[Source: "High-tech new industry" May issue] Last year, LED upstream chip and midstream package overcapacity was serious, and the price was greatly reduced, driving the price of LED lighting application products to drop significantly. It is expected that the LED application field will explode in 2012. Growth, especially in the field of LED indoor lighting and outdoor lighting. In 2010, more than 75% of China's LED lighting companies were in a loss situation. In 2011, more than 60% of China's LED lighting companies achieved profitability. In the first quarter of 2012, the proportion of China's LED lighting companies to achieve profitability has further increased. It is expected that more than 80% of LED lighting companies will achieve profitability in 2012. Table 1 Total output value of China's LED industry in 2010-2011 First, the basic situation of the LED industry chain The LED industry chain can be divided into three parts: upstream, midstream and downstream. The upstream is LED epitaxial wafer growth, chip manufacturing, and auxiliary equipment manufacturing; the midstream is the device package; the downstream is the application product manufacturing. Application product manufacturing includes LED display, backlight, LED lighting products and so on. Figure 1 2010-2015 China LED application output value analysis and forecast Incremental Encoder,Linear Scale Encoder,Dual Concentric Rotary Encoder,Dc Servo Motor Encoder Yuheng Optics Co., Ltd.(Changchun) , https://www.yhenoptics.com
LED lighting market outlook
First, the LED lighting manufacturers profit ratio increase
In the first quarter of 2012, due to the backlog of inventory, China's LED upstream chip manufacturers still have some discounted prices.
Since February this year, the demand for downstream lighting application market has grown rapidly, and the overall price reduction of LED midstream products is relatively low, only about 5%. In addition to some of the inventory backlog, and the price of LED chip products with a discounted price dropped a lot, the price of other chip products in the first quarter of 2012 was also less than 7%.
In the first quarter of 2012, the LED application market grew by more than 30% year-on-year, giving LED lighting products a strong price/performance advantage in individual segments.
According to the results of the first quarter of this year, the LED industry research institute (GLII) will continue to lower the price of LED lamps. In the first quarter, the overall luminous efficiency of indoor lighting products such as LED fluorescent tubes and LED bulbs increased by 12.3%, and the average price dropped by 7.8%.
The decline in the price of LED lighting applications has led to the rapid development of the LED lighting application market in China, which has significantly improved the survival of LED lighting application manufacturers.
However, compared with traditional lighting, LED lighting applications still have many problems such as high price, uneven product quality, chaotic market competition, lack of industry standards, lack of core patents, unsound production scale, and low acceptance of ordinary people.
Second, in 2012 China's LED application market output value will reach 150.4 billion yuan
In 2011, the 22% growth rate of the LED application market was far lower than the original expected 40%, mainly due to the sluggish demand in the domestic LED application market, as well as the international economic impact of the European debt crisis and the weak US economy.
In 2012, countries around the world have successively introduced policies to develop LED applications, and the rapid maturity of LED application products will directly drive the rapid growth of China's LED application market in 2012, especially LED indoor lighting will explode. It is estimated that the growth rate of China's LED application market will reach 30% in 2012, and the output value will reach 150.4 billion yuan. However, the price of LED application products will continue to decline, which will lower the gross profit margin of enterprise products.
The High-Tech LED Industry Research Institute (GLII) predicts that by 2015, China's LED application market will reach 286 billion yuan. 
Source: Gaogong LED Industry Research Institute (GLII)
Analysis of the status of China's LED industry chain
The manufacture of upstream LED chips and epitaxial wafers is dominated by Cree, Philips lumileds and Nichia, which dominates the high-end market. LED chip manufacturers in Taiwan control the low-end and mid-end chips market. Domestic LED chip companies are basically concentrated in the low-end chip market. After the rapid expansion of production capacity in recent years, the production capacity is obviously over-capacity and the competition is fierce.
The domestic LED industry is mainly based on midstream packaging and downstream applications. As of the first quarter of 2012, China's LED upstream enterprises reached 95, of which 56 were mass-produced; more than 1,600 mass-produced enterprises in the middle reaches, and more than 5,000 LED application enterprises in the downstream.
Driven by national policy support and downstream application demand, as of the end of the first quarter of 2012, China had more than 200 LED companies with revenues exceeding 100 million yuan. 
However, from the perspective of LED industry structure, Chinese LED companies are still mainly packaging and application, mainly for the low-end market, with low product profits, and are facing the squeeze of international companies such as Europe, the United States and Japan.
In 2010-2011, there were 16 successful L ED companies in China. As of the end of the first quarter of 2012, 15 LED manufacturers have been listed one after another (Mulinsen has a meeting but not listed). In 2012, another LED will be introduced. The listing of enterprises has culminated.
According to the survey conducted by the High-tech LED Industry Research Institute (GLII), 58.6% of LED companies have an intention to go public, and enterprises with revenues over 100 million yuan account for 68.5%. 
