Trade friction affects LED demand and China's production status remains unchanged - LEDinside

According to the latest "LED industry demand and supply database report" of the LED Research Center (LEDinside), the total output value of the global LED market in 2018 was US $18 billion 796 million, compared with 2017 only increased by 4%, and the growth rate was 11% lower than that predicted at the beginning of this year. The main reason lies in the imbalance between the supply and demand of the industry, and the excess supply leads to L. The decline in ED prices and trade frictions affect terminal demand.

LEDinside pointed out that although many Chinese LED manufacturers hope to boost their revenue growth by expanding their capacity in 2018, the overall growth of the industry is not as good as expected due to the huge pressure of price decline. Especially in the first half of this year, the LED chip quotations of some specifications dropped by 20~30%. The main reason is that China's LED chip manufacturers have been greatly enlarged, and the terminal demand has not kept pace with the increase of supply, resulting in imbalance between supply and demand of the industry. However, because the price of the chip has been close to the cost of most manufacturers, there is not much chance of a further reduction in the short term.

As for demand side, the business of LED exporters to North America and other emerging markets has been significantly affected by the Sino US trade frictions and the depreciation of the emerging market exchange rate. Among them, the United States recently announced $200 billion tariff list, LED lighting related products more than 30, accounting for about 70% of China's total exports of lighting products to the United States, about 8 billion U.S. dollars. These products will be subject to 10% tariffs from September 24th, and tariffs will rise to 25% in January 1, 2019.

LEDinside believes that the subsequent chain effect may lead to many foreign brand factories reducing the order for China's OEM. Therefore, China's applications including LED packaging and downstream lighting will be affected to varying degrees, which will lead to a sharp decline in the demand for LED chips upstream.

Although tariff adjustment will affect changes in the global LED and lighting industry, LEDinside believes that the global LED and lighting products will still be concentrated in China in the short term. The main reason is that the supply chain links such as peripheral parts and electroplating processes have taken root in China, so the supply relationship will not change much in the short term. However, some American lighting brands have issued price notices to dealers in the US market, reflecting the rise in tariffs and raw material prices. Some manufacturers even consider exporting semi-finished products to third parts and then exporting to North America to reduce tariff impact. In the long run, LED and lighting manufacturers with global layout will have a competitive advantage, because the direct export of overseas factories can reduce tariff impact, which will help to gain greater market share. (text: LEDinside stored in Chao)

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