It is no wonder that VECO and CREE are thriving with these LED subsidies from China. According to this article, they have until about 2014 or 2015 until Chinese companies catch up (depending on if you believe the headline or the story).
Government incentives spur doubling in China LED market by 2014, says iSuppli
Press release, July 30; Willie Teng, DIGITIMES [Friday 30 July 2010]
digitimes.com
Driven by government subsidies and soaring demand from new applications such as LCD TV backlighting and general illumination, China's LED market is set to more than double from 2009 to 2014, according to iSuppli.
LED revenues in China will reach US$7.1 billion by 2014, up from US$3.4 billion in 2009, for a compound annual growth rate (CAGR) of 12.8%. Ultra-high brightness (UHB) LEDs will increase particularly rapidly, rising to US$1.8 billion by 2014, up from US$686 million in 2010.
"Compared to their competitors in the US and Taiwan, Chinese LED suppliers lag in technological capability and in the experience of their management teams and R&D engineers," said Vincent Gu, senior analyst for China research at iSuppli. "However, the Chinese companies receive extensive funding from government sources, which will allow them to capture a major share of soaring domestic demand."
Local governments in China subsidize at least 70% of the cost, or US$1.5 million on average, for each purchase of a machine that performs metal-organic chemical vapor deposition (MOCVD), a process used in the manufacturing of LEDs. Furthermore, local authorities offer tax and utility payment benefits to Chinese LED suppliers.
Such support from the government will spur US$3.5 billion in spending for each year from 2010 to 2012 on LED-related manufacturing equipment among Chinese LED suppliers, according to an optimistic forecast from iSuppli. In turn, the spending will allow Chinese suppliers to overcome their current technological shortcomings, including their lack of intellectual property (IP), manufacturing equipment and LED wafers.
"With their extensive spending and technological development during the coming years, the Chinese LED suppliers should emerge as major competitors in the global industry after 2015," Gu said.
Diverse market for LEDs
The domestic Chinese LED market covers numerous applications, including LED displays, street lighting, general illumination, traffic signals, flash lighting for handset key pads and digital still cameras (DSCs) and the backlighting of large-sized LCD panels in LCD TVs, laptops and other displays. The LCD backlighting market in China will enjoy robust growth to reach US$1.2 billion in 2014, up from US$468 million in 2010.
In addition to the established applications for LED, a new demand driver will arise for LEDs over the medium to long term: the general lighting market. Given the global trend supporting carbon dioxide reduction, demand for LEDs - which offer low-power consumption - should strengthen in the general lighting market as well. iSuppli estimates shipments to the general lighting market will account for 18.4% of the total LED market in 2010. |
