Oct 25, 2017: During 2017, global LED chip production capacity was on an expension phase, according to LED market supply and demand analysis by LEDinside, a division of TrendForce. According to the report, this surge in capacity for LED chips is due to the rising demand from Chinese LED package suppliers who have already started increasing their production capacities since 2016.
While Chinese LED chip suppliers are enhancing their capacity, LEDinside estimates that about 401 MOCVD chambers based on the standard K465i design will be installed worldwide by 2017 end. This indicates the largest chip capacity increase since 2011. Chinese LED chip suppliers will represent 54% of global production capacity in 2017.
“At the start of 2017, major Chinese LED chip makers including San’an Optoelectronics, HC SemiTek and Aucksun revealed that during the year they will be carrying out major capacity expansion plans,” said Roger Chu, research director of LEDinside. “We estimate that the new processing operations set up by the domestic chip makers will push China’s representation in the global MOCVD capacity to 54%,” he added.
This wave of capacity expansion for LED chips in China is due to the growing demand from the LED package suppliers in the downstream, adds Chu. Chinese package suppliers are also relocating their operations to the second-tier cities due to the rising costs of labor and land in the traditional industry clusters of Guangdong Province and the Pearl River Delta.
Local governments in the smaller cities have offered various incentives to get LED companies to build factories in their domains. As a result, China’s LED industry in 2017 saw another in capacity growth spurt that was comparable to the one during 2010~2011 period.