31 August 2010


China plans to add 1200 MOCVD reactors, including 300 in 2010

According to the latest Report on China’s LED Chip Industry in 2010 from the LEDinside research division of analyst firm TrendForce Corp, China plans to introduce more than 1200 MOCVD systems, including in excess of 300 to be added this year alone. However, in the light of historical experience, the annual increase in the number of MOCVD systems will in practice be less than the planned number, comments the report.

The planned number reflects the extraordinary prosperity of China’s LED chip industry. At least six enterprises have planned capacity of more than 100 MOCVD systems: for example, Xiamen Sanan and Elec-Tech International have already ordered more than 100 reactors each.

The main motives encouraging LED makers to introduce such enormous numbers of MOCVD tools are the subsidy policies of local Chinese government and the huge prospects for the LED market.

LED firms can receive a subsidy from their local government of RMB8–10m per MOCVD system, which can substantially reduce the equipment purchase cost, allowing the planned number of MOCVD systems to be increased significantly. The government’s subsidy policy is hence the main cause for LED makers to plan such large-scale MOCVD additions. Moreover, local government policies to attract investment, particularly the MOCVD subsidy, have effectively prompted the entry into the China market of mainstream LED chip firms from Taiwan, the USA and other regions.

Also, in addition to the enormous market potential of general lighting, new application fields are continually being developed, while the existing application markets keep maturing. In China, a market rush will always appear immediately a new industry emerges (such as with the photovoltaic sector). In the case of the LED industry, the number of chip plants in China has soared in the past year or so, so the planned number of MOCVD systems has risen correspondingly.

In the meantime, there is little understanding of the status of China’s LED chip makers, e.g. the number of LED chip firms, the number of MOCVD reactors planned by each one, the total number of planned MOCVD systems, the future MOCVD market volume etc. The lack of an accurate investigation of China’s LED chip industry has resulted in blind entry into the industry by some players, comments the market research firm, and a degree of over-optimism about the planned number of MOCVD systems for many of the LED manufacturers.

Finally, because of the unexpected increase in the number of Chinese LED chip makers, most of which have plans to introduce MOCVD technology, the shortage of R&D personnel related to epitaxial wafer production will become a great challenge. Personnel will therefore play a key role in future market competition between China’s LED chip makers, it is concluded.

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