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No Letup in the Oversupply of LEDs as Inventories Continue Rising
July 01, 2019
 
DigiTimes reports the supply of LED this year is expected to be between 15% and 18% above demand and is estimated to be ~10% above demand next year.  Citing weak demand for LED lighting and backlights for smartphones and TVs, and even with a bump of 3% to 5% for mini-LEDs for the backlight market in 2ndHalf 2019,  the demand is too small to have an appreciable impact. Inventory levels for LEDs in China have risen 3.8% so far this year from 6.52b CNY at the end of 2018 to 6.77b currently, and China’s largest producer, San'anhas seen inventory turnover increase from 174 days to 232 days during the same period.  With the Huawei ban and a general cautionary pall over the entire consumer electronics industry, the oversupply could get worse, but much will rest on whether a trade deal is made and the timing. 
 
However, mini-LED adoption will not affect the over-supply situation and while their value/set is higher than larger BLU strings, they tend to be produced on more specialized equipment and will absorb only a small amount of existing capacity.  Additionally, almost every LED producer is working toward the production of mini-LEDs, which gives buyers a reason to use that competition to call for lower priced. The recent announcement by the Chinese government that it will no longer subsidize raw capacity growth could have a measuring effect and help the industry get to a more balanced situation, but it will take time.