State subsidies will increase LED industry polarization

The recent “Semiconductor Lighting Product Subsidy Promotion Project for 2012”, whether it is the outdoor traffic lighting or indoor commercial lighting subsidies involved in the project. In the end, such subsidies for lighting products will likely increase the possibility of polarization in the LED lighting industry. The reasons are as follows:

One: As the prices of these two types of products are relatively high, the engineering projects have higher requirements on product quality, brands, and suppliers. As a result, many manufacturers in the Chinese mainland have no way to make breakthroughs in the market. This has led large companies to skyrocket in this “spring breeze,” and small companies have found it difficult to capture such opportunities.

II: If a subsidy action is implemented in the upper reaches of the LED industry, companies that are listed in the Chinese mainland are all LED upstream companies. As these companies are listed one by one, the upper reaches of the LED industry will have sufficient funds to achieve capacity expansion, and in view of the downstream Without a corresponding expansion of the market capacity of the product, bottlenecks in terminal sales will occur, and large inventories will appear in the upstream and downstream products.

Three: If the subsidy action is implemented from the downstream industry of LED, the output of the entire industry chain of LED is to use the product end in the downstream. If the end market is opened, it is obvious that the good performance of the terminal market will directly drive the sales of upstream and upstream products.