LED has became the most popular industy for risk investment and private equity.According to statistics, seven LED enterprises has achieved initial pulic offerings in 2011 which acculmulated RMB 3.652 billion financing amount and owned an average financing amount for RMB 518 million. As is shown in the market analysis, five of the enterprises enterd GEM and the two others enterd SEM board.
LED application stirs up a revolution in traditional lighting industry. Recently, domestic LED lighting industry grows dramtically and becomes the new star in capital market. However, there are several problems behind the “capital heat” such as key technologies restricted, capacity surplus and disorder competition.
LED Industry Explosion
LED enterprises listing in the market will still remain heat this year. 1st Febuaury the SFC annouced in the trial list of IPO applications, there are at least 9 related enterprises waiting for listing among 515 companies. These to be listing enterprises invovled the epitaxy, chips, packaging, application and other aspects along the industry chain.
November 4th 2011, the National Development and Reform Commission officially announced the “Routin of Elimination the Incandescent in China” which plans to completely eliminate the common incandescent. China is a incandescent lamp producing and consuming country which owns incandescent stock around 15 billion. The annual production and sales are 3.85 billion and 1.07 billion respectively.
People from the industry analyse that it will form a long-term positive for LED lighting industry and energy-saving lamp industry. Just the replacement of existing incedenscent lamps will expand the market scale to several hundred billion yuan.
In order to achieve the goal of emission reduction, China’s government has increased subsidies on energy saving, environmentally friendly products. 2012 Finanacial Subsidies for Semiconductor Lighting Products organized by the Ministry of Finance, National Development and Reform Commission, Ministry of Scienve and Technology, held in Bejing with a total of 110 enterprises particiated in the tender.
As is known, the proportion of government subsidies accounts for 30% of the purchase price and the total amount is expected to reach hundreds of millions. Subsidy funds distriubute through indirect way. Subsidy runs from government to the successful enterprise, and then the enterprises sells the products to the terminal users regarding the agreement, the supply price minusing financial subsidies.
Actually, the National Development and Reform Commission has confirmed that, in 2012, the Chinese government will spend 40 billion yuan for LED street lamps procurement and will provide 30% financial subsidy for the LED street light users.
Local governments have responded actively. During the 12th five-year plan period, Guangdong Province requires all lighting project which invested by government and new planned development area should use LED in public space. Guandong will replace all the street light by LED light in the next three years which will stir up the market.
According to experts, the market share of LED in China will reach 20% contributing an industrial scale up to 5000 billion yuan. And China will rank the top three in global LED lighting market.
High Capacity with Poor Technology
In fact, key technologies are restricted by other countries which is the biggest problem among the domestic industry.
LED chip is the key material of LED lighting. LED enterprises with the policy support and capital support can expand the capacity rapidly. But the domestic LED enterprises mainly gather on application area, seldom enterprises will do some independent research and development. Domestic related technoloies and industry are still in incubation period. Presently, most of the LED chips import from USA, Japan, Taiwan and other places.