A lawsuit between IC supplier and LED manufacturer

Semiconductor supply crisis has greatly impacted the LED display industry. Recently a lawsuit between an IC supplier (the Supplier) and an LED manufacturer (the Manufacturer), which claimed a total of RMB 53 Million (USD 8M), has been widely known.

The cause for this suit is the Supplier would raise the IC price at more than 5 times of that in the initial agreement. As known that a most common-used LED driving IC had increased from RMB0.27/pc to RMB1.5/pc from March until July. The Manufacturer couldn't accept the adjusted price, and required the Supplier to continue supplying as per the price appointed in annual agreement. But the Supplier had never responded and is unwilling to perform the initial agreement.

On July 8, the Manufacturer proposed to accuse upstream companies of driving up prices and disrupting the market. Additionally, they would denote 1 million RMB to help small LED display companies for legal aid. The Manufacturer stated that as of August 12, total 9 LED display manufacturers had joined the lawsuit and 100 others companies expressed their support to accuse the Supplier monopolizes the chip market.

However, the Supplier responded that, they had no direct supply relationship with the Manufacturer, who purchased IC from the agents. Moreover, the selling price is regulated by the market, not a tripartite price adjustment. The manufacturer had not paid significantly higher than the market price when they bought from its agent even at RMB1.5/pc.

On September 23, the Contract Dispute between the 2 parties was accepted by the People's Court.

Although we don’t know yet how the lawsuit would go, the fact is that driving IC has been keeping increasing in the past months. As we know, there are plenty of Driving ICs needed on the LED displays. The extremely IC price increasing has brought big hurt to LED industry. We look forward the earlier ending of this trend so that all LED manufactures and end users can benefit from it.