Despite Strong Demands Chip Manufacturers Remain Indecisive Towards Expansion

Recent studies by different research organizations in China show lighting manufacturers’ orders are on the rise as industry moves closer to peak season in March. Chip manufacturers, however, remain indecisive about expanding production. LED chip supply and demand will be more optimistic compared to last year.  

LED lighting demands boom

Prices for LED lighting products have dropped further this year. Retail prices for 5W LED bulbs equivalent to 40W equiv. incandescent  bulbs have already dropped to RMB 10-15 (US $1.6-2.4) range. Tube light retail price also lowered, with 16W T8 reaching RMB 40 and lower. Lighting manufacturers are all vying to secure larger market shares and product shipments have increased substantially. Sinolink Securities estimates that several large Chinese lighting manufacturers will see an increase of around 100 percent in their LED business, with income share close to 50 percent. 

Chip manufacturer stuck in expansion dilemma

Chip demands have increased on the back of rising LED lighting demands. As the industry enters March, production for first and second tier chip manufacturers have  reached full production capacity. Anticipating the launch of high cost/performance (C/P) equipment models by Veeco and Aixtron, many chip manufacturers remain on the fence about production expansion. Sinolink Securities anticipates this situation to continue into finalization of new MOCVD models which could tighten chip supply as peak season begins. 

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