China's LED market shows promise

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Last month, the Beijing Olympic's opening ceremony wowed audiences around the globe. During the ceremony, Glux LED, a Shenzhen-based company specializing in Light Emitting Diode (LED) monitor production presented its premier product: a color brick LED monitor, which measured 147 meters long by 22 meters wide.

The show was a breathtaking mixture of technology and art, but for investors and manufactures, it was all about the future for LED technology in China.

The expected widespread deployment of LEDs by 2015 in China is projected to save more than two times the electrical power output of the Three Gorges dam, according to Wu Ling, the director of the China Solid State Lighting Alliance (CSA). 

Today, China is the biggest producer of light sources and products in the world. In the past, Chinese low and middle grade lighting products account for only 18 percent of the world's total.

By 2010, China's LED industry is expected to deliver $2.32 billion US in annual sales, compared to $1.18 billion USD for 2008, according to research conducted by DigiTimes, an IT consumer magazine based in Taiwan. The research data suggests China’s LED public lighting market will grow three to five times over the next four years.

China is making progress in its LED efforts on several fronts: technical innovation; application and development capacity; device reliability research and formulating testing rules and standards. Those labors will be necessary in order for China to make good on its plans to overtake Japan's market LED leadership by 2010, according to Wu Ling.

Other LED demonstrations lighting up the Beijing sky, inlcuded the Olympic Water Cube and the Bird Nest with a combined total of 740,000 LED lights. Those LED lights saved some 60 percent of the electricity, according to Zhu Xiaodong, a member of lighting project for the Water Cube.

Ding Yanhui, the president of  Shenzhen Absen Industry, said the company's seven years of experience in LED development and sales forecasts big market opportunities ahead.

“As a competitor, Glux LED’s technology at Olympic opening ceremony was absolutely amazing," Yanhui said. "Seeing their product truly inspired and motivated us to develop and innovate new technology."

Yanhui said the company is expecting ¥300 million in sales for 2008. And added that the growth in China's LED market has helped the company recently raise venture capital from Top Capital, an U.S investment company with the expectation of taking Absen public in China.

Future investments should focus on LED modules, such as chips production  rather than low-margin finished products, said Jason Wang, China General Manager of McWong Lighting Shanghai, a leading U.S manufacturer of lighting devices.

LED maker Cree said it see potential for sales and adoption of LED in China’s domestic market. Thirty-three percent of Cree's LED business last fiscal year (which closed June 29, 2008) came from both China or Hong Kong.

With China's promising economic growth, companies say nearly all of the lighting opportunities are expected to be opportunities for LED technology. Among the opportunities are street lights, which enhance night vision, Cree said.

According to the CSA, there were 15 million street lamps in China in 2006. And the growth rate for that market is 20 percent. China's overall market for street lamps is estimated at more than 5 billion each year.

Earlier this year, Cree and the Tianjin city government started the first LED city lighting project in China. The plan was to use Tianjin as showcase for LED lighting applications.

McWong said the market potential for LED in commercial applications, such as public external lighting and monitors is much greater than residential use where higher costs are a barrier.

Shenzhen-based Diguang International Development  has been manufacturing back light units for Thin Film Transistor LCD for more than 10 years, stepped into LED market a year ago. The company expects China's LED market will be exceed $147 billion US in 2010.

“The LED market is huge," says Luke Chen, senior advisor for Diguang International Development. "To replace the current market is a tough one since the cost for LED is still quite high."