According to the latest report released by the High-tech LED Industry Research Institute (GLII), as of the end of the third quarter of 2012, the number of MOCVD equipment used in the LED industry in China (excluding Hong Kong, Macao and Taiwan, the same below) reached 896.
Figure 1. Number of MOCVD in China in each year 
Note: In 2011, 483 MOCVD equipment were actually added. Since 7 of the old machines were replaced or withdrawn, the data increased by 476.
Source: Gaogong LED Industry Research Institute (GLII)
Among them, the number of newly added MOCVD in the first three quarters of this year was only 93. It is expected that the number of new MOCVDs in the whole year will be much smaller than the estimated 242 at the beginning of the year. GLII analyst Yu Bin said that most of the epitaxial chip manufacturers this year are the main reasons for delaying or canceling the MOCVD expansion plan.
MOCVD capacity utilization rate is only 30.1%
At the same time, the continuous launch of new domestic MOCVD in 2011 also caused a serious excess of domestic LED epitaxial chip capacity in the first three quarters of this year. According to GLII statistics, in the first three quarters of this year, the average operating rate of domestic MOCVD was 58.4%, and the capacity utilization rate was about 30.1%.
Overcapacity also directly led to a rapid decline in the price of the chip market, and the gross profit margin of the product was continuously compressed. GLII believes that scale will be the core indicator for the future market competitiveness of domestic LED chip companies.
VEECO and AIXTRON combined revenues fell by more than 50% year-on-year
Affected by the sharp decline in global MOCVD demand, the revenue of the world's two largest MOCVD equipment suppliers also experienced a sharp decline in the first three quarters of 2012. As of the end of the third quarter, VEECO revenue was $403 million, down 49% year-on-year.
Figure 2. VEECO and AIXTRON revenues
Data source: company financial report
More than 50% of the extension companies will withdraw from the market in the next two years
According to GLII statistics, as of the end of the third quarter of 2012, there were 44 domestic MOCVD companies. Among them, the number of enterprises with more than 50 units accounted for 11%, the proportion between 30-49 units was 7%, the proportion between 20-29 units was 7%, and the proportion between 10-19 units was 34%. The ratio between 1-9 units is 41%. It can be seen that most of the epitaxial chip manufacturers in China are small-scale enterprises. GLII expects that more than 50% of domestic and foreign chip companies will be forced to withdraw or be acquired in the next two years.
Figure 3. The number of MOCVDs owned by Chinese companies
Source: Gaogong LED Industry Research Institute (GLII)
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