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Chinese LED Market Lights Up

The Chinese light emitting diode (LED) market will grow 23 percent in 2011 to $5.8 billion from $4.7 billion last year, driven by liquid crystal display (LCD) backlighting and street lighting, according to researcher IHS iSuppli.

Growth in the Chinese LED market will continue for several years, as revenue grows to $6.9 billion next year and then rises to $11.1 billion in 2015 for a compound annual growth rate of 17.7 percent, reported IHS iSuppli.

A broad range of applications will drive LED growth in China including general illumination, traffic signals, handsets, key pads, digital still camera, flashlights, decorative lighting, and street lighting.

In fact, street lighting will be the biggest segment, reaching $1.5 billion this year and $1.8 billion in 2012. The LCD backlighting market will also drive strong growth because of greater use of LEDs in large-size LCD televisions and laptops. Those applications will generate $1.8 billion in LED revenue in 2015, compared to 713 million in 2011, according to IHS iSuppli.

General lighting will emerge as a demand driver for LEDs in China because they deliver low-power consumption and are environmentally safe.

Although strong growth is forecast for LED usage in China over the next several years, the industry is still in its infancy in that country compared to the United States and Taiwan.

However, China's LED manufacturers appear to have government support in China which will help drive growth.

Local governments in China subsidize at least 70 percent of the purchase price for metal organic chemical vapor deposition (MOCVD) equipment used to make LEDs. This amounts to about $1.5 million for each machine, according to IHS iSuppli. LED manufacturers also get breaks on taxes and utility costs.