Guangzhou exemplifies China's LED industry
Guangzhou (China) Lightfair Conference is the biggest lighting fair in Asia, with companies throughout the LED lighting supply chain, including new Chinese MOCVD makers, International Solid State Lighting Alliance and China SSL Alliance. Citi alternative
enewable energy analyst Timothy Arcuri notes trends at the show in LED manufacturing and pricing ahead of China's subsidy program going into effect.
The NDRC's demand rebate program is more positive than Citi originally estimated, because the rather meager RMB2.2B (~$350MM) would get more funds if this iteration of the subsidy catalog's funds are depleted, expected to take only ~12-24months. Producers are even more excited by provincial-level subsidies, Arcuri says. In Guangdong, the province in which the conference took place, these will boost revenue for local LED producers to RMB5B (~$850-900MM) by 2015.
Major buyers like Kingsun are finally coming to shop at the local LED makers, sourcing up to 60% of their LEDs domestically by 2013. Companies that months before were making Christmas lights are now making bulbs; bulbmakers are vertically integrating rapidly into fixtures. Lumens/W at these companies have increased dramatically even from last fall.
Citi heard of many examples of Chinese LED makers selling well below cost to gain an edge, and this could intensify as the government subsidies roll out.
Citi estimates that ~60% of all reactors shipped to China are turned on, with ~60% utilization on these tools, implying overall utilization of ~35-40%. The "gray market" for MOCVD tools is gaining steam, but province-specific. Citi's observed talk of stronger vendors within a given province buying new, unused, or virtually unused tools from weaker vendors (in most cases recertified by the tool vendor). As long as the equipment does not leave the province, local government is happy, sometimes even "playing matchmaker" behind the scenes to force consolidation.???M.C
Solid State Technology, Volume 55, Issue 6, July 2012