How long can China's LED industry be hot?

"What they lack most of China led the industry? Not money, not a machine, but the engineer." May 10, BDO Runda [16.72 -0.71% stock it] Dong-lei Wang, chairman of Shanghai, said Chinese companies are the world around to find someone, grab "will open the furnace engineers", to pay a "double re-double" the price. He is to attend the world's second largest equipment supplier Veeco LED training center ceremony ground. He was listed as the first speaker of the business representatives, who boast a large Veeco timely. Veeco Global CEO PeELer a bit in the audience could not conceal his pride.

Peeler proud reason, Veeco made money in China last year. His "First Financial Daily" said that in 2010, 30% of revenues from China in 2011 to more than half. This is also the companies are rushing to set up training centers for the reasons customers buy the equipment, but the lack of skilled engineers.

This is the LED industry for more than a year under the latest act crazy layout. But the good times can continue for how long?

Crazy LED industry

Wang Dong-lei Veeco will be the first to speak as clearly representative of a large enterprise customer effect. Before the ceremony, Veeco, told China President Wang Keyang revealed that in 2011, the Chinese LED market is still very active, several companies have been under the domestic front the MOCVD orders, "one of them bought a lot." Which companies, but he declined.

However, after the ceremony, told reporters Wang Dong-lei, a LED next to the sources, in 2011, BDO Runda about a Veeco 100 units set Mocvd.

What does this mean? 2010, Veeco's Mocvd equipment shipments less than 300, if the situation last year are still in this year, equal to that eaten by the BDO Runda, a nearly 1 / 3 capacity. July 2010, BDO Runda had set it down Veeco and Aixtron, Germany 100.

The Big Three domestic security LED epitaxial silicon photovoltaic [41.18 0.32% stock it] internal data show that its plan to be completed before the end of 2011 the expansion of 107 units Mocvd task.

More crazy than they are. Two months ago, the parent of GCL GCL Holdings in Zhangjiagang Hong Kong, announced 2.5 billion U.S. dollars to build LED industry base, one of the purchase of 100 units Mocvd, 170 Taiwan, sapphire crystal growth furnace, before being 400 Mocvd equipment procurement.

About a Mocvd equipment close to 300 million. GCL will only Mocvd equipment purchases of up to 15 billion dollars. "It said the target was within the 600, this is crazy." GCL who is familiar with the senior analyst said.

The newspaper noted that, due to fierce competition for the procurement, start trying GCL equipment business through vertical integration, to strengthen the industry position. Not long ago, about 50 million U.S. dollars it AMEC shares of Shanghai, replacing Hua Dengcheng for large shareholders to try to integrate in its second main Mocvd micro-equipment business. Micro is the only scoring in the mainland and a number of foundry giant Taiwan Semiconductor Manufacturing equipment manufacturers. A few days ago, in recognition of micro insiders have told this matter.

This battle led to a number of small LED epitaxial wafer producers temporarily unable to get more equipment. The day before yesterday, the reporter met Richard Chang, chairman of Ying Rui Optoelectronics. He said the company had just moved into 2 sets Mocvd equipment, years ago, is expected to mass production.

Battle for Veeco, Aixtron enjoying the growth of dividends. Veeco reported a first quarter this year, due to insufficient capacity, of the undelivered orders amounted to $ 530,000,000, while its revenue target in 2011 was 10 million U.S. dollars. In fact, since 2010, its backlog of orders every quarter almost 5 billion U.S. dollars. The single-quarter revenue growth rate has been continuously for more than 200%.

Capacity will be a period of adjustment

"We expect that from 2011 to 2015, about 5,000 units worldwide Mocvd equipment." Peeler said in 2011, China shipped 850 to 1100 units.

But the really good days continue to do so? Crazy layout seems to imply the following number of irrational factors.

Before this newspaper reported, contributed to China's rush in two years one of the layout and equipment subsidies on power, it even occupies 40-60% of the cost.

As of early March, the three photoelectric safety equipment subsidy payments received Mocvd total of over 585 million, exceeding its total 2010 revenue of more than half.

Yangzhou stakeholders on the newspaper but said the subsidy policy on July 1 this year will be canceled. Although not stated clearly in other cities, but no more than six months the policy competition.

And if the abolition of subsidies will it have a direct impact business? Wang Dong-lei is unwilling to directly answer, "to ask this government." He said.

In this regard, Richard Chang cautioned that the introduction of preferential policies in each city cycle may vary.

Veeco difficult to ignore the news. Wangke Yang said, I heard from the manufacturers will continue to support the form of interest-free loans. Peeler simply frankly stated that will affect the ship, but will not affect the company's market share.

Peeler believes that the outbreak of the Chinese LED industry growth benefited from the transfer of industries, a substantial lead before South Korea, but after the second quarter of 2010, some saturation, but not before the foundation of China, subsidies act as a "a strong medicine." But the South Korean growth slows, this implies a global application to the embarrassment of market saturation. Up to now, LED chips are used in notebook and TV, the former has penetrated most of the latter has more than 50%, IT-driven growth area has been some weakness.

"China's LED industry upstream development, should be wary of the structural overcapacity." SEMI China's semiconductor lighting and flat panel industry analysts warned that Qifa Xin, LED lighting in the area's largest market, but the area still rely on imports of Chinese products. If the upper 1 to 2 years local manufacturers are still concentrated in low technology products, excess capacity will be obvious.

Peeler frankly stated that television and other fields of application is indeed a saturation, but the next 5 years LED lighting chips have 68% growth. Solid State Lighting Industry Alliance, the Secretary-General Wu Ling, and said that if the popularity of general lighting, it would be a trillion market.

But this seems a bit too optimistic. Up to now, because of cost and technology problems, China has embarked on a "city of ten thousand ten" plan, "city of ten thousand twenty-plan" and other policies did not progress as expected. As initially planned, in 2012 China will be installed 36,000 LED lights, to the promotion stage in 2013, the proportion of general lighting market will exceed 30%. But so far, LED lights do not enter ordinary families, outdoor lighting is also far from universal.

Once the evolution of the lighting market than expected, LED backlighting applications industry will face new market saturation and the attack can not be opened, the industry will certainly implies a huge risk.

Peeler did not avoid this risk, he said that 2011 to 2015, the global LED industry will be