The lack of core technology in the enterprise LED industry has huge hidden concerns


Driven by the concept of energy saving and emission reduction and low carbon economy, LED has become a hot industry, attracting enthusiastic investors to pursue. According to a study by Goldman Sachs, the global LED market is expected to grow at a compound annual growth rate of 18% from 2008 to 2010.


In 2009, the stock prices of many LED manufacturers in Taiwan rose sharply, and the highest increase was more than three times. Even Taiwanese artist Wu Zongxian has raised 10 million yuan to set up a technology company to join the LED industry. In the A-share market, the LED sector led by Sanan Optoelectronics was favored by funds. Among them, from the end of 2008 to the present, the “half-way home” Dehao Runda share price has increased more than 8 times in 15 months. Many home appliance faucets have also penetrated into the LED industry. For example, Skyworth and Konka have invested in LED packaging factories with 10 million yuan. Not only that, but global LED manufacturers are also expanding.

Core technology is in the hands of others


On the one hand, it is the real money of "you fight for me", but it is the constraint of technology and equipment.


The global LED industry is mainly distributed in Japan, Taiwan, Europe, America, South Korea and China. Among them, Japan accounts for about 38% of the total, and is the largest producer of the global LED industry. Taiwan's output value ranks second in the world.


At present, the LED epitaxial wafer production technology mainly uses the organometallic chemical vapor deposition (MOCVD) method, and the MOCVD equipment is mainly monopolized by two oligarchs - AIXTRON of Germany and VEECO of the United States. Relevant data shows that the market share of the two companies exceeds 92%. Moreover, the US and European countries have mastered the core technologies of upstream epitaxial wafers and chip manufacturing. Enterprises from the US, Japan and Europe have 85% to 90% of original invention patents in the upstream area of ​​the LED industry chain.


Relevant surveys show that packaging is the main R&D and application field in China, and the number of patent applications accounts for 39% of the total. In terms of the upstream and chip of the industry, China's research and production started relatively late, and the proportion of patents was small.


Will it be a beautiful bubble?


According to a study by Goldman Sachs, the global LED market is expected to grow at a compound annual growth rate of 18% from 2008 to 2010. The main growth momentum of the LED market in the future will come from the LCD panel, automotive lighting, and general lighting application market. Goldman Sachs pointed out that because the actual technology is still limited in terms of power saving, and the product cost is still high, it is expected that LEDs will widely replace traditional light sources, which is still impossible to achieve in the medium term.


According to the statistics and measurement of the Optoelectronic Devices Branch of China Optical Optoelectronics Industry Association, there are currently more than 2,000 LED companies and about 600 packaging companies in China, of which about 100 are of certain scale. However, the industrial concentration of packaging companies is not high. At present, among the LED-related listed companies in China, there is still no listed company with packaging as its main business. Overseas, especially Taiwanese LED companies have already laid out the mainland market on a large scale.


According to the statistics of Great Wall Securities, in the LED industry chain, the profits of the upper, middle and lower reaches of the industry accounted for 70%, 10% to 20%, and 10% to 20% respectively. Relevant data also shows that due to the low barriers to entry, the current midstream and downstream industries have entered the stage of small profits but quick turnover. The general gross profit margin is 5%~15%, and the net profit margin is below 5%.

With the booming global LED industry, the demand for MOCVD equipment has increased dramatically. However, the supply capacity of MOCVD suppliers is becoming a bottleneck for LED company's capacity expansion. The bargaining power of China's LED manufacturers concentrated in the middle and lower reaches is not strong. The development of localized MOCVD equipment and practical application is an urgent problem to be solved in the development of China's LED industry. If only blindly influx into the downstream package, the result can only be overcapacity, making the competition even more fierce. The "ambitious" LED industry can only be a beautiful bubble that is "blowing".

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