Depth analysis of China's and even global LED top ten trends
July 06 01:13:29, 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, a research arm of global market research firm TrendForce based in Shenzhen, have analyzed trends in the Chinese and global LED markets. Their insights cover key areas such as patent expiration, market penetration, industry consolidation, and talent shortages, offering a comprehensive view of where the industry is heading.
**Trend 1: Patent Expirations Open New Opportunities for LED Packaging Firms**
Currently, major players like Cree, Philips, Osram, Nichia, and Toyota Synthetics dominate the global LED patent landscape, holding a wide range of patents across the entire supply chain—from raw materials to packaging and applications. However, many of these patents are beginning to expire due to the 20-year protection period for invention patents and 10 years for utility models and design patents. Since 2010, a growing number of LED-related patents have expired, particularly those involving white LEDs. In the next two to three years, several core patents from the 1990s will also reach their expiration date, while phosphor-related patents will become obsolete between 2012 and 2014.
However, Chinese companies have also filed numerous "cottage version" patents, which often lack originality. Many are mere modifications of existing international patents or opportunistic filings in utility models or designs. These patents may be invalidated if challenged by international firms, with over 70% of Chinese LED patents potentially at risk in legal disputes.
**Trend 2: LED Lighting Gains Visibility in General Lighting Markets**
LEDinside predicts that the adoption of LED lighting products will accelerate in 2013 due to falling prices, technological maturity, and increased consumer awareness. Traditional lighting manufacturers are increasingly incorporating LED light sources into new product lines. As a result, the popularity of LED lighting in general lighting markets is expected to rise rapidly, penetrating various sectors such as residential, commercial, and industrial lighting.
**Trend 3: China's LED Market Faces Consolidation and Restructuring**
2013 marks a critical year for the expansion of the Chinese LED market. LEDinside forecasts that the penetration rate of LED downlights and spotlights in mainland China could exceed 30%, with overall LED lighting sales reaching RMB 1 billion. However, excessive production capacity and overexpansion have led to oversupply, making it difficult for manufacturers to profit. In particular, Chinese epitaxial manufacturers, many of which were established with government subsidies, may see their numbers drop below 30 in the coming years.
Moreover, local MOCVD equipment manufacturers are trying to challenge foreign dominance, but imported machines are being phased out, limiting the impact of domestic alternatives. As larger LED packaging companies grow, smaller ones may face financial difficulties, leading to potential bankruptcies.
**Trend 4: Falling Chip Prices Drive Supply Chain Reorganization**
Despite rising demand for LED chips in handheld devices and lighting, the global LED industry still faces overcapacity. With heavy investment in the Chinese LED supply chain and increasing orders for MOCVD equipment, chip output and inventory are rising. To remain competitive, companies are lowering prices, triggering price wars and reducing profit margins. According to recent data, the price of sapphire substrates and chips has dropped by more than a third since early 2012. This trend is expected to continue, leading to further price declines and structural integration within the supply chain.
**Trend 5: Talent Shortage in Key Areas of the Industry**
Innovative talent, especially in upstream segments like epitaxial chips, is in short supply. For example, MOCVD equipment is dominated by VEECO and AIXTRON, which hold 90–95% of the global market share. While Japanese equipment is advanced, it is mostly used domestically and not widely exported. Many mainland companies invest heavily in foreign equipment only to find they lack skilled personnel to operate and maintain them. As a result, they often hire experts from Taiwan and South Korea, which is becoming a common practice.
While this approach addresses immediate needs, long-term success requires building an innovative environment. Without proper support, even top talents may struggle to thrive.
**Trend 6: Integration of the Mainland LED Industry Chain and the Rise of the "Deposit King"**
As the mainland LED market expands, some companies are shifting focus to areas where Taiwanese firms excel. Sanan Optoelectronics, for instance, is expected to surpass leading Taiwanese chip manufacturers in production capacity. This shift has raised concerns among Taiwanese companies, prompting them to prepare for potential market encroachment. Meanwhile, many Taiwanese firms are establishing factories in mainland China to take advantage of its vast market and lower costs.
**Trend 7: Global Players Enter the Chinese Market, Leading to Industrial Migration**
The Chinese market’s huge potential has attracted international LED giants like Osram, Philips, and GE, who are adjusting their strategies to expand their presence in China. Companies are relocating operations and setting up new facilities in cities like Wuxi, Chengdu, and Northwest China. Within China, there is also a migration trend, with companies like Leigu and NVC moving their headquarters to locations like Huizhou and Chongqing.
This movement reflects a broader trend of industrial transfer, driven by policy support, cost advantages, and market growth. The LED industry is gradually shifting from coastal regions to inland areas.
**Trend 8: Light Efficiency Competition Intensifies**
Light efficiency remains a key battleground for manufacturers. Cree continues to lead with record-breaking performance, while companies like Seoul Semiconductor claim impressive luminous flux figures. However, practical mass production is expected to stay around 160–180 lm/W in 2013.
**Trend 9: GaN-on-Si and nPSS Technologies Gain Momentum**
GaN-on-Si substrates are gaining attention as a viable alternative to traditional sapphire and SiC substrates. Toshiba, for example, announced mass production of GaN-on-Si LEDs in late 2012, signaling a potential shift in the market. Meanwhile, nPSS technology is emerging as a promising innovation, opening new opportunities for performance improvements.
**Trend 10: Global Standardization Efforts Accelerate**
Countries worldwide are accelerating the standardization of LED products to ensure quality and performance. The EU, North America, Japan, and China have all introduced certification programs and standards to regulate the industry. These efforts aim to reduce market chaos and promote sustainable development. LEDinside expects industry alliances to play a key role in shaping the future of the LED market.
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