Recently, the State Council decided to arrange financial subsidies of 2.2 billion yuan to support the promotion of energy-saving lamps and LED lighting fixtures. The reporter learned yesterday that $2.2 billion has not yet been formally allocated and that the price war on LED lights in the market has started earlier. At present, the price of some branded LED lamps is only about 50% of the same period of last year. While the price drop has brought opportunities for local LED industry development, it has also made some companies with weaker capabilities face challenges.
The price drop of LED lamps was launched in advance. “Traditional incandescent lamps consume electricity and have a short life span; energy-saving lamps are currently used by the state but they contain mercury; they have more than 70% higher energy efficiency than energy-saving lamps, and they are energy-efficient and environmentally friendly. Japan, Canada, and other developed countries are accelerating the promotion and application," said He Wenming, chief engineer of Fujian Zhongke Wanbang Optoelectronics.
Although LED light products are so good, higher prices still hinder their promotion. In the past two years, as the production scale became larger and the price dropped, the 7W LED lamp still had to be several tens of yuan, while the energy-saving lamp was only about 10 yuan, and the low-cost incandescent lamp was only about 1 yuan.
For this reason, the State Council recently decided to arrange financial subsidies of 2.2 billion yuan to support the promotion of energy-saving lamps and LED lighting. The reporter learned from the LED lighting companies in Fuzhou that the 2.2 billion subsidy will reduce the price of LED lamps, which is a drop of 15% to 20%.
To the surprise of the reporter, the subsidy rules have not yet been implemented and the prices of LED lamps in the market have been diving ahead. A 7W LED light bulb last year can be sold for 40 to 50 yuan this year, only selling twenty yuan, some small brand products even as long as ten yuan. This decline far exceeds the industry's expected decline of 15% to 20%.
Why does the price change so much? The reporter learned after consulting the merchants yesterday that this was mainly because the huge market potential of the LED civilian lamp gradually became prominent. The related person of TSMC told the reporter that the market share of the LED civilian market was originally less than 5%, and now is increasing at an annual rate of 200%. Therefore, many manufacturers cut prices in advance to grab the market. For example, the fuse of this price reduction is the first LED company in our province ignited, and its products have a price reduction of more than 25%.
In addition, most of the original LED lamps are exported. However, since the beginning of this year, many LED companies have reduced their export orders, and foreign customers have deliberately lowered prices, resulting in a gradual decline in the industry's profit margin. For this reason, the merchants have to make every effort to lower prices for the domestic market. Currently, there are nearly 100 types of LED lamps that can be purchased on the local market. Compared to two years ago, this figure has increased by nearly four times.
The local LED companies are facing challenges The country's allocation of subsidies and the market continues to expand, it seems that the LED lighting market situation is excellent, but industry sources said that for the LED lighting company in Fuzhou, the situation has become a bit harsh. "Subsidy rules are expected to be introduced at the end of this month and early next month. The primary beneficiaries of state subsidies will be those large-scale competitive LED companies." Guan Baiyu, secretary general of China Semiconductor Lighting LED Industry Alliance, told reporters.
Fuzhou started earlier in the research and development of LED products. In April 2009, Fuzhou became one of the 21 pilot cities for semiconductor lighting application projects in the “Ten Cities, Ten Thousand Citiesâ€. At present, there are dozens of companies engaged in LED lighting technology and product research, development, production and application in Fuzhou. The output of various LED lamps can reach several tens of millions per year. In addition, Fuzhou also seized the opportunity of Taiwan's LED industry transfer, and attracted many Taiwanese optoelectronic companies to settle down in Fuzhou. The total investment in the joint venture LED industrial base in Fuzhou was RMB 3 billion. At present, with the deepening of the cooperation between local enterprises and the Chinese Academy of Sciences and Taiwan's LED industry, the competitiveness of LED companies in Fuzhou is becoming stronger and stronger. For example, at present, most of the LED lamps researched and developed by a company in Fuzhou have reached the international advanced and domestic leading level, and the production cost is the lowest.
However, with the intensification of competition in the LED market, for most companies, the profit rate may also be reduced, and some companies may be eliminated.
Guan Baiyu said that at present, there are about 8,000 LED companies in China, which are in a small and scattered state. Since last year, some enterprises have started to close down. The reason for this is, on the one hand, due to a serious excess of production capacity; on the other hand, the production cycle of LED new products is about 3 months to 6 months, and there is no shortage of resources for SMEs lacking core technologies. At present, some local LED companies mainly engage in the middle and lower reaches of packaging, applications, etc., and rarely involve upstream links. The upstream segment accounts for about 70% of the industry's profit, while the downstream segment only accounts for 30%. Therefore, to seize the critical period of two or three years, it is the key to the development of the local LED industry to support and nurture several large LED companies at national level, create brands, and take a place on the international market.
The price drop of LED lamps was launched in advance. “Traditional incandescent lamps consume electricity and have a short life span; energy-saving lamps are currently used by the state but they contain mercury; they have more than 70% higher energy efficiency than energy-saving lamps, and they are energy-efficient and environmentally friendly. Japan, Canada, and other developed countries are accelerating the promotion and application," said He Wenming, chief engineer of Fujian Zhongke Wanbang Optoelectronics.
Although LED light products are so good, higher prices still hinder their promotion. In the past two years, as the production scale became larger and the price dropped, the 7W LED lamp still had to be several tens of yuan, while the energy-saving lamp was only about 10 yuan, and the low-cost incandescent lamp was only about 1 yuan.
For this reason, the State Council recently decided to arrange financial subsidies of 2.2 billion yuan to support the promotion of energy-saving lamps and LED lighting. The reporter learned from the LED lighting companies in Fuzhou that the 2.2 billion subsidy will reduce the price of LED lamps, which is a drop of 15% to 20%.
To the surprise of the reporter, the subsidy rules have not yet been implemented and the prices of LED lamps in the market have been diving ahead. A 7W LED light bulb last year can be sold for 40 to 50 yuan this year, only selling twenty yuan, some small brand products even as long as ten yuan. This decline far exceeds the industry's expected decline of 15% to 20%.
Why does the price change so much? The reporter learned after consulting the merchants yesterday that this was mainly because the huge market potential of the LED civilian lamp gradually became prominent. The related person of TSMC told the reporter that the market share of the LED civilian market was originally less than 5%, and now is increasing at an annual rate of 200%. Therefore, many manufacturers cut prices in advance to grab the market. For example, the fuse of this price reduction is the first LED company in our province ignited, and its products have a price reduction of more than 25%.
In addition, most of the original LED lamps are exported. However, since the beginning of this year, many LED companies have reduced their export orders, and foreign customers have deliberately lowered prices, resulting in a gradual decline in the industry's profit margin. For this reason, the merchants have to make every effort to lower prices for the domestic market. Currently, there are nearly 100 types of LED lamps that can be purchased on the local market. Compared to two years ago, this figure has increased by nearly four times.
The local LED companies are facing challenges The country's allocation of subsidies and the market continues to expand, it seems that the LED lighting market situation is excellent, but industry sources said that for the LED lighting company in Fuzhou, the situation has become a bit harsh. "Subsidy rules are expected to be introduced at the end of this month and early next month. The primary beneficiaries of state subsidies will be those large-scale competitive LED companies." Guan Baiyu, secretary general of China Semiconductor Lighting LED Industry Alliance, told reporters.
Fuzhou started earlier in the research and development of LED products. In April 2009, Fuzhou became one of the 21 pilot cities for semiconductor lighting application projects in the “Ten Cities, Ten Thousand Citiesâ€. At present, there are dozens of companies engaged in LED lighting technology and product research, development, production and application in Fuzhou. The output of various LED lamps can reach several tens of millions per year. In addition, Fuzhou also seized the opportunity of Taiwan's LED industry transfer, and attracted many Taiwanese optoelectronic companies to settle down in Fuzhou. The total investment in the joint venture LED industrial base in Fuzhou was RMB 3 billion. At present, with the deepening of the cooperation between local enterprises and the Chinese Academy of Sciences and Taiwan's LED industry, the competitiveness of LED companies in Fuzhou is becoming stronger and stronger. For example, at present, most of the LED lamps researched and developed by a company in Fuzhou have reached the international advanced and domestic leading level, and the production cost is the lowest.
However, with the intensification of competition in the LED market, for most companies, the profit rate may also be reduced, and some companies may be eliminated.
Guan Baiyu said that at present, there are about 8,000 LED companies in China, which are in a small and scattered state. Since last year, some enterprises have started to close down. The reason for this is, on the one hand, due to a serious excess of production capacity; on the other hand, the production cycle of LED new products is about 3 months to 6 months, and there is no shortage of resources for SMEs lacking core technologies. At present, some local LED companies mainly engage in the middle and lower reaches of packaging, applications, etc., and rarely involve upstream links. The upstream segment accounts for about 70% of the industry's profit, while the downstream segment only accounts for 30%. Therefore, to seize the critical period of two or three years, it is the key to the development of the local LED industry to support and nurture several large LED companies at national level, create brands, and take a place on the international market.
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