July29, 2019

ByDaniel Choi

An industry deemedworthy by the Central Government itself

LightEmitting Diodes (LEDs) are a culmination of the fields of optics, thermology,electrogenesis and many more different fields of research and knowledge. LEDlighting products such as lightbulbs have a wide variety of uses both in thehome and in other applications such as backlights for electronics. According tothe national policies as revealed in the 13thfive-year plan for theLED industry, the Chinese government is either planning on a creating a newcompany or nurturing an existing company in the LED industry to become anindustry powerhouse with 10 billion CNY in sales revenues (1.45 billion USD asof July 29th, 2019) and also assist in the development of 1-2international brands and around 10 different domestic brands.

LED applications and lightbulb usagestatistics

Theperiod between 2011 and 2016 saw major changes in LED usage; while fluorescentbulbs were the dominant form of lighting products during 2011, LED graduallybegan to take their place over the period of 6 years. The Chinese governmentcontinues to promote the use of LED products over other alternatives for anumber of positive reasons.

Thefigure shown here indicates that while fluorescent lightbulbs were the dominantform of lightbulbs between 2011 to 2013, LED usage eventually became even withfluorescent lightbulbs in 2014 and eventually surpassed fluorescent lightbulbusage in the following year. The slow decrease in other lightbulb types coupledwith the drastic changes in fluorescent lightbulb points to the fact that LEDshave already become the dominant form of lighting in China. Government programsdemanding mandatory LED usage for public facilities such as hospitals,educational facilities, office buildings and government facilities as well asthe increased visibility, availability and awareness of LED lighting productsare some of main driving factors for such rapid growth, while practical reasonsfor the switch include greater brightness, ease of recycling and longevityamongst others.

Theupstream portion of the LED industry is mainly concerned with the manufacturingof EPI wafers and LED Chips, while the midstream portion is predominantlyconcerned with packaging. The downstream portion of the industry supplies anumber of different industries, and benefits from massive demand from a largevariety of electronics products that need LED lighting such as the smartphoneindustry, the tablet PC industry and the notebook industry.

An already strong industry set to becomeeven stronger

TheChinese LED industry’s strong performance can be attributed to stronggovernment backing and the practical reasons mentioned above. Unlike otherlighting products which were more limited in usage, LEDs have a large number ofdifferent applications and as such is tied to many different downstreamindustries, many of which are high performers on their own as well. While aprevious figure only lists different lightbulb usage statistics up to the year2016 where LED usage is at 46%, based on current trends it is safe to presumethat LED usage today has already passed 50%.