HONG KONG (Reuters)-
One-fifth of China's LED lighting companies are likely to fail this year, as falling prices and excess supply have hit Beijing's energy sector. -
In China, about 4,000 companies are tempted by tax cuts, subsidies and cheap factory land to produce LEDs or light-emitting diodes.
Now, they are in fierce competition, and prices have halved in the past three years. Just as over-
The decline in investment and exports has dragged down Beijing's solar panels and wind power champions, most of whom are in China. -
The world's largest hyped LED lighting industry is now facing tremendous shocks. -up.
"Now everyone is making LEDs.
"This industry is in a mess," Irving Pan, global marketing director of Shenzhen Civilization Semiconductor Lighting Co. , Ltd. , the LED manufacturer, said in an interview.
"This is a typical issue related to China," he added.
"Whenever a new industry is introduced here, a large number of speculators will flock to it and quickly subvert it.
"The multiplicity of civilizations-
Shenzhen's Story LED light factory is surrounded by dozens of competitors.
When Pan and his colleagues founded their company in 2006, they were pioneers in an industry the central government was determined to promote as part of China's green technology development.
Beijing has set a target of 30% of the domestic general lighting market by 2015, which is more than three times the current level.
According to official estimates, this will reduce the annual use of coal by 35 million tons.
If half of the lights in China are LED lights, the electricity savings will be 2.
Analysts say the Three Gorges Dam is the world's largest hydroelectric project, generating five times as much electricity per year as the Three Gorges Dam in China.
But domestic demand is weak.
Despite subsidies and promises to reduce electricity tariffs over time, Chinese households have been switching to LEDs slowly because they are still much more expensive than traditional lights.
Quality problems also undermine consumer confidence.
According to industry experts and even some LED company officials, at least 20% of China's LED lighting companies may be forced to shut down.
"Many small LED lighting companies are suffering and may not see light at the end of the tunnel," said Wei Li, Secretary of the board of directors of Dongguan Golden Sun Photovoltaic Co. , Ltd. (002638. SZ)
China's leading LED street lamp manufacturer.
"There won't be so many companies in five to ten years," she told Reuters by telephone from her company's headquarters in Dongguan, a LED manufacturing center in southern Guangdong Province.
Analysts said industry consolidation could temporarily disrupt the global dominant supply chain, as 60 to 70 per cent of China's output is built for exports.
But in the long run, this shuffle will bring a healthier leading industry in China, thus bringing better quality products.
More than 20 Chinese LED players'shares listed in China and Hong Kong, some of which attracted pre-IPO private equity investment, fell sharply as profits evaporated.
Ledman Photoelectric Co. , Ltd. （300162. SZ)
Compared with the peak in March, it dropped by 48%, while Shenzhen United Aluminum Group Co. , Ltd. （300232. SZ)
The loss was 37%.
Foreign lighting giants, including Philips Electronics（PHG. AS), Osram -
Partly owned by German Engineering Group Siemens（SIEGn. DE)-
And General Electric Co. （GE. N)
Industry experts say they should be winners because of their financial influence and technical expertise.
Philips and Osram have been focusing on the traditional lighting business in China, and they have increased the production of LED.
Osram has 8,000 employees in China and started its first project. -
He led China Chip Packaging Factory in August, 100,000-square-
The rice complex in the eastern city of Wuxi uses chips made in Germany and Malaysia.
Domestic winners may include Jinshan and Foshan Electrical Lighting Co. , Ltd. (000541. SZ)
NVC Lighting Holding Co. , Ltd. （2222. HK), Elec-
Science and Technology International Limited（002005. SZ)
Shenzhen Youli Ming Shenzhen Ruifeng Photoelectric Co. , Ltd. （300241. SZ), analysts say.
So far, LED is mainly used for street lighting, shopping malls, high-end hotels and office buildings.
In order to accelerate the wider shift to efficient lighting, China began phasing out wasteful incandescent lamps in October and joined other countries such as the United States and Japan.
Diodes are semiconductors that convert current into light, and their efficiency is much higher than that of household and commercial lighting and compact fluorescent lamps. (CFLs)
And incandescent bulbs.
LED lamps are more durable than incandescent bulbs, with efficiency up to 10 times.
Some industry experts predict that in 10 years, these lights will bring more environmental and economic benefits than any other clean technology, including-
Voltage transmission, electric vehicles, smart grids or renewable energy sources.
In North America, LED-
According to a global LED industry report released by McKinsey Consulting in 2012, basic lighting accounts for about 8% of the lighting market.
Using these lights in the United States alone saves two.
Six terawatt-hours of electricity per year is equivalent to the average electricity demand of more than $200,000. S.
According to a 2011 study for the United States by Navigant Consulting, family members. S.
Ministry of Energy.
In China, as the world's largest energy consumer and carbon emitter, general lighting accounts for 12% of annual electricity consumption.
About 70% of China's electricity comes from coal.
Although it is expected to face elimination, Beijing is still committed to the industry.
The Ministry of Science and Technology said last summer that it planned to create 500 billion yuan（$80. 23 billion)
By 2015, LED lighting industry.
The company also plans to train 20 to 30 technically competitive industry leaders to participate in LED chip manufacturing, packaging or fixture manufacturing, and nominate the industry. -
At present, the annual output value is about 200 billion yuan. （$32. 09 billion)-
Receive further support from the government.
It did not specify leading companies.
According to Ben Lin, senior analyst at Ledinide in Shenzhen, these companies may include some listed companies, as well as non-listed companies such as Shenzhen Starfire Photoelectric Technology Co. , Ltd. , Shenzhen Acquisition Enterprises Co. , Ltd. and French companies. -
Investing in Zhongshan Junneng Gao-
Technological Photoelectric Lighting Company
At present, Chinese LED manufacturers mainly rely on foreign companies to produce chips, accounting for half of the production cost of lamps and lanterns.
Bringing this technology home will help reduce costs.
If China is to achieve its leading goal, cost reduction and technological progress are essential.
McKinsey reported that, reflecting the global trend, the annual composite growth rate of China's LED lighting market may exceed 40% by 2016, accounting for 46% of the country's total lighting industry.
"I believe that the era of LED will come one day," said Zhu Jianqin, executive director of Hong Kong.
Listed t Lighting Holding Co. , Ltd. （0515. HK)
Mainly engaged in LED road lighting manufacturing.