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Jessie Lin, DIGITIMES Research, Taipei [Wednesday 12 December 2012]
The China LED industry has developed at a breakneck pace over the last two years, thanks largely to a clear government policy on solid-state lighting (SSL) and the inclusion of LED as one of the key areas of industry for development within the 12th Five Year Plan. Looking at China's LED chip and packaging industry, there is considerable variation in the level of success achieved by the various major players, and this Digitimes Research Special Report analyzes these differences in terms of financial position, capacity and industry presence. Abstract 
The China LED industry has developed a breakneck pace over the last two years, largely thanks to a clear government policy on solid-state lighting (SSL) and the inclusion of LED as one of the key areas of industry for development within the 12th Five Year Plan (12th FYP). While the 12th FYP took effect from 2011, the government published a revised set of 12th FYP Semiconductor Lighting Technology Development Projects in 2012. The revised plans increase many of the numerical indicators and targets from the old version, demonstrating China's desire to up the pace of LED industry development. Digitimes Research compares the two versions for analysis.
While the government has established clear industry policies, the China LED industry still lacks the 20-year history of the Taiwan or Japan industries. The breakdown of sectors in which it is competitive and uncompetitive therefore differs significantly from those regions. Digitimes Research believes that China is most competitive in rare earth materials, LED packages, and end product applications; it is relatively weak in other areas.
This report mainly focuses on China's LED chip and packaging sector because in recent years, the number of MOCVD equipment in China has been growing rapidly due to strong government subsidies. This makes the development of the country's upstream and downstream LED sectors intriguing. There are considerable variations in the level of success achieved by the various major players, and these differences are analyzed in terms of financial position, capacity and industry presence. Digitimes Research believes Sanan Optoelectronics has the highest rating, followed by Electech, Epilight, Tsinghua Tongfang and Silan Azure.
The rise of China-based LED chip makers has also stimulated the growth of the regional LED package industry. However, China's industry ecosystem for the LED package sector differs from those of other regions most notably in terms of fragmentation, with more than 1,000 companies involved compared to only a handful of significant players in other regions. Digitimes Research has a number of players as indicators based on their relatively large size and greater potential for development; the largest of these are Nationstar, Honglitronic, Ledman, Refond, Jufei (JF), and Z-Light.
Nationstar has the greatest potential for future industry presence, with a very comprehensive industry chain covering upstream LED chips and downstream end lighting products. Honglitronic and Z-Light are more focused on downstream LED lighting development, while Ledman, Refond and Jufei are all mainly expanding LED package capacity. In overall terms, Nationstar is the most competitive and is likely to remain the number one China-based LED packaging company.
Table of contents Development of the China LED industry Key LED industry policies in China's revised 12th FYP Table 1: China's revised SSL policies in terms of upstream, midstream and downstream industry sectors Table 2: China's revised SSL policies in terms of the industry as a whole Competitiveness of the China LED industry Table 3: Analysis of the competitiveness of the China LED industry Lighting-related output value forecasts for the China LED industry Chart 1: China LED industry output value forecast, 2010- 2015 (CNY billion) China share of global MOCVD capacity Chart 2: Global MOCVD demand, by region, 2011-2012 Competitiveness of China's major LED chip makers Financial position Table 4: Financial position of China's major LED chip makers in 2012 Capacity Table 5: Comparison of MOCVD capacity for China's LED chip makers Industry presence Table 6: Industry presence analysis for China-based LED chip makers Competitiveness of China's major package makers Table 7: Comparison of the competitiveness of China's major LED package firms (CNYm) China tier-one LED chipmakers Sanan Optoelectronics Operation analysis Chart 3: Sanan revenues and operating profits, 2010-3Q12 (CNYm) Capacity planning Chart 4: Sanan's total number of MOCVD equipment, 2008-2014 (MOCVD units) Market presence Table 8: Sanan's market presence Sanan buys Formosa Epitaxy shares Table 9: Sanan forms alliance with Formosa Epitaxy Chart 5: Sanan and Formosa Epitaxy revenues and profits (US$m) Chart 6: Sanan and Formosa Epitaxy net change of cash (US$m) Chart 7: Sanan and Formosa Epitaxy total combined capacity (Equipment units) Chart 8: Total and expected capacity of Epistar-related firms (Equipment units) Chart 9: Sanan and Formosa Epitaxy customer bases Chart 10: Sanan and Formosa Epitaxy cooperation benefits Electech International Operation analysis Chart 11: Revenues and gross margins of Electech's LED-related business unit, 2010-3Q12 (CNYm) Capacity plan Chart 12: Electech's total number of MOCVD equipment, 2011-2012 (Equipment units) Market presence Table 10: Electech's market presence China tier-two LED chipmakers-Silan Azure, Epilight, Tsinghua Tongfang Silan Azure Operation analysis Chart 13: Silan Azure revenues and gross margin, 1H10-3Q12 (CNYm) Capacity planning- Hangzhou Chart 14: Silan Azure capex plan, 2011-2012 (CNYm) Chart 15: Silan Azure's number of MOCVD equipment, 2010-2012 (equipment units) Chart 16: Silan Azure MOCVD capacity expansion, 2010-2012 Capacity planning-Chengdu Chart 17: Chengdu plant construction project Table 11: Monthly LED chip capacity for Silan Microelectronics group, 2010-2015 Product and market presence Chart 18: Silan Azure LED supply chain (million tons/month) Epilight Technology Operation analysis Chart 19: Epilight consolidated revenues and profits, 2007-2012 (CNYm) Capacity planning Chart 20: Eplight MOCVD capacity, 2009-1H12 (Equipment units) Chart 21: Heifei Irico Epilight LED equipment and chip production percentage, 2011-2014 Chart 22: Heifei Irico Epilight expected LED epitaxial wafer and chip annual capacity, 2014 (Equipment units) Market presence Chart 23: Irico Group LED supply chain capacity breakdown by application, 2012 Product line and technology Table 12: Heifei Irico Epilight LED chip product structure (annual capacity) Table 13: Epilight LED chip technological development Tsinghua Tongfang Operation analysis Chart 24: Tsinghua Tongfang revenue breakdown by application, 1H12 Chart 25: Tsinghua Tongfang semiconductor and lighting business unit revenues, 2008-2012 (CNYm) Capacity planning Chart 26: Tsinghua Tongfang Nantong plant MOCVD equipment move-in schedule Product and market presence Chart 27: Tsinghua Tongfang LED TV and lighting market development Chart 28: Tsinghua Tongfang subsidiary development in downstream products Chart 29: Market price of 7W LED light bulbs in China, September 2012 (CNY) Tier-two chipmaker competitiveness analysis Table 14: Finance and capacity competitiveness analysis Table 15: LED industry market development comparison, 2012 China tier-one packaging houses- Nationstar, Honglitronic, and Ledman Position Table 16: Nationstar, Honglitronic, and Ledman company background Finance Chart 30: Leading China packaging house revenues, 1Q11-3Q12 (CNYm) Products Chart 31: LED packaging revenues, 2011-2012 (CNYm) International sales Chart 32: Nationstar, Honglitronic, Ledman - Breakdown by international sales, 1H12 Technology and patents Chart 33: Nationstar, Honglitronic, Ledman - Patents by company Table 17: Nationstar, Honglitronic, Ledman - New products Nationstar Table 18: Nationastar LED supply chain Chart 34: Foshan Nationstar Semiconductor LED supply chain Honglitronic Chart 35: Honglitronic business strategy, 2H12 Table 19: Honglitronic major downstream subsidiaries Ledman Table 20: Ledman LED industrial park in Huizhou, China China tier-two LED packaging houses- Refond, Jufei, Z-Light Market presence Table 21: Refond, Jufei, Z-Light background Operation analysis Chart 36: Refond, Jufei, Z-Light revenues, 2009-3Q12 (CNYm) Products Chart 37: Refond, Jufei sales by product, first three quarters of 2012 Chart 38: Z-Light LED packaging product line Distribution and supply chain Chart 39: Refond, Jufei international and domestic sales, 1H12 Technology and patent Table 22: Refond, Jufei, Z-Light LED packaging technology Refond 2013 plan Chart 40: Refond's market development plan Table 23: Refond's Shanghai expansion plan Jufei's 2013 plan Table 24: Jufei LED packaging capacity expansion plan (CNYm) Chart 41: Jufei annual LED packaging capacity, 2010-2013 (million units) Z-Light's 2013 plan Chart 42: Z-Light's LED packaging and end market product development Table 25: Z-Light's downstream subsidiaries
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