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Half of all LED chip making companies in China will go bankrupt owing to a slump in global demand and cuts in subsidies to certain manufacturers, according to a piece of research by Reuters. Analysts say oversupply and the economic downturn has depressed prices to below production levels, meaning large numbers of small companies have already closed their businesses. Under a new government resolution to reduce subsidies, these businesses may be left with no choice but to integrate or declare bankruptcy. Due to government support, global share of the market for packaged LED components rose from 2 per cent in 2010 to 6 per cent in 2011. But the boom years are coming to an end, with many of China’s LED chipmakers operating their factories at 50 per cent capacity. Around half of the 700 or so factories that received government help have been left idle.