China’s LED industry booms and grows under low profits
Although OEM development mode severely squeezes profit margin of China’s LED enterprises, domestic businesses didn’t loss their confidence on the future. The data shows that from January to July in 2012, the total amount of newly-added investment for LED industry in our country planed reached 12.56 billion yuan. More than 40% of the capital was invested in many industry sectors, even the entire industry link.
It is noteworthy that investment from non-LED enterprise after entering LED industry has become an important part that LED industry obtained. This kind of investment takes up to 45% among all the investment projects and over 65% amount of money. The LED boom is closely connected with government’s support. In March, China National Development and Reform Commission ensured to spend 40 billion yuan on LED street lamp purchasing and provide 30% fiscal subsidy to LED street lamp users.
The local governments followed soon. Since March 1 this year, Guangdong province declared that to all fiscal-invested lighting engineering and new development area all to use LED at public lighting area.
In addition, the favor of capital market for LED market has become one of the most popular industries in venture investment and private equity.
Statistics show that in 2011 there were 7 LED corporations IPO in A share, adding up to 3.625 billion yuan capital raising. In February this year, there were at least 9 LED related businesses on the list of the IPO applying enterprises published by China Securities Regulatory Commission. The data shows during the 11th Five-Year-Plan, the scale of integrated circuit industry doubled. The output and sales revenue raised from 26.58 billion yuan and 70.2 billion yuan in 2005 to 65.25 billion yuan and 144 billion yuan in 2010, accounting the proportion of international integrated circuit market raised from 4.5% in 2005 to 8.6% in 2010.
Domestic market scale expanded from 390 billion yuan in 2005 to 735 billion yuan in 2010, accounting to 43.8% of international integrated circuit market. Under the situation of economic recession in 2011, the export of our nation’s LED and other energy-saving products still grew 25% and the indoor lighting products increased by 75% year on year. The price dropped 22% year on year, reaching up to 18.6 billion yuan, a year-on-year increase of 38%.
According to the prediction of some related institutions, benefiting from government’s support and price decline, the annual LED indoor lighting output will obtain 30.6 billion yuan, a year-on-year increase of 75%. It may achieve 99.3 billion yuan by 2015. In the next 4 years, compound growth rate of indoor lighting output will reach 52%.