Consolidation of LED Industry Continues in China
September 28, 2015 | TrendForceEstimated reading time: 2 minutes

The scale of China’s LED package market is projected to expand 16% year on year to 61.4 billion RMB in 2015, according to the latest Chinese LED Industry Market Report by LEDinside, a division of TrendForce. The growth of Chinese LED package market on the whole has slowed. With China being the production center of the global LED industry, the weakening of global economy this year has led to a larger slide in the exports of the country’s LED products. The year-on-year increase of Chinese LED lighting product exports for this year’s first half is 21%, a steep decline compared with the 80% year-on-year growth for the first half of 2014.
LEDinside analyst Allen Yu said that below expected growth of the lighting market demand has caused the current overcapacity for the LED package industry. As competition intensifies, prices of LED products will keep falling and operation pressure will mount for small and medium-size industry participants. Therefore, industry consolidation will also continue. With huge war chests already in place, some major Chinese LED companies have begun acquiring smaller players to strengthen themselves and transform their business models. Presently, most Chinese LED companies are competing in the low-end market. For Chinese LED product exporters, they will need to acquire international companies with a good number of patents in order establish a firm presence overseas. In sum, mergers and acquisitions will be frequent in the Chinese LED industry.
This recent and relentless wave of acquisitions is the result of the gradual maturation of the Chinese LED industry, and the process began with LED package companies in 2014. By 2015, the deal-making was officially in full swing with Lumileds, Bridgelux and other international companies becoming targets.
Yu pointed out that the competition in the Chinese LED package market has always been fierce, especially in the lighting LED segment. Chinese industry participants furthermore have lower margins for their products, reflecting their relatively weak profitability. Acquisition is thus one of the various methods that these players can use to help change their business models or boost their competitiveness. The following are some common types of deal-making that have taken place so far:
1. Horizontal integration: An LED company can either acquire or merge with another company belonging to the same industry or the same level of supply chain as to rapidly expand, pool resources and complement each other’s technological strengths. Notable cases in the Chinese LED industry are Honglitronic’s acquisition of Smalite and Refond’s acquisition of LT Photoelectricity.
2. Vertical integration: This type of deal-making involves buying companies up or down the supply chain as to obtain raw materials at cheaper prices or secure sales channels for end products. Examples in the Chinese LED industry include Natinstar’s deal with Invenlux Technology (LED chip maker), Honglitrongic’s deal with Lianyou (lead frame supplier) and Mason Technologies’ takeover of Rishang (LED advertising signage specialist).
3. Cross-industry merger/acquisition: Cross-industry deals help companies to spread their risks. One prominent example is Honglitronic’s attempt to enter the Internet of Vehicles sector via investments in DINA and Wisdom GPS. At the same time, Honglitronic is also branching into the Internet of Finance sector with its investments in Wang Li Finance Corporation.
In addition to these types of deal-making, Chinese LED companies that have amassed significant funds are establishing their own investment firms to rationalize their resources with various financial instruments and improve their overall competitiveness. For their acquisition targets, the injection of additional fund will relieve them of their cash flow pressure as well as helping them increase their production capacities and scale of their business operations.
Testimonial
"In a year when every marketing dollar mattered, I chose to keep I-Connect007 in our 2025 plan. Their commitment to high-quality, insightful content aligns with Koh Young’s values and helps readers navigate a changing industry. "
Brent Fischthal - Koh YoungSuggested Items
Technica USA Advocates for PCBAA Membership Among Printed Circuit Assembly Customers
09/16/2025 | Technica USATechnica USA is actively encouraging its printed circuit assembly customers to join the Printed Circuit Board Association of America (PCBAA), a leading industry organization advocating for increased domestic production of printed circuit boards (PCBs) and substrates.
Marcy’s Musings: Advancing the Advanced Materials Discussion
09/17/2025 | Marcy LaRont -- Column: Marcy's MusingsAs the industry’s most trusted global source of original content about the electronics supply chain, we continually ask you about your concerns, what you care about, and what you most want to learn about. Your responses are insightful and valuable. Thank you for caring enough to provide useful feedback and engage in dialogue.
I-Connect007 Launches Advanced Electronics Packaging Digest
09/15/2025 | I-Connect007I-Connect007 is pleased to announce the launch of Advanced Electronics Packaging Digest (AEPD), a new monthly digital newsletter dedicated to one of the most critical and rapidly evolving areas of electronics manufacturing: advanced packaging at the interconnect level.
ICAPE Group Unveils Exclusive Report on Sustainability in Electronics Manufacturing
09/15/2025 | ICAPE GroupICAPE Group, a global leader in printed circuit boards (PCBs) and custom electronics manufacturing, today announces the launch of its 2025 Industry Outlook & Innovation Report: Sustainability in Electronics Manufacturing. This exclusive report is accompanied by fresh insights from a dedicated Statista survey of 100 electronics manufacturing professionals, commissioned by ICAPE Group.
Panasonic Industry will Double the Production Capacity of MEGTRON Multi-layer Circuit Board Materials Over the Next Five Years
09/15/2025 | Panasonic Industry Co., Ltd.Panasonic Industry Co., Ltd., a Panasonic Group company, announced plans for a major expansion of its global production capacity for MEGTRON multi-layer circuit board materials today. The company plans to double its production over the next five years to meet growing demand in the AI server and ICT infrastructure markets.