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Local manufacturers are optimistic that the segment's market value will increase by at least 30 percent this year, sustained by increasing volume orders from the general lighting and automotive sectors.

SSL uses power LEDs as a light source in place of CCFLs or incandescent bulbs. For the most part, SSL has been restricted to niche markets such as flashlights, novelty items, premiums, outdoor accent lighting and automobile tail- and headlights. In the past two years, however, mainland China LED suppliers have noted growing demand for LEDs used in residential, commercial and public lighting.

Some 50 companies make up the LED supplier base on the mainland. The majority of these companies are large-scale manufacturers of power LEDs applied in SSL. Power LEDs accounted for 10 to 20 percent of LED makers' total output last year.

Like many of mainland China's LED suppliers, Hangzhou Zhongzhou Opto Co. Ltd is planning to expand its power LED business, eyeing a 100 percent increase in output this year. Liu Lei, export business director, said the company will invest $19 million in this project. General and automotive lighting will be the target applications of Zhongzhou Opto's additional output.

Jiangsu Wenrun Optoelectronic Co. Ltd has earmarked $1 million for new production facilities to be used to ramp up its power LED capacity this year, according to Yolanda Zhu, marketing executive. Power LEDs currently represent 3 percent of Wenrun Optoelectronic's aggregate LED production, but the company is now working to increase the share to 10 percent, Zhu said.

Production costs slide
The key selling points of SSL are its low power consumption and higher luminous intensity relative to CCFLs and incandescent bulbs. The downside is steep production cost.

Wenrun Optoelectronic's Zhu said that until recently, many mainland makers found the cost of producing power LEDs too high. But with SSL making inroads into the general lighting market, costs have dropped significantly in recent years.

Aside from high costs, heat dissipation is also a major concern among power LED makers. Liu of Zhongzhou Opto said that the company is developing techniques to increase heat dissipation, while enhancing the design of its power LEDs, ultimately to achieve output of up to 10W.

Makers across the mainland are focusing R&D on increasing the average efficiency of power LEDs, which is currently between 60lm and 80lm per watt. In the next five years, makers will try to further enhance the energy-saving, maintenance-free and environment-friendly features of their power LEDs.

As companies increase production by up to 50 percent and exports by at least 10 percent, prices are likely to drop 5to 10 percent next year.