The annual IHS list of largest packaged LED makers got its first Chinese entrant in 2013: MLS Electronics Co. Ltd.
MLS came in at No. 14 in 2012. Like most Chinese LED makers, the company sells almost exclusively in its domestic market. (But the Chinese market is huge, accounting for 30% of worldwide demand, according to an IHS analyst.)
Top 10 suppliers of packaged LEDs
|3||Samsung Electronics||South Korea|
|4||Seoul Semiconductor||South Korea|
|7||LG Innotek||South Korea|
Thousands of LED companies scuffle for a piece of that large market -- nearly 10,000, according to Yicai.com -- so the fragmentation is extreme. MLS has less than 10% of it, and the next five Chinese suppliers take only another 20%. No supplier aside from MLS ranks even in the top 20.
Consolidation is widely expected over the next five years. Yical.com predicts that 30-50% of those compnies will be gone by 2019.
The New York Times ran a high-profile article yesterday about China's LED ascendence. The reporter raised and largely dismissed the worrisome question of whether LED supply will go the way of solar panels and wind turbines -- with China starting from behind and then taking over the market by a combination of low prices and (as many accuse) impermissable subsidies implemented through low-interest loans from state-owned banks.
The NYT indicated that the situation may not play out the same way with LEDs. For one thing, the LED industry is more segmented than solar or wind were. The Chinese factories are mostly pumping out low-power LEDs for backlighting applications. Another factor is the "poor and worsening reputation for quality" that bedevils many of the producers. The article quotes Xicato's Mike Pugh: "We do not buy Chinese LEDs. We just can't take that chance," as he cites the company's sources Cree, Lumileds, and Osram.
But it's hard to deny that Chinese competition is coming to the world market. It is nearly impossible for foreigners to sell there domestically, because of the extremely low prices. Only a year ago, Chinese LED factories were operating at half capacity, but the pickup in demand has them running "at full tilt" today, according to the NYT.
— Keith Dawson , Editor-in-Chief, All LED Lighting