An escalating trade war between the US and China is expected to depress demand for LED chips made in China, which might exacerbate a persistent supply glut that has plagued Chinese LED makers, market researcher TrendForce Corp (集邦科技) said yesterday.
The US’ second wave of tariffs on US$200 billion worth of Chinese products include more than 30 LED products, which are to be subject to a 10 percent import tax, the Taipei-based researcher said.
The new tariffs took effect on Monday.
The LED products are valued at about US$8 billion, accounting for 70 percent of China’s total LED exports to the US, according to TrendForce’s tally.
The effects of the tariff would deepen when the tax jumps to 25 percent on Jan. 1 next year, it said.
“The tariffs might affect Chinese LED packaging companies and lighting product makers, because they might see a significant decrease in orders from foreign clients. This will in turn reduce demand for LED chips upstream in the supply chain,” TrendForce said.
To circumvent the import tariffs, Taiwanese LED manufacturers operating in China might move their assembly lines back home, the researcher said.
TrendForce said Taiwanese LED companies might benefit from the trade war and see an improvement in their global market share, due to cost competitiveness and extensive patent coverage, it said.
The global LED industry last year grew 4 percent to US$18.8 billion from a year earlier, falling short of an estimated 11 percent annual expansion, TrendForce said.
The researcher blamed overcapacity-driven supply glut and a price collapse for last year’s disappointing results.
There are no clear signs indicating an improvement in the market, it said.
In the first half of this year alone, LED prices have tumbled 20 to 30 percent due to worsening oversupply, TrendForce said.
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