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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 comprehensive industrial chain encompassing the production of LED epitaxial wafers, chip fabrication, packaging, and final product applications. Among these, as the adoption of LEDs continues to rise, the downstream application market for LEDs has expanded significantly.
According to research data from the High-tech Research Institute's LED Research Institute (GGII), the market size for China’s LED downstream applications reached 369.7 billion yuan in 2016, marking a year-on-year increase of 15.71%. This growth reflects the strong momentum in sectors such as display, backlighting, lighting, and others, which accounted for 12%, 11%, 66%, and 11% respectively. GGII predicts that the output value of China’s LED downstream applications will reach 455.1 billion yuan in 2017, an expected increase of 20.4%.
LED lighting, being one of the largest applications, has seen tremendous activity in recent years. From the perspective of LED lighting products, the variety of LED lamps has grown significantly, with notable changes in their structure and design.
**The Evolution of LED Lamp Shapes and Structures**
LEDs have become widely used in various types of lighting due to their energy-saving and eco-friendly characteristics. Over the years, LED lamp designs have become more diverse, and power configurations have also evolved. However, with falling product prices and rising costs, profit margins have shrunk, prompting manufacturers to focus on material selection and optimized solutions. As a result, the structural design of luminaires has undergone significant changes.
For example, traditional LED bulbs were composed of multiple parts: a shade, an LED light source, a heat sink, a power supply, a base, and a screw. This structure remained largely unchanged for many years. However, with declining bulb prices, manufacturers could no longer afford the previous cost structures, leading to the emergence of new, more efficient designs.
One major innovation is the linear scheme, which has fundamentally changed the shape of LED bulbs. Previously, the power supply was a separate component, but now it is integrated into the linear IC circuit along with the LED light source, streamlining the overall design.
As the LED lighting industry evolves rapidly, product updates are happening at an unprecedented pace. If a product doesn’t update its appearance or materials within a year or two, it risks being left behind by competitors. This fast-paced development has led to a lack of standardization in LED products and low levels of automation among downstream manufacturers.
**Low-end Manufacturing Needs Urgent Upgrading**
Currently, the domestic manufacturing sector is still dominated by labor-intensive, low-value production. The per capita manufacturing output remains lower compared to developed countries. In 2014, only 42% of China’s high-tech manufacturing exports were classified as technology-intensive, significantly lower than the 58% in the U.S., 53% in Germany, 55% in Japan, and 58% in the UK.
In the long run, an aging population will lead to increased labor costs, further eroding the cost competitiveness of Chinese manufacturing. Additionally, countries like India, Thailand, and Vietnam offer lower labor costs, making the need for transformation and upgrading even more urgent.
To address this challenge, some factories in mainland China began adopting automated production lines starting from the second half of 2013. These systems can reduce assembly costs by up to 50%, offering a clear advantage in efficiency and cost control.
Lin Yan, vice chairman of Sanxiong Aurora, believes that the automation of production lines should be carried out in two stages: mechanization and intelligence. Mechanization helps improve efficiency and reduce labor costs, while intelligent automation takes it a step further, allowing for smarter and more efficient manufacturing processes. However, this transformation requires active participation and collaboration from lighting manufacturers, not just equipment suppliers.
By implementing automated production lines, lighting companies have benefited directly. These systems enhance production efficiency, ensure consistent quality, and significantly cut down on labor expenses. Companies like Mulinsen, Sanxiong Aurora, and Yuanhui Optoelectronics have invested heavily in automated production, improving efficiency and enabling the rapid production of high-quality LED products.
Take Xing Shuozhi’s automated LED bulb production line as an example. Manually producing a single bulb costs about 0.5–0.6 yuan, whereas using automated equipment reduces the cost to just 0.1–0.15 yuan. This results in a savings of 0.4 yuan per bulb. With an output of 1,500 bulbs per day, the daily savings amount to at least 8,000 yuan. For LED lighting companies, this investment can typically be recouped within six months.
With the proposal of “Made in China 2025,†the push toward intelligent manufacturing is accelerating. The development and industrialization of lighting electrical products have become a key trend, offering an effective way to upgrade the LED manufacturing industry and enhance the competitiveness of China’s lighting sector.