The automotive market is recovering, and LED headlights have become a new growth driver for profitability.

As the domestic epidemic situation improves, consumer confidence is growing, suppressed demand among some consumers is being released more quickly, and the automotive market is gradually recovering.

According to data released by the China Association of Automobile Manufacturers, car production and sales in our country recorded double-digit year-on-year growth in May of this year. This also marks the first time double-digit growth has been achieved since the downturn ended and recovery began last April.

The automotive sales market is gradually recovering, which to some extent is boosting the recovery of the LED lighting market. Companies such as Everlight Electronics, Redick, Liqing, Edison, and others have expressed optimism about the automotive lighting market.

According to Ye Yinfu, Chairman of Everlight Electronics, "MiniLED, ultraviolet and infrared LEDs, as well as automotive applications, will become new niche markets and will serve as the driving forces behind operational growth."

To expand its business into automotive modules, Everlight Electronics has planned a module production line at its Suzhou factory, aiming to increase its market share in automotive lighting.

The relevant Radek official stated: "As the epidemic slows down, the share of automotive lighting customers continues to grow steadily. The second quarter performed better than the first. Assuming no unforeseen disruptions, operations are expected to improve quarter by quarter, with a cautiously optimistic outlook for the second half of the year."

The relevant official, Liqing, also noted that "the growing trend of LED lighting penetration in the market is evident, which will help the company maintain strong order visibility."

Edison is also continuing to reduce its share in highly competitive LED component products while actively expanding into the market for LED automotive lamp modules and lighting modules. According to Edison's forecasts, revenue from its two key product lines—LED automotive lamp modules and lighting modules—is expected to achieve double-digit growth this year.

LED technology has been rapidly gaining popularity in recent years as costs have decreased, while the size of packages, efficiency, and brightness have improved. Among these advancements, LED technology has gradually become a trend in automotive lighting, and LED-based automotive lighting devices have also entered a phase of steady expansion.

Currently, whether it's a joint-venture brand or an independent one, a low-end brand or a luxury brand, LED headlights have become standard equipment in many vehicles.

According to data from the LED Research Institute (GGII) under the High-Tech Industries Research Institute, with the gradual adoption of LED automotive lighting in mid-range vehicle models, China's LED automotive lighting market is estimated to surpass 42.5 billion yuan in 2020.

Taiwanese manufacturers view the LED automotive headlight market as a "sweet pie," and mainland China's manufacturers, naturally, won't miss this opportunity. Many companies have already chosen the LED automotive headlight market as a key growth area.

Donghao Optoelectronics, one of the earliest companies in China's automotive lighting sector, initially chose the aftermarket market as its starting point. After years of steady growth and refinement, both product quality and technical expertise have become the industry's defining "flagship" offerings.

Since the company’s core business is LED lighting, revenue from this segment accounted for approximately 50% of total revenue in 2019. Chen Jiang, Deputy General Manager of Donghao Optoelectronics, openly stated: "The growing demand for automotive LED orders has stabilized the company’s capacity utilization rate."

In 2020, due to the impact of the epidemic, car production and sales in China plummeted in the first quarter. However, Chen Jiang said: "Although auto companies are seeing reduced shipments, since we’re primarily focused on the replacement market, the impact remains relatively small."

To meet market demands, Donghao Electronics has begun gradually shifting toward the pre-installation market, leveraging its accumulated experience and advantages gained in the aftermarket service sector.

Compared to the aftermarket market, the pre-installation market is more attractive. Not only Donghao Optoelectronics, but also Guoxing Optoelectronics—a company already established in the LED lighting aftermarket—is accelerating its transition into the pre-installation market.

According to the relevant official at Nationstar Optoelectronics: "Nationstar Optoelectronics has maintained strong cooperative relationships for a long time with several domestic and international automakers and aftermarket lighting suppliers. After years of dedicated effort and continuous accumulation, we have made significant progress in planning and developing the pre-installation market, earning high praise from both international and local customers."

Of course, in addition to these companies transitioning into the pre-installation market, there are also several LED companies that are "putting down roots" in this space, such as Hongli Zhihui and Osram.

Hongli Zhihui's automotive LED packaging has become one of its key strengths.

To establish a strong foothold in the LED automotive headlight market, Hongli Zhihui has established a department dedicated to automotive LED packaging. Today, the company boasts an independent production line for automotive components, a dedicated workshop, and a CNAS-certified automotive component laboratory. It has successfully transitioned to IATF16949 standards, and its products have achieved dual certification—meeting both the AEC-Q102 automotive product reliability standard and the IEC60810 safety standard for automotive applications.

The active development of manufacturers producing LED automotive headlight packaging has, to a certain extent, boosted the enthusiasm of companies specializing in automotive headlight production.

On June 9, Xingyu Co., Ltd., a company specializing in automotive lighting, announced a plan to issue publicly convertible corporate bonds denominated in yuan. The total amount of the convertible bonds to be issued will not exceed 1.5 billion yuan, with 545 million yuan earmarked for the construction of electronics plants within the Intelligent Manufacturing Industrial Park.

Upon completion of the electronic plant, the project will be used for the production and testing of light sources for vehicles and other electronic modules, ultimately achieving an annual production capacity of 40.8 million light sources for vehicles and other electronic modules.

Xingyu Co., Ltd. announced that the fundraising project focuses on the development of electronic and intelligent automotive lighting solutions, actively aligning with the national strategy for advancing smart vehicles. It aims to strengthen the company’s production capabilities in light-source modules and other electronic components, enhance its product portfolio, and drive growth in the high-quality automotive lighting market.

Overall, the market size for LED automotive headlights is growing year by year, and the future trend in automotive lighting points toward LED headlights, laser headlights, and intelligent headlights—making LED automotive lights continue to hold significant growth potential.