The impact of the Sino-US tariff trade war on the LED display industry

In recent years, the economic and trade frictions between China and the United States have continued to escalate. Especially since 2018, the two sides have successively imposed tariffs on each other’s goods worth hundreds of billions of dollars, kicking off the so-called “Sino-US trade war”.

This tariff war affects multiple industries, and LED displays, as an important part of the electronic information industry, are inevitably affected. This article will deeply analyze the far-reaching impact of the Sino-US tariff trade war on the LED display industry from the perspectives of industrial chain, market structure, technological transformation, and corporate response.

1. Exports are blocked: LED display screens face challenges in going overseas

As the world’s largest LED display production base, China’s product exports dominate the market, with the United States being one of its main export markets. After the outbreak of the trade war, the United States imposed tariffs ranging from 10% to 25% on LED products produced in China, which greatly increased the cost of Chinese LED products in the US market and weakened their price competitiveness.

Some small and medium-sized LED companies have been forced to reduce their export scale or even withdraw from the US market due to their meager profits, and even “zero profits” or even “negative profits” after the imposition of tariffs.

Large enterprises have begun to seek to set up factories overseas or re-export through third countries to avoid tariff risks, but this has undoubtedly increased operating costs and compressed profit margins.

2. Supply chain reshaping: rising costs of raw materials and key components

The production of LED displays involves multiple links, including lamp beads, driver ICs, power supplies, PCB boards and other components. In the context of the trade war, not only are exports restricted, but some raw materials and components are also affected by tariff fluctuations.

For example, some high-end chips originally relied on imports from the United States, but the trade war caused their import channels to be blocked or costs to rise, which directly affected product delivery and cost control.

In addition, some US-funded companies have also reduced cooperation and technical support for Chinese LED manufacturers, exacerbating the risk of industrial chain rupture and forcing domestic companies to accelerate the process of independent and controllable supply chains.

3. Changes in market structure: companies accelerate the development of diversified markets

Against the background of obstruction in the US market, many LED companies (such as Unilumin LEGIDATECH ) have begun to turn their attention to emerging markets such as countries along the “Belt and Road”, Southeast Asia, Europe, and Latin America. Although the total demand in these markets is temporarily difficult to replace the United States, its growth potential is huge and has gradually become a new growth pole for LED display exports.

At the same time, companies began to focus on overseas localization layout, and by setting up factories in Southeast Asia and sales and service centers in Europe, they further narrowed the distance with customers and reduced the uncertainty caused by trade frictions. The accelerated pace of the industry’s “going out” has also prompted Chinese LED companies to continuously improve their brands, services and local adaptability of products.

4. Technological innovation and product upgrades have become core competitiveness

The trade war has accelerated the reshuffle and transformation of the industry. On the one hand, low-end production capacity faces a serious impact, forcing companies to get rid of price wars and instead strengthen independent research and development and technological innovation; on the other hand, the market demand for high-end products has increased, pushing LED displays towards higher resolution, lower energy consumption, and stronger interactivity.

For example, Mini/Micro LED technology has become a new hot spot in the industry, and innovative applications such as transparent screens, special-shaped screens, and outdoor naked-eye 3D displays are constantly emerging.

Only companies that master core technologies and have independent intellectual property rights can be invincible in global competition. In a sense, trade barriers have forced companies to strengthen their technical strength and form a higher level of competition.

5. Policy and industry support: buffering corporate shocks

Facing the pressure brought by the trade war, the national and local governments have successively introduced a series of support policies to support the stable export and innovative development of emerging industries such as LED display screens.

For example, through export tax rebates, R&D subsidies, industrial funds, etc., the financial pressure of enterprises during the transition period is alleviated.

In addition, industry associations are also actively guiding enterprises to go overseas in groups, collaborate in innovation, promote the formulation of independent technical standards, and strengthen overseas brand building and marketing. Multi-party collaboration has become an important support force for the industry to maintain stable development in an uncertain environment.

6. Future trends and thinking

Although there is still uncertainty about the direction of the Sino-US trade war, it is foreseeable that the global industrial chain is accelerating the reconstruction, and the global development of the LED display industry will be more diverse and complex. Chinese LED companies should follow the trend and actively respond from the following aspects:

Strengthen the independent and controllable supply chain system and increase the domestic substitution rate of core components;

Increase product added value and technical content, and develop in the direction of intelligence, interaction, and customization;

Expand diversified markets and localized service capabilities, and reduce dependence on a single market;

Strengthen brand building and international cooperation, and enhance influence and voice in the global market.

Conclusion

Although the Sino-US tariff trade war has brought a short-term impact on China’s LED display industry, it has also become a “booster” for the industry’s transformation and upgrading.

At a time when challenges and opportunities coexist, only by adhering to technological innovation, market diversification and global layout can LED companies achieve leapfrog development in the new round of global competition.