Overcapacity, technology issues plague LED sector

By Zhou Siyu

NANCHANG - Besides being an architectural marvel, the six-kilometer-long Bayi Bridge these days has one more attraction the city can be proud of - its array of light emitting diode (LED) lamps.

The "LED lamp zone" in Nanchang is not confined to the giant bridge across the Ganjiang River.

This year, it is expected to grow into an area lit by 10,000 LED lamps, encompassing 17 thoroughfares, 100 buildings on either bank of the river, 1,000 scenic spots and all expressways in and around the city.

In a way, it reflects the booming LED industry in the country.

In January, an agreement was inked for a 12-billion-yuan manufacturing base to be built in Wuhu, Anhui province. Another 6-billion-yuan investment in an LED project in the same city followed the month after.

In Changzhi, Shanxi province, two LED projects, worth 1.1 billion yuan in total, is expected to start production by year-end. The Central China LED Photoelectric Center, a four-storied building used for LED display and block trade, will be built in Zhengzhou, Henan province, the agreement for which was inked on Tuesday.

Such agreements are becoming common across key cities in China. Money is flowing in, construction is humming round the clock, and workers are toiling away as rows of factories and workshops are erected from nothing, stuffed with expensive hi-tech equipment that will make these LEDs.

All eyes are on China's growing market for LED products, but the threat of overproduction is also looming.

Lack of technical breakthroughs and global competition has marred some bright prospects, and very few companies have been able to withstand the pressure.

And, demand for LED TVs will be affected by products made out of organic light emitting diodes (OLEDs), a better technology, according to a report released by Nomura Securities on Wednesday.

However, since there is no clear sign of reduction in production capability, chances are high that overproduction will be the order of the day.

To regain market share, LED TVs will have to be priced lower by around 60 percent, the report said.