A new demand driver for LEDs in the medium to the long term will be the general lighting market. Given the global trend to reduce carbon emissions, China demand in the general lighting segment will be strong for LEDs, which offer low-power consumption and are environmentally safe. LED shipments for general lighting will make up 15.5 percent of the total LED market this year, IHS iSuppli data show.
Despite the current popularity of LEDs in China, the domestic LED industry is still in its infancy compared to its counterpart in thriving LED-focused countries such as the United States and Taiwan. Some reasons why China trails in the ﬁeld include lagging technological capabilities currently available in the country as well as a paucity in adequately experienced management teams and R&D engineers to lead the way. Furthermore, the lack of Chinese intellectual property in core and upriver segments¡ªsuch as in LED wafers¡ªis a serious concern.
Still, China¡¯s LED players enjoy ample funding from local and government sources, which should help domestic entities capture the large Chinese end demand for LEDs in the future. To date, local governments in China subsidize at least 70 percent of the purchase price for metal organic chemical vapor deposition (MOCVD) equipment employed in LED manufacturing¡ªa percentage translating into some $1.5 million for each machine. Furthermore, tax and utility payment beneﬁts are offered to encourage investments in the domestic LED industry, proving to be an additional boon for local players