Wang Qing

I. Present State and Basic Pattern of LED Industry's Development in China and Abroad

1. LED has become an important field for new-energy technology to make breakthroughs

Light-emitting diode (LED) has been universally recognized as an emergent solid-state cold light source with the greatest development potential in the 21st century. It is energy-saving and environment-friendly and has greater brightness and reliability. Its power consumption is only one-tenth of traditional incandescent lamp and one-third of energy-saving fluorescent lamp, and its lifetime can be several dozen or a hundred times longer. At a time when the whole world faces growing energy shortage and environmental pressure, the LED lighting technology has triggered the third global lighting revolution after humanity invented fire and incandescent lamp. The production of LED lighting products does not produce mercury, lead and other pollutants and their use causes little pollution. For this reason, LED as a new light source has become one of the hi-tech fields that have the brightest development prospect and the greatest market potential in the world.

The development of the LED technology will not only drive the development of the lighting and semiconductor industries, but also trigger an application revolution in home appliances, automobiles, cell phones and a host of other terminal electronic consumer goods. Therefore, it has received high attention in developed countries. The "Next Generation Lighting Initiative" of the United States, the "21st Century Lighting Program" of Japan, the "Rainbow Program" of the European Union and the similar programs of South Korea and China's Taiwan province have all taken LED research, development and commercialization as an important national industrial and technological strategy. The United States, the European Union and Japan all announced that incandescent lamps would be completely phased out in 2012.

2. Present state of world LED technology and industry development

Currently, the world has preliminarily formed a LED industrial distribution pattern, with Asia, North America and Europe being three major centers. The American and Japanese enterprises enjoy monopolist advantages in epitaxial slices, chip technology and equipment making, while European enterprises are extremely strong in application technologies. Japan is the largest LED producer in the world, claiming a 50% global market share. With a 17% LED market share, China's Taiwan province is next only to Japan and ahead of South Korea, Europe and the United States.

At present, the GE in the United States, the Philips in the Netherlands and the OSRAM in Germany are the world's top three lighting producers. They have all entered into cooperation with semiconductor companies in establishing semiconductor lighting companies. Supported and driven by the semiconductor industry and the downstream industries, the enterprises in South Korea and Japan have made tangible progress (Table 1).

Table 1 Operational Revenue & Rankings of World's Leading LED Producers in 2009 (in million dollars)

Ranking	Producer	2008	2009	Growth rate (%)
1	Nichia	1359	1219	-10
2	OSRAM	805	724	-10
3	CREE	495	616	24
4	Samsung LED	188	516	175
5	Lunileds	426	420	-1
6	SeoulSemi	257	392	52
7	Stanely	300	346	15
8	Everlight	351	342	-2
9	Toyoda Gosei	214	322	50
10	Lite-on	336	303	-10

Note: Producers exclude LED chip suppliers.

Source: LEDinside: http://www.ledinside.com.two.

3. Present state of China's LED industry development

Led by the LED technology revolution and as the world's most important manufacturing base, China has also scored rapid development in the LED industry over the past two years. While the international financial crisis has caused a continuous slide in the global lighting market, China's LED industry saw its sales revenue soaring to 60 billion yuan in 2009, or up 30% over the previous year. With its market scale moving toward the 100-billion-yuan scale (Table 2), China is becoming one of the fastest-growing countries in the world LED industry. Today, China is already the world's largest producer of lighting devices, with its output value and export value both ranking second in the world. It is forecast that China's LED output value will exceed 150 billion yuan in 2010 and LED will have a 20% share on China's lighting market in 2015. Its technologies will be able to simultaneously produce 4-inch and 6-inch LEC epitaxial slices and high-performance and high-brightness LED chips. The lighting efficiency will be higher than 135lm/W, and the industrial scale will exceed 500 billion yuan. By then, China will become one of the world top three DRAMeXchange LED producers in the world (LEDinside: http://www.ledinside.com.tw/market_news_led_200708).

Table 2 LED Market Applications & 2010 Market Scale Forecast

Scope of application	Market of application	Market capacity forecast
Information Display	Electronic instruments, home appliance indicators, scoreboards, billboards, etc.	10 billion yuan
Traffic signs	City traffic, expressways, railways, airports, navigational signs, etc.	10 billion yuan
Auto lighting	Auto indicators, breaking lamps, fog lamps, dashboard display and lighting, etc.	10 billion yuan
LED backlight	Displays for cell phones, digital cameras, notebook computers and color television sets, etc.	10 billion yuan
LED lighting	Outdoor landscape lighting, indoor decorative lighting, special lighting, safety lighting, general lighting, etc.	100 billion yuan

Currently, China has over 4,000 LED enterprises, comprising over 50 upstream enterprises, over 1,000 package enterprises and over 3,000 downstream application enterprises. In China, the LED lighting industry has preliminarily formed an industrial distribution pattern, which comprises four major concentration areas (the Pearl River Delta, the Yangtze River Delta, the Fujian-Jiangxi Region and the North China Region) and seven major bases (Dalian, Shanghai, Shenzhen, Nanchang, Xiamen, Yangzhou and Shijiazhuang) . At present, all these concentration areas are basically in the same stage of production technology and industrial development. The Pearl River Delta, where LED development has been faster, claims a 70% national share and a 50% world share in package business. It has formed a complete industrial chain, including eptaxial slice production, chip making, packing and product application.

The Chinese government has paid high attention to the technological performance and market development of the LED industry and introduced a host of policies on technologies and applications, which have promoted the development of this industry. In 2003, an inter-departmental and regional-participated national coordinating and leading group for semiconductor lighting was established at the initiative of the Ministry of Science and Technology. At the same time, a "national semiconductor lighting project" was launched. In 2004, the Chinese Academy of Sciences established its own semiconductor lighting R&D center. The national 863 program has offered supporting funds to relevant enterprises and research institutions for basic LED research and technology development. In 2009, the Ministry of Industry and Information Technology promulgated nine industrial standards, and the State Standardization Administration promulgated eight main LED standards. The Plan for the Adjustment and Rejuvenation of the Electronic Information Industry promulgated in 2009 also explicitly defines the LED lighting industry as an industry for priority development. In promoting industrialization, the Ministry of Science and Technology launched a "10,000 road lamps in 10 cities" program at the end of 2008. Under this program designed to popularize LED lighting, each of the 10 selected cities must install over 10,000 LED lamps (road lamps, tunnel lamps, subway lamps, gas station lamps and basement parking lamps). In light of the technological efficiency, energy-saving efficiency and economic and social efficiencies of LED products, 30% ~ 50% of the increased investment, compared with traditional lighting, would be subsidized. In May of the same year, the Ministry of Science and Technology authorized 21 cities to conduct experiment on semiconductor lighting application. The ministry plans to upgrade this program in 2010 to a "2 million lamps in 52 cities" program. Under this program, each of the 50 cities must install 2 million semiconductor lamps, which would save 1 billion KWH in terms of power a year. The Ministry of Finance and the Ministry of Science and Technology would offer fiscal subsidies to pilot cities and raise the ratio of LED localization to 70%. The regional governments in Guangdong, Shanghai, Jiangsu and Anshui have also introduced intensive industrialization support programs or subsidy policies. For example, the province of Guangdong in 2010 promulgated the Guidelines of the Guangdong Provincial People's Government for Accelerating the Development of the LED Industry (draft), under which a 600-million-yuan special fund would be used to subsidize the LED lighting application in the province for three years.

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