In the Metal Organic Chemical Vapor Deposition (MOCVD) market, international manufacturers like Aixtron from Germany and Veeco from the U.S. have long dominated. In 2016, domestic MOCVD equipment held only an 11% share in China. However, recent years have seen a strong push for localization. Domestic MOCVD systems are now being validated by leading Chinese LED chip manufacturers, gradually displacing foreign equipment in key markets such as blue, green, and white light LEDs. Aixtron has largely exited the Chinese market, leaving Veeco as the primary competitor to domestic brands.
Zhongwei Semiconductor recently announced that over 100 units of its Prismo A7â„¢ micro-MOCVD reaction chambers have been delivered, marking a significant milestone since the product's launch. This achievement boosts confidence in the future of domestic MOCVD technology. However, challenges remain. On November 2, 2017, a U.S. court issued a preliminary injunction against SGL, a supplier of graphite trays used in micro-devices, halting all related production. This decision poses a serious risk to existing customers using micro-device technology.
In response to Zhongwei’s progress and the patent risks, Gaogong LED sought more information about their equipment technology and future plans. The company, however, declined to provide details at this time.
Despite these challenges, the domestic MOCVD market is seeing growing opportunities. Dr. Chen Aihua, Chairman of Zhonghao Optoelectronic Equipment (Shanghai), stated that domestically developed MOCVD equipment with independent innovation has real potential. He emphasized that domestic manufacturers can compete fairly with foreign counterparts through cost-effectiveness, quality service, and continuous performance improvements, supporting China’s fast-growing LED industry.
Zhonghao is the only domestic manufacturer to have successfully commercialized MOCVD equipment. Its systems are now used by major chip producers like Sanan Optoelectronics, Huacan Optoelectronics, Yuanrong, Jucan, Hualai, Hefei Rainbow Blue, and others. Since delivering its first MOCVD system in 2012, Zhonghao has shipped nearly 30 units.
Breaking the patent barriers remains a critical challenge. MOCVD is a highly patented industry, with core technologies largely controlled by companies like Veeco and Aixtron. These firms have invested heavily in R&D and global IP protection. For domestic players, entering this space requires not only technological breakthroughs but also navigating complex legal landscapes.
While imitation may offer short-term advantages, it exposes Chinese companies to greater patent risks down the line. To truly become a manufacturing powerhouse, the LED industry must prioritize independent innovation, develop core technologies, and build a robust intellectual property portfolio.
Building a self-reliant MOCVD technology system is a long-term process, requiring significant investment and perseverance. Zhonghao’s founding team understood this early on, committing to two principles: developing core technologies independently and aligning innovation with customer needs.
Their first MOCVD product, ProMaxy®, faced challenges in maintenance cycles and process stability compared to Veeco’s systems. But after refining the second generation, ProMaxy®168 achieved performance levels comparable to foreign models. However, introducing new processes proved difficult due to the reliance of many domestic manufacturers on Veeco equipment.
To address this, Zhonghao worked closely with customers to develop efficient process introduction methods, reducing lead times and costs. As Dr. Chen noted, one customer went from installation to mass production in under three months, solving the issue completely.
Independent innovation comes at a high cost. It requires substantial capital and human resources for development, supplier collaboration, and quality control. These investments strain operating capital and often lead to sustained losses. Yet, as Dr. Chen emphasized, the long-term rewards are worth it.
Customer support has been vital. Without their trust and cooperation, there would be no opportunity for domestic equipment to prove itself. Their contributions have helped drive the development of core technologies essential for industrial growth.
Looking ahead, the future for domestic MOCVD manufacturers appears promising. With China’s LED industry expected to grow rapidly, there will be ample room for both domestic and foreign equipment to compete fairly. After seven years of development and two generations of products, domestic MOCVD technology has gained strong market differentiation and competitiveness.
As localization increases, the overall landscape of China’s chip industry is shifting. If domestic equipment continues to improve and match or exceed foreign alternatives, the global competitiveness of Chinese chip companies will strengthen significantly.
Reduced production and service costs will further enhance customer competitiveness. Combined with China’s financial strength, foreign manufacturers may find themselves at a disadvantage when competing with domestic players.
As the chip industry becomes more competitive, demand for cost-effective solutions will rise. If domestic MOCVD equipment offers better value, it could capture even more market share. More importantly, with a foundation in independent innovation, Chinese manufacturers can meet evolving customer needs, upgrade existing systems, and introduce next-generation products that reshape the MOCVD market.
Ultimately, the success of China’s LED industry depends on the continued development and global competitiveness of its domestic MOCVD equipment.
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