Chinese central government is to release a subsidy program worth 2.2 billion yuan ($346 million) in early July to promote the use of energy-saving lamps and LED lighting, which experts said will speed up the industry's consolidation. 

The subsidy for the lighting industry is part of a national subsidy plan involving 26.5 billion yuan in total for consumption of household electrical appliances, aimed at expanding domestic demand and boosting energy conservation. The plan was disclosed by the State Council on May 16.

Wang Hong, director of the Engineering Research Center for Semiconductor Lighting at South China University of Technology, pointed out that, "Such a large subsidy will speed up the consolidation of the lighting industry, while some small and medium-sized LED companies will be possibly forced to shut down."

Furthermore, Wang noted that large lighting producers with advanced technology in LED and energy conservation will benefit the most from the supportive program, because prices of energy-saving lamps will be lowered with the subsidies, which will enhance their competitiveness.

According to the 12th five-year plan (2011-15) for the semiconductor lighting sector released by the Ministry of Science and Technology in May, the value of LED lighting industry will reach 500 billion yuan by 2015, and the authorities will foster the development of a few large companies with core technologies. By 2015, there will be a maximum of 30 leading LED companies in the country.

However, small and medium-sized companies are thought to benefit less from the program. According to The Guangzhou-based Information Times newspaper reported earlier this month, the country now has over 8,000 LED companies, with many small and medium-sized companies on the verge of closure due to intensified competition. Huang Feng, a salesman at the Shanghai Hufan Lamps Co., showed his opinion that,"Though the subsidies will help cut the prices of LED lamps, I don't think the sales will rise on the whole, due to severe overcapacity in the sector."