Mainland China's LED production capacity utilization rate gradually recovers in the first half of the year

　　Driven by global LED lighting market demand in the first half of the year, the capacity utilization rate of major chip manufacturers in mainland China has rebounded. However, as new capacities of various manufacturers come back online, whether chip prices can remain stable in the second half remains to be seen.

　　In the first half of the year, benefiting from the recovery in TV backlight and lighting demand, the utilization rate of MOCVD equipment at major LED chip manufacturers rebounded. Taiwanese manufacturers, including Epistar and Formosa Epitaxy, pointed out that the capacity utilization rate in the first half of the year has recovered to a nearly fully-loaded state.

　　According to data from the Green Energy division of global market research firm TrendForce, driven by global LED lighting market demand in the first half of the year, the utilization rate of MOCVD equipment at major chip manufacturers in mainland China showed a recovery trend.

　　LED chip prices have also stabilized since the beginning of this year. However, as chip manufacturers resume their production capacity, whether LED chip prices will loosen in the second half of the year remains to be seen. In the long run, it will still depend on the exit of inefficient capacity in mainland China to help restore supply-demand balance in the LED industry.

　　Mainland manufacturers HC Semitek and Silan Mingsi primarily focus on LED billboard chips. Currently, both are adjusting their production capacity to meet market demand for LED lighting chips, and all newly acquired MOCVD equipment is being used to produce lighting chips.

　　Overall, since 2012, growth in the billboard market has slowed, competition has become more intense, and manufacturers have found it difficult to make profits. This is also one of the reasons why chip manufacturers are switching to produce LED lighting chips.

　　Taking mainland China's leading LED chip manufacturer Sanan Optoelectronics as an example, Sanan has a total of 149 MOCVD units, of which over 90% are currently in mass production, with utilization rates exceeding 80%. Elec-Tech International currently has 92 units, with 45 in mass production, ranking second in mainland China in terms of both inventory and mass production numbers. HC Semitek and Silan Mingsi are already at full production due to tight equipment. The equipment utilization rates of other chip manufacturers have also improved to a certain extent.

　　According to statistics, the number of MOCVD units in mainland China reached 1,013 by the end of 2012. It is expected that the number of new MOCVD equipment added in mainland China in 2013 will exceed 100 units.

　　Currently, the overall number of MOCVD equipment in mainland China may still trigger overcapacity concerns, but upon closer inspection, many manufacturers' equipment has not been put into production since its introduction, and many machines are old models whose performance and efficiency fall far short of newer units. If these ineffective production capacities exit the market after 2013, it may help the market achieve supply-demand balance sooner.