Depth analysis of China's and even global LED top ten trends
July 06 01:10:22, 2025
**Abstract**
Although the LED industry faced significant challenges and even a large-scale restructuring in 2012, the long-term outlook remains positive. Analysts from LEDinside, the research arm of global market research firm TrendForce based in Shenzhen, have analyzed trends in both the Chinese and global LED markets. Their insights cover key areas such as patent expiration, market penetration, overcapacity, and talent shortages, offering a comprehensive view of where the industry is headed.
**Trend 1: Patent Expirations Open New Opportunities for LED Packaging Companies**
The major players in the global LED industry—Cree, Philips, Osram, Nichia, and Toyota Synthetics—hold a vast number of patents covering raw materials, equipment, packaging, and applications. However, many of these patents are now expiring due to the 20-year protection period for invention patents and 10 years for utility models and design patents. Since the early 1990s, a significant portion of these patents, especially those related to white LEDs, have been expiring since 2010. In the next few years, core patents from that era will become available, creating new opportunities. Additionally, phosphor-related patents are expected to lose their validity between 2012 and 2014. However, many Chinese companies hold "cottage version" patents, which are often not original and may be invalidated if challenged by international firms, with over 70% at risk of being struck down.
**Trend 2: LED Lighting Gains Visibility in General Lighting Markets**
LEDinside predicts that the adoption of LED lighting will accelerate in 2013, driven by falling prices, improved technology, and increased consumer awareness. Traditional lighting manufacturers are increasingly incorporating LED light sources into their product lines. As a result, LED lighting is expected to gain rapid traction across various lighting applications in the coming two years.
**Trend 3: China’s Market Faces Consolidation and Challenges**
2013 is seen as a pivotal year for the Chinese LED market. LEDinside forecasts that LED downlights and spotlights will surpass 30% penetration in mainland China, with total industry sales potentially reaching RMB 1 billion. However, overexpansion has led to oversupply, making it difficult for manufacturers to profit. Many small and medium-sized packaging firms may struggle, while only around 30 epitaxial plants are expected to remain operational in the near future. Local MOCVD manufacturers are trying to compete with foreign suppliers, but they face challenges in scaling up production and achieving efficiency.
**Trend 4: Falling Chip Prices and Supply Chain Reorganization**
Despite rising demand for LED products, supply chain imbalances persist. With increased investment and MOCVD orders, chip output and inventory are growing. To stay competitive, companies are lowering chip prices, leading to reduced profit margins. By mid-2013, structural overcapacity is expected to continue, prompting integration and restructuring within the supply chain, either through horizontal consolidation or vertical integration.
**Trend 5: Talent Shortage Hinders Innovation**
Skilled professionals in upstream segments like epitaxial chips are in short supply. MOCVD equipment, dominated by VEECO and AIXTRON, is essential but requires experienced operators. Many Chinese firms invest heavily in equipment but lack the expertise to operate them effectively, forcing them to recruit from Taiwan and South Korea. Long-term success depends on building an innovative environment rather than relying solely on external talent.
**Trend 6: Industry Integration and the Rise of Mainland Players**
As the mainland's LED industry matures, some companies are shifting focus to areas traditionally dominated by Taiwanese firms. Sanan Optoelectronics, for example, is expected to surpass leading Taiwanese chip manufacturers in capacity. This shift has prompted Taiwanese firms to prepare for competition, with some moving operations to the mainland to tap into its growing market and lower costs.
**Trend 7: Global Giants Enter the Chinese Market**
International LED companies are increasingly targeting China, adjusting strategies to expand their presence. Osram, Philips, and GE have all invested in local facilities, reflecting the country’s market potential and cost advantages. Meanwhile, domestic firms are also relocating, with some moving operations inland to take advantage of better policies and lower costs.
**Trend 8: Light Efficiency Competition Intensifies**
Light efficiency remains a critical battleground. While Cree continues to lead with record-breaking performance, other companies like Seoul Semiconductor are pushing boundaries. However, most mass-produced LEDs are expected to reach 160–180 lm/W in 2013, with continued improvements expected in the future.
**Trend 9: GaN-on-Si and nPSS Technologies Gain Momentum**
GaN-on-Si substrates are becoming a strong contender against traditional sapphire and SiC. Toshiba, for instance, has launched mass production of GaN-on-Si LEDs, signaling a shift in the market. Meanwhile, nPSS technology is emerging as a new area of interest, with potential for higher performance and cost savings.
**Trend 10: Global Standardization Efforts Accelerate**
Countries worldwide are working to establish LED industry standards to ensure quality and safety. The EU, North America, Japan, and China have all introduced regulations and certifications to bring order to the market. These efforts aim to eliminate confusion caused by unregulated competition and promote sustainable growth.
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