MLS growth driven by lighting and signage
Nationstar joins MLS in the top 10, which was the first mainland Chinese company to enter the top 10 in 2013. After a very strong 2013, MLS only experienced modest growth from 2013 to 2015, but grew very strongly in 2016 to reach sixth place. Like Nationstar, MLS doesn't have much business in backlighting or automotive, but is growing, driven by sales of lighting and signage. In Q2 2017, it reached $247 million in revenue, ranking fourth.
MLS's revenue for 2017 is now projected to be approximately double the revenue of 2013. Furthermore, it has the opportunity this year to become the fifth supplier in history to reach one million dollars in sales of encapsulated LEDs in a single year; the others were Nichia, Osram Opto, Lumileds, and Samsung.
The growth of Chinese companies in the LED market
Besides MLS and Nationstar, many other players are active in the Chinese market. Hongli, Jufei, Shenzhen MTC, and Refond are estimated to be the next largest. There are also many more smaller LED suppliers in China.
The rise of Chinese suppliers in the LED market is not limited to the LED vendors themselves. This year, MOCVD, a key tool needed to produce LEDs, and suppliers AMEC and TOPEC have seen a strong increase in sales, becoming the first companies to seriously challenge the long-standing dominance of Germany-based Aixtron and US-based Veeco. The current IHS Markit quarterly report on the LED market, published in September, also includes MOCVD's rankings and stocks for 2016 and 2017 (annual and quarterly).
New production equipment continues to be added in China, demonstrating that Chinese competition is here to stay and will continue to grow in the future.
The threat to others
Many Western and Japanese LED companies don't yet see Nationstar as a major competitor because most of its sales are within China. However, the rise of Chinese companies is generally making the competitive environment more difficult for other suppliers struggling to match their low prices in lighting and other applications.
Western, Korean, and other suppliers are increasingly seeking alternative markets such as automotive, horticulture, and UV LEDs. Alternatively, Tier 1 suppliers can differentiate themselves through intellectual property, product quality, or specific technology (such as chip-scale packaging).
By Jamie Fox, Principal Analyst, Lighting and LED Group, IHS Markit
