Marketing News

Trade conflict affects LED demand


According to the latest LED Industry Demand and Supply Database Report by LEDinside, the overall global LED market output value was 18.796 billion US dollars in 2018, which is only 4% higher than that in 2017. The 11% predicted, the main reason is still the imbalance between industrial supply and demand, the oversupply leads to the decline in LED prices, and trade frictions affect terminal demand.

LEDinside pointed out that although there are still many Chinese LED manufacturers in 2018 who hope to increase revenues to drive revenue growth, due to the huge pressure on the overall industry to face price declines, many manufacturers' revenue growth is not as expected. Especially in the first half of this year, the price of LED chips of some specifications fell by as much as 20~30%. The main reason is that after the LED chip manufacturers in China expanded significantly, the terminal demand could not keep up with the increase of supply, which led to the imbalance between supply and demand of the industry. However, since the current chip price has been close to the cost of most manufacturers, the chance of a substantial price cut in the short term is not high.

As for the demand side, due to Sino-US trade friction and the depreciation of exchange rates in emerging markets, LED manufacturers' exports to North America and other emerging markets have been significantly affected. Among them, the US recently announced the $200 billion tariff list, more than 30 LED lighting related products, accounting for about 70% of China's total lighting products exports to the United States, about 8 billion US dollars. These products will be subject to a 10% tariff from September 24th, and tariffs will be raised to 25% from January 1st, 2019.

LEDinside believes that the subsequent chain effect may cause many foreign brand factories to reduce OEM orders for China. Therefore, application manufacturers in China including LED packaging and downstream lighting will be affected to varying degrees, leading to the demand for upstream LED chips. Sharply reduced.

Although tariff adjustment will affect the global LED and lighting industry, LEDinside believes that in the short term, global LED and lighting products will still be concentrated in China. The main reason is that the supply chain links such as peripheral parts and electroplating processes have taken root in China. Landing, so the supply relationship will not change much in the short term. However, some US lighting brands have issued price increases to dealers in the US market, reflecting the increase in tariffs and raw material prices. Some manufacturers even consider exporting semi-finished products to the third place for assembly and then exporting to North America to reduce tariff shocks. In the long run, LED and lighting manufacturers with a global presence will have a competitive advantage, as they can reduce tariff impacts through direct exports from overseas factories, which will help to gain a larger market share.

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