Home > First Chinese supplier breaks into Top 10 LED rankings in 2013

First Chinese supplier breaks into Top 10 LED rankings in 2013

Editorial

MLS Electronics Co. Ltd., the first Chinese company to enter the Top 10 global rankings for packaged LEDs, represents a unique achievement for China’s thriving LED industry.

According to IHS Technology, this achievement is a result of China’s massive investments in light-emitting diode (LED) manufacturing capacity. China’s MLS Electronics Co. Ltd. rose to the No. 10 rank in the worldwide market for packaged LEDs in 2013, up from 14th place in 2012, joining leading players from South Korea, Japan, the United States, Germany and Taiwan.

Jamie Fox, principal LED analyst for IHS observes that most of the new LED production capacity added worldwide since 2011 has occurred in China, making it inevitable that Chinese companies eventually would penetrate the ranks of the top 10 LED suppliers.

According to IHS LED Intelligence Service, apart from MLS, no other Chinese firm even ranks among the top 20 global suppliers. Though massive, China’s LED supply base is highly fragmented, with thousands of small manufacturers located across the country.

The market-leading MLS accounted for less than 10 percent of Chinese LED revenue in 2013. Alice Tao, China LED analyst at IHS commented that the next five largest LED suppliers in China represented only about 20 percent of the market.

However, the rise of China’s LED manufacturing capacity is also raising concerns about overcapacity with some of the equipment purchased for metal-organic chemical vapour deposition (MOCVD) manufacturing, which is the most important process step in LED production, now sitting idle in China. Overcapacity is a problem that could shut down some of the Chinese suppliers.

IHS also reports that MLS and the smaller Chinese suppliers mostly compete among themselves for a share of the large domestic LED market with international sales not amounting to a lot. Additionally, the extremely low prices in the Chinese market pose a hurdle to the entry of overseas suppliers.

IHS expects the LED revenues of Chinese vendors to grow steadily over time, as the country’s economy continues to grow strongly. Chinese LED suppliers will consequently sell more internationally and begin competing with foreign rivals.

Key concerns for international customers who are considering Chinese suppliers include intellectual property and quality. However, factors such as patent expirations, China’s established history in other industries, the sheer volume of manufacturing capacity in the country and the fact that many LED lamps are assembled in the nation, suggest these concerns could be alleviated over time.

Top-tier LED suppliers such as Nichia, Osram, Lumileds and Cree so far have seen only a small impact from Chinese vendors on their sales. This might change by the end of the decade.

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