce's green energy unit LEDinside has reported that total LED chip revenues of mainland Chinese companies amounted to $992 million in 2013, with a year-on-year growth of 17 per cent. The report projects that revenues will reach $1182 million in 2014
According to LEDinside analyst Allen Yu chip capacity utilisation in 2013 has largely improved by being influenced by the enhanced penetration of LED commercial lighting. However, the continuous decline in chip price, the growth rate of production value was less than that of production volume.
In the first half of 2013, the LED commercial lighting market demand was strong. Traditional lighting manufacturers accelerated the LED lighting business, and midstream packaging manufacturers turned to downstream integration in succession.
The lighting-use chip-based manufacturers' capacity utilisation improved rapidly. Elec-Tech's LED chip revenue in 2012 reached $35.5 million, but is expected to reach $56.5 million in 2013, with a growth of more than 50 per cent. EpiTop's revenue will achieve double growth in 2013. For Sanan Optoelectronics, Tongfang Optoelectronics, and HuaLei Optoelectronics, capacity utilisation remained at a high level.
The display-use chip-based manufacturers have increased lighting-use chip business in succession. HC SemiTek gradually increased LED lighting-use chip business, which is expected to reach 50 per cent by the end of 2013. Silan Azure's new production machines were mainly used to produce lighting-use chips as well.
In the case of the rise of Chinese chip companies, Taiwan manufacturers' and international manufacturers' Chinese chip market shares were gradually shrinking.
According to LEDinside, in 2013, the Chinese chip makers' share in the Chinese LED chip markets reached 80 per cent.
In the field of display-use chips, the market was still showing a rapid price decline in 2013, therefore, although companies have greatly increased their revenues, the profit can not follow up the trend. Display-use chips' prices decline was one of the reasons why chip manufacturers increased lighting-use chip business.
In 2013, China's LED chip industry has been further concentrated, the market share of top five manufacturers increased from 61.9 per cent in 2012 to 64.4 per cent. With the continuous industry development, concentration will get ceaseless promotion, and industry reshuffle and integration are inevitable.
Yu said that judging from the current situation of the chip industry, although the chip price decline slowed down, corporate profitability is still difficult to improve. Small- and medium-sized chip makers lacking funds and technology will become the next batch of candidates to go into liquidation or to be acquired.
In 2014, in the case of slowdown in growth of backlight and display areas, LED lighting is still the main area that chip manufacturers will compete for.
LEDinside expects that global LED lighting market value in 2014 will reach $17.8 billion. The total shipment of LED lighting products will be 1.32 billion sets, with a growth of 68 per cent over 2013.
For technology, 4-inch wafer production applied by Chinese companies is increasing. ETi is adopting 4-inch wafer technology 100 per cent, but the adoption rate in San'an Optoelectronics, HC SemiTek, and Nationstar will reach more than 30 per cent. In addition, flip chip will also be popular, and is expected to be widely used in high-power lighting and flashlight fields with its own advantages.