First Chinese supplier breaks into top 10 LED rankings in 2013

China's investments have finally paid off as one of it's companies has joined the ranks as one of the top companies in LED manufacturing capacity.

07/07/2014


Top 10 global suppliers of packaged LEDs in 2013 (ranking by revenue in US Dollars). Source: IHSChina’s massive investments in light-emitting diode (LED) manufacturing capacity are paying off, with a Chinese company entering the top ranks of the global market for the first time ever, according to IHS Technology

China’s MLS Electronics Co. Ltd. in 2013 rose to the No. 10 rank in the worldwide market for packaged LEDs, up from 14th place in 2012. With the other top 10 players based in South Korea, Japan, the United States, Germany and Taiwan, as presented in the attached figure, this represents a first for China’s burgeoning LED industry. 

“Since 2011, most of the new LED production capacity that has been added worldwide has occurred in China,” said Jamie Fox, principal LED analyst for IHS. “Because of this, it was inevitable that Chinese companies eventually would penetrate the ranks of the top 10 LED suppliers. MLS was first to join the global elite, having established itself as the clear leader in the Chinese market by capitalizing on strong domestic demand. For the major suppliers, MLS’s ascent into the market’s upper ranks represents a clear signal that Chinese firms soon will become major competitors in the global LED business.” 

These findings come from the IHS LED Intelligence Service

China’s LED market lights up 

MLS is one of many Chinese LED suppliers that have sprung up amid the surge in production. However, the other firms do not even rank among the top 20 global suppliers. China’s LED supply base is massive and highly fragmented, with thousands of small manufacturers located across the country. 

“Despite leading the domestic market, MLS accounted for less than 10% of Chinese LED revenue in 2013,” said Alice Tao, China LED analyst at IHS. “The next five largest LED suppliers in China represented only about 20% of the market.” 

With the rise of LED manufacturing capacity in China, concerns have risen relating to overcapacity. Some of the equipment purchased for metal-organic chemical vapor deposition (MOCVD) manufacturing—the most important process step in LED production—is now sitting idle in China. Observers have fretted that the overcapacity could result in the shutdown of some Chinese suppliers. 

However, only a few of the smaller Chinese vendors so far have closed their LED operations. Most of the top companies remain active in the market, with some posting strong profit margins. 

An insular market goes global 

MLS and the smaller Chinese suppliers mostly compete among themselves for a share of the large domestic LED market. The international portion of sales for these companies is very small. 

At the same, the extremely low prices in the Chinese market make the country inaccessible to overseas suppliers. Because of this, foreign LED makers don’t encounter Chinese competitors very often. 

But that situation will change rapidly. IHS expects the LED revenues of Chinese vendors to grow steadily over time, as the country’s economy continues to grow strongly. Because of this, Chinese LED suppliers will begin to sell more internationally and come into competition with foreign rivals. 

Barriers to entry

Both intellectual property and quality are concerns for international customers that are considering Chinese suppliers.

However, several factors suggest these concerns could be alleviated over time. These factors include patent expirations, China’s established history in other industries, the sheer volume of manufacturing capacity in the country and the fact that many LED lamps are assembled in the nation.

Top-tier LED suppliers such as Nichia, Osram, Lumileds and Cree so far have seen only a small impact from Chinese vendors on their sales. This is especially true in the market for general lighting in regions such as Europe and the Americas. Such will not necessarily be the case by the end of the decade.

For instance, MLS has started 2014 on a strong note, and may have even ranked among the IHS top 10 LED suppliers in the first quarter.



No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Learn how to create value with re-use; gain productivity with lean automation and connectivity, and optimize panel design and construction.
Go deep: Automation tackles offshore oil challenges; Ethernet advice; Wireless robotics; Product exclusives; Digital edition exclusives
Lost in the gray scale? How to get effective HMIs; Best practices: Integrate old and new wireless systems; Smart software, networks; Service provider certifications
Fixing PID: Part 2: Tweaking controller strategy; Machine safety networks; Salary survey and career advice; Smart I/O architecture; Product exclusives
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Look at the basics of industrial wireless technologies, wireless concepts, wireless standards, and wireless best practices with Daniel E. Capano of Diversified Technical Services Inc.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.