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Low production efficiency, high labor costs How do LED lighting companies get rid of the "low-end manufacturing" hat?
In recent years, China has developed a relatively complete industrial chain for LED technology, covering the production of epitaxial wafers, chip fabrication, packaging, and final product applications. Among these, the downstream application market for LEDs has expanded significantly as their adoption rate continues to rise.
According to data from the High-tech Research Institute's LED Research Division (GGII), the market size for China's LED downstream applications reached 369.7 billion yuan in 2016, reflecting a year-on-year growth of 15.71%. The major application areas—display, backlight, lighting, and others—accounted for 12%, 11%, 66%, and 11% respectively. GGII forecasts that this market will grow further to 455.1 billion yuan in 2017, marking a 20.4% increase.
LED lighting remains one of the largest segments within the industry, with significant activity observed over the past few years. The variety of LED lamps has grown dramatically, and their structural designs have evolved considerably.
**The Evolution of LED Lamp Shapes and Structures**
Due to inherent advantages such as energy efficiency and environmental friendliness, LEDs are widely used across various types of lighting products. Over the years, LED lamp designs have become more diverse, and their power levels have also increased. However, with falling prices and rising costs, profit margins have shrunk, prompting manufacturers to focus on cost-effective solutions.
As a result, many lighting companies have simplified their product designs, leading to significant changes in luminaire structures. For example, traditional LED bulbs were composed of multiple components such as the lampshade, light source, heat sink, power supply, base, and screw. But with price pressure, new design approaches have emerged.
One notable innovation is the linear scheme, which integrates the power supply directly into the circuit board along with the LED light source, eliminating the need for separate power units. This shift has fundamentally changed the form and structure of LED bulbs.
Despite rapid product updates, standardization of LED products remains a challenge, and automation levels among downstream manufacturers are still relatively low.
**Low-End Manufacturing Needs Urgent Upgrading**
Currently, China's manufacturing sector is dominated by labor-intensive, low-end production, resulting in lower value-added output compared to developed nations. In 2014, only 42% of China's high-tech exports were classified as advanced technology-intensive, lagging behind the U.S., Germany, Japan, and the UK, which all exceeded 50%.
With an aging population, labor costs are expected to rise, weakening China’s cost advantage. Meanwhile, countries like India, Thailand, and Vietnam offer cheaper labor, making it essential for Chinese manufacturers to upgrade and transform.
To address these challenges, some factories in mainland China began introducing automated production lines starting from the second half of 2013. These systems can cut assembly costs by up to 50%.
Lin Yan, Vice Chairman of Sanxiong Aurora, believes that the automation process should be divided into two stages: mechanization and intelligence. Mechanization improves efficiency and reduces labor costs, while intelligent automation enhances the entire manufacturing process. However, successful implementation requires collaboration between equipment suppliers and lighting manufacturers.
By adopting automated production lines, lighting companies benefit directly through improved efficiency, better quality control, and reduced labor costs. Companies like Mulinsen, Sanxiong Aurora, and Yuanhui Optoelectronics have invested heavily in automation, enabling them to produce high-quality LED products quickly and efficiently.
For instance, the cost of manually producing a single LED bulb is approximately 0.5–0.6 yuan, whereas automated production brings this down to 0.1–0.15 yuan. With daily output of 1,500 bulbs, this saves at least 8,000 yuan per day. Such cost savings allow companies to recoup their investment within six months.
With the introduction of "Made in China 2025," the push for intelligent manufacturing is accelerating. The development and industrialization of smart lighting products are not only a trend but also a crucial path for upgrading the LED manufacturing industry and enhancing the competitiveness of China's lighting sector.