Many Chinese LED firms have gone bankrupt or are facing asset liquidation this year as falling prices and oversupply batter the LED industry, reported Reuters.
Just as over-investment and sagging exports dragged down Beijing’s solar panel and wind turbine champions, China’s much-hyped LED lighting sector, the largest in the world, is now facing a drastic shake-up.
The once-bright LED industry in China is facing a severe reshuffle because of blind investment expansions, stiffer competition and thinner profits, with added pressure from shrinking export orders.
“Everyone is making LEDs these days. The industry is a mess,” Irving Pun, global marketing director of LED maker Civilight Shenzhen Semiconductor Lighting Co Ltd, said in an interview to Reuters.
Many LED companies were established by former electronics enterprises that flocked to the new industry without core technologies. The vicious competition and price slashing dramatically reduced profit margins, accelerating newer firms’ demise, said industry analysts.
Most companies, encouraged by generous government support, ignored basic factors such as supply and demand imbalances while investing large sums to increase capacity. The intense competition has halved prices over the past three years.
At least 20 percent of Chinese LED lighting firms may be forced out of business, according to industry experts and even some LED company officials.
“Many small LED lighting companies are suffering and may not see light at the end of the tunnel,” said Wei Li, board secretary of Dongguan Kingsun Optoelectronic Co Ltd, a leading Chinese LED street lighting manufacturer.