Wang Haolei, Chairman of Dehao Runda, told the Securities Times during an interview in Wuhu that central departments and cities that prioritize LED as a key industry should help stimulate market demand. Otherwise, domestic production capacity might shift overseas, potentially leading to anti-dumping issues similar to those seen in the photovoltaic sector. The industry is currently facing overcapacity, and Wang Donglei, who was in Dalian the day before, explained that Dehao Runda has revised its investment plan for LED projects down from 12 billion yuan and 200 MOCVD machines due to rapid industry expansion.
When Dehao Runda entered the LED sector in 2009, profit margins were high, but now the company faces overcapacity across the entire industry. LED growth accelerated after Samsung introduced LEDs into TV backlights in 2009, significantly boosting demand. However, the market didn’t grow fast enough to absorb the surge in MOCVD equipment. By 2011, half of the world’s MOCVDs were sold to China, but many companies, especially in downstream packaging, are now struggling with low utilization rates.
At Dehao Runda’s Wuhu base, chip production is only at 50% capacity. Wang Donglei believes slowing down MOCVD deployment can help avoid price collapses. He noted that Sanan Optoelectronics, which started operations in six months, reduced chip prices by 20%, and if Dehao Runda also ramps up fully, similar price drops could occur. He expects the industry to stabilize around 2014, when demand may finally catch up with supply.
Sanan Optoelectronics’ chairman, Jin Hongzhu, described 2013 as the “winter†for the LED industry, predicting that many small factories will close and only a few major players will remain. While upstream chip manufacturing may be less affected than downstream applications, competition in the latter is fierce. Some companies, like Shenzhen-based Haobo Optoelectronics, have faced financial difficulties, including wage arrears, due to reliance on government orders.
LED streetlight projects are a key driver, with both Sanan Optoelectronics and Dehao Runda securing large contracts in Wuhu. However, even with these orders, production lines aren’t running at full capacity, as companies are cautious about cash flow. Government delays in payments add to the pressure, and Wang Donglei emphasizes the importance of cash during this downturn.
He also sees potential in commercial lighting, where LED adoption is expected to grow as costs decrease and energy savings become more attractive. Although market demand has been delayed, he remains optimistic about long-term prospects, comparing the current situation to the early days of TV backlighting, which once drove massive demand for MOCVD equipment.
Both Dehao Runda and Sanan Optoelectronics are focusing on R&D and innovation to maintain profitability amid overcapacity. They believe the industry will eventually recover, and the cold winter of 2014 could lead to a stronger, more sustainable LED market.
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