(Yicai) June 18 -- Hongli Zhihui, a Chinese LED chip packaging company, is shifting focus to automotive LED lighting as competition in the country’s semiconductor sector intensifies and profit margins shrink, the company chairman said in a recent interview with Yicai.

"Automotive lights have higher technical requirements than household lighting products so their prices are higher,” Li Jundong said. “As car sales soar, Hongli Zhihui will increase investment in vehicle lighting.”

"Japanese and American companies used to supply most of the automotive LED lighting components in China, but technical barriers have been surmounted in recent years and there are more local suppliers. So what we need to do is to continue to expand the market," Li said.

“Developers of electric cars are spurring demand for a greater variety of vehicle lights,” said Deng Shoutie, vice president and director of automotive lighting at Guangzhou-based Hongli Zhihui. As the supply chain is not yet closed, it gives newcomers like us a chance to gain a foothold and achieve rapid growth."

LED semiconductor packaging accounted for 78.3 percent of the company's revenue in 2023 while car LED headlights accounted for 17.57 percent, according to the firm’s latest annual report.

Hongli Zhihui has already forged ties with more than 20 Chinese automakers including Geely Auto, Great Wall Motors, Chery Automobile, Beijing Auto and Hozon to supply them with LED lights, Li said. Many of these tie-ups are expected to start mass production one after the other. Commercial vehicle manufacturers such as Yutong Bus and BYD Commercial Vehicles are also teaming up with the firm.

And it is also expanding its global footprint for commercial vehicle lighting. "The company has been producing commercial auto LED headlights since 2007, and we already have a large market share in the US, Europe and other countries," Deng said.

The penetration rate of LED headlights in new energy vehicles was around 95 percent in 2023. And many Chinese suppliers have increased their output by more than 50 percent.

The global automotive lighting market is expected to grow at an annual compound rate of 4.9 percent from 2021 and 2027, and should be worth USD42.2 billion by 2027, according to market research firm Yole Développement.

Editors: Tang Shihua, Kim Taylor