In 2024, affected by the weak global economy and saturated international market, the growth rate of China’s LED lighting industry dropped significantly, triggering the shrinkage of LED chip and substrate manufacturing and packaging industry. Looking forward to 2025, the global economy if continued downturn or will stimulate the LED lighting industry vertical integration, and to Mini/Micro LED and other small pitch LED display and other emerging applications such as market transfer capacity. Saidi Research Institute of Integrated Circuits suggests that China should step up the introduction of relevant policies to strongly support the iterative development of LED display applications, materials and equipment, and to promote the LED industry to maintain its international leading position in the new round of development cycle.
First, lighting market shrinkage and display market outbreak led LED industry adjustment
The global economic downturn triggered stagnant growth in LED lighting demand. Affected by global geopolitical instability and economic weakness, the market demand of LED industry in 2024 is saturated compared with 2021, and the driving force of industry development is further reduced. China Lighting and Electrical Appliance Association data show that in the first three quarters of 2024, China’s LED lighting products exports amounted to 34.30 billion U.S. dollars, a year-on-year increase of 1.5%; in the LED light source, LED bulb exports fell by 13.9% year-on-year, and the LED tube exports fell by 6.8% year-on-year. After removing the factors of rising costs of raw materials, energy and logistics, China’s exports of LED products in the first three quarters of 2022 saw a slight decline. From the global market point of view, Europe and North America LED market by the continuation of the impact of monetary tightening policy continued to shrink, Southeast Asian countries due to undertake industrial chain transfer appeared to buck the trend of growth. Since the fourth quarter of 2024, Europe, the United States, Britain and other countries and regions to take radical interest rate hike policy, and the benchmark interest rate pushed up to the highest level after the financial crisis in 2008, is expected to 2023 will be the global LED products investment and consumption caused by sustained harm. With the gradual weakening of the product price factor, the development space of LED lighting industry shrinks in 2024, or it will lead to the domestic LED market to fall back and structural adjustment, and China’s LED lighting market will enter negative growth in advance.
LED chip manufacturing, encapsulation overcapacity aggravates industry competition. Influenced by the global raw material prices continue to rise, end consumption is weak, in 2024 China LED chip substrate manufacturing, encapsulation are slightly down. In the LED chip and substrate segment, the revenue of 8 domestic listed enterprises in 2024 is expected to reach 15.42 billion yuan, down 3.1% year-on-year. Due to the LED chip price continues to be low and LED supply chain because of the epidemic sealing control part of the interruption, some domestic LED enterprise manufacturing capacity utilization rate declined, silan micro and other leading enterprises LED chip production line appeared operating loss. In the LED encapsulation link, the domestic 9 listed enterprises in 2024 revenue is expected to reach 33.68 billion yuan, down 12.9% year on year. 2024, LED supporting materials prices due to exchange rate fluctuations, continued to squeeze the small and medium-sized packaging enterprise profit space, and make the order to the head of the enterprise to further concentrate. Manufacturing and encapsulation capacity continues to overcapacity exacerbated the vertical integration of the traditional LED lighting industry, according to incomplete statistics, in 2024, there are more than 60 LED lighting enterprises into bankruptcy and liquidation stage, the new century, Lianli shares, Ouyidi and Huidai photoelectric listed companies are also in the bankruptcy and liquidation of the list.
Advanced production capacity may continue to transfer to emerging markets such as LED display. In recent years, despite the slowdown in the development of application markets such as automotive LEDs, the LED display industry has maintained a sustained and rapid development, becoming a new engine leading the development of LED materials and equipment. According to customs statistics, from January to October 2024, China’s LED display export amounted to 1.31 billion U.S. dollars, an increase of 39.3% year-on-year. 2024 revenue of 9 listed enterprises mainly in the LED display business grew from 3.85 billion U.S. dollars in 2021 to 7.83 billion U.S. dollars, a year-on-year increase of as high as 103.7%, and the proportion of the application market for LED displays also increased from 6.1% to 9.9%, becoming the transformation and alternative choice for traditional displays such as LCD. Promoted by the development of Mini/Micro LED display industry, the demand for small-pitch LED equipment and materials is growing steadily, and the market for high-precision LED manufacturing equipment and high-purity LED materials is developing strongly. 2024, the revenue of 7 domestic LED material listed enterprises is expected to be 18.19 billion yuan, with a year-on-year growth of 18.3%. Nanda photoelectric, jingsheng electromechanical, north huachuang LED due to the business and small pitch LED display closely related to appear a large increase. With the further development of LED industry miniaturization, it is expected that in 2025 the application of LED display industry will still maintain rapid development trend, which will drive the advanced LED manufacturing and encapsulation capacity continue to transfer to the small pitch LED.
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