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LED industry lights up

By Fei Li (China Daily)
Updated: 2009-07-13 08:07

The giant LED screen that welcomed visitors to last year's Beijing Olympics helped publicize a fast-growing industry in China. [Asianewsphoto]

While many industries are suffering under this year's cloud of economic uncertainty, China's fledgling but rapidly growing LED industry is proving a silver lining.

But the LED (light-emitting diode) industry, still dominated by the United States and Japan, needs to grow even faster, industry executives and analysts said.

China's growing domestic market for energy-efficient LED lighting is being bolstered by a government encouraging more consumers and businesses to use LED products, they said.

This is providing a cushion against declining export markets in the United States and Europe, they said.

"The raw materials used in producing LED products have slumped a lot as a result of the global financial crisis, pushing down the prices of the finished LED products and making them more affordable," Li Mantie, general manager of Shenzhen Ledman Optoelectronic Co, a leading LED maker in China, said in a recent interview with an industry website.

More affordable products, Li said, could accelerate their wide applications, therefore boosting the industry as a whole.

"And many customers are trading down due to the financial crisis. This makes China-made LED products more appealing, since they are generally cheaper than their competitors," Li said.

LED is an electronic light source, which was invented in Russia in the 1920s.

Today, LED is widely used in an array of applications, ranging from home or office lighting to mobile phone screens and televisions.

China has more than 2,000 companies and research institutes involved in the LED industry employing around 100,000 people, according to Guo Yuguo, director general of the LED division of the China Optics and Optoelectronics Manufacturers Association (COEMA).

China's LED industry is clustered in the Pearl River Delta and Yangtze River Delta in Fujian and Jiangxi provinces and in the cities of Beijing and Dalian.

It is an industry projected to grow to 150 billion yuan next year as more LED applications are developed, according to Communications Industry Researchers, a US-based market research firm.

Topology Research Institute, a Taiwan-based research firm, predicted in April that China's LED market would grow 64 percent from this year's estimated 74.5 billion yuan to 122.5 billion yuan in 2010.

The research firm based its estimate for higher growth on the government's 4 trillion yuan economic stimulus package and also wider applications of LED products, especially in the lighting segment.

But the fast-growing industry is still technologically lagging its peers in the United States, Japan and Taiwan province, analysts and industry executives said.

"The lack of advanced wafer and chip technology is a major drawback to China's LED industry," said Xi Guanyi, an industry consultant at the Information and Technology Research Center at CCID Consulting Co, a Beijing-based information technology industry and market research firm.

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The Chinese mainland, which has a deep pool of research institutions and talents, and Taiwan province, where the LED industry chain is more developed, can benefit each other in the LED industry.

"The key is that both sides establish an industrial alliance and jointly work out industrial standards," Xi said.

Taiwan province has established 17 LED standards, while the Chinese mainland has only seven, Xi said.

"So the room for the two sides to work together in this area is huge," he said.

A delegation of mainland Chinese home appliance makers and LED makers visited Taiwan last month to look for investment opportunities on the island.

The delegation members included top executives from BOE Technology Group Co and the LED division of China Electronics Technology Group Corp. The two companies are leading mainland LED makers.

Experts said wider applications of LED technology would grow new markets in sectors such as television set production and indoor and outdoor lighting.

Globally, sales of LED TVs, which save 40 percent more energy compared to conventional LCD TVs, are expected to grow more than tenfold this year to about 2 million units, according to the research group DisplaySearch.

That's compared to total LCD TV sales of 120 million, DisplaySearch reported.

Earlier this year, the Ministry of Science and Technology launched a pilot program to promote the usage of semi-conductor lighting in 10 cities, including Beijing and Shanghai.

The size of the LED lighting sector alone is expected to grow to 9.8 billion yuan next year, thanks in part to the 2010 Shanghai World Expo and the upcoming Asian Games in Guangzhou, according to the industry research firm LED Inside.

"There was big publicity last year for LED, thanks to its use at the Beijing Olympics. Many venues were lit by LED lamps, and the huge display screen at the opening ceremony also used LED," said Guo of COEMA.

Guo is also chairman of Jiangsu Wenrun Optoelectronics Co, a LED encapsulation and semi-conductor lighting products maker.

"We (China's LED industry) need to turn the international financial crisis into an opportunity. LED industry growth is now shifting to China," Guo wrote in a recent article.

"The government's energy-saving push is also a big booster for the sector," Guo wrote.

Li of Shenzhen Ledman Optoelectronic Co said China can leapfrog Japan and the United States for dominance of the market if government and industry leaders work together.

The central government should list the industry as a strategic sector, Li said.

"Many locally-produced high-end LED products are as good as the ones produced by (American brand) CREE and other foreign vendors, but are half of the price, so the government should give us more support in this area," Li said.