China-based LED epitaxial wafer and chip makers began massive expansion projects in 2017 and most of their new production capacities will come online in 2018, likely resulting in global overcapacity and price drops, according to industry sources.

Sanan Optoelectronics and HC SemiTek, the top-2 China-based LED chip makers, lowered quotes for mainstream products in fourth-quarter 2017, signaling oversupply and prompting smaller makers to give up or defer their expansion plans, the sources said.

China-based LED packagers were also keen on expanding production capacities in 2017, increasing pressure on their Taiwan-based competitors, the sources said. To cope with price competition, some Taiwan makers adjusted product mix to maintain gross margins despite decreased revenues in 2017.

Taiwan-based LED packagers' profits in 2018 will rely on VCSEL (vertical-cavity surface-emitting laser) diodes for consumer electronics and LED devices for sensors for surveillance system, IoT (Internet of Things), IoV (Internet of Vehicles) and drone applications, the sources indicated.

By: DocMemory
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