UBS Outlook for LED Chip, Package, and Light Source Manufacturers in 2014

LED package industry anticipated to integrate in the next two years. LED light source sector focuses on consumer channels and brand building. Chip production in 2013 was limited. LED lighting to grow rapidly in 2013-2015, benefiting manufacturers with newly expanded production capacity....

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LED chip supply and demand has balanced out, increase in shipment volume and gross profit possible in the future.

Expansion of chip production in 2013 was limited and around 20-30 percent produced was invalid. With LED lighting rapidly growing, supply and demand for the domestic LED chip industry has already balanced out. We anticipate that LED chips will increase both in shipments and gross profit in 2014. Leading manufacturers with advantages in scale and cost and with government backing have the potential to increase competitiveness.

LED package industry anticipated to integrate in the next two years

The structure of the LED package industry is disorderly. Within the next two years, the industry is predicted to begin integration. The manufacturers that will come out victorious are those with the production scale suited for handling lighting demands and who have a close cooperation with downstream and upstream companies. The current stage looks favorable for manufacturers specializing in package production.

LED light source sector focuses on consumer channels and brand building

For the LED light source industry, market looks optimistic for stable growth-oriented companies with better production scale, production quality, production control, and brand building. Future sales channels will become more diversified.

The LED chip and lighting source sector is the most likely to produce large manufacturers. LED industry supply chain includes the sectors of chips, packaging, light source, and fixtures. The preconditions for a business to be able to produce a large manufacturer include product standardization and large scale production capabilities. The sector also requires large demand. Looking at the entire supply chain, upstream chip and downstream light source sectors have the possibility to produce large manufacturers.

Chip production in 2013 was limited

The Chinese government offered a lot of backingto the LED industry from 2010-2012. Blind investment in the LED chip industry led to a surplus in supply.

Around 20-30 percent of MOCVD production is invalid. China has over 1000 units in total but only around 700 units are used for production. The main reason for this is that MOCVD technological advancements have been rapid over the past two to three years. Older second hand units cannot compete. At the same time, prices have dropped dramatically. Leading manufacturers who are expanding production can receive subsidies which mean they will not consider purchasing older MOCVD units.

Local Chinese governments after 2013 will no longer blindly support all LED chip manufacturers, but rather select a small percentage they find to be higher-caliber. Due to this, production expansion in 2013 was very limited for the LED chip industry, with only leading manufacturers able to expand during this stage, which mainly depended on volume of demand. According to public information released by market listed companies, HC SemiTek was the main company to expand production capacity. After the company became listed in 2012, they initiated large scale production expansion. San’an Opto anticipates beginning expansion towards the end of 2014.

LED lighting to grow rapidly in 2013-2015, benefiting manufacturers with newly expanded production capacity

Domestic LED chips have already reached a balance between supply and demand in 2013H1, with utilization rate for leading manufacturers reaching more than 90 percent. This could cause a structural shortage of supply for LED chips in 2Q14.

Over the past few years, LED chip luminosity has increased 20-25 percent every year. If prices remain the same, then LED chip profit margins will increase. We therefore estimate that LED chips will see an increase in shipment volume and net profit in 2014.

Competition drops for small manufacturers in LED chip sector

It is estimated that after 2014, small manufacturers with 40 MOCVD units and below will experience production difficulties. Main reasons include:

1. 1. Strong demand from upstream LED chips and tight supply of sapphires resulting from increased demands for application in iPhone home buttons. Only large manufacturers can guarantee suppliesfor upstream material companies.


2. 2. The lowering of local government support for second and third tier LED chip manufacturers.


3. 3. The high technical barrier for LED chip production and increased focus on product stability and consistency. A constant production operator and team of engineers are needed for technical support. Only large manufacturers are able to constantly provide R&D.

The LED package industry is estimated to start integrating within the next two years with manufacturers specializing in packaging estimated to come out on top. Over the past two years, the LED package industry has clearly benefitted from lowered prices of LED chips. As integration in the LED chip industry is drawing to a close, LED package industry will benefit less and less from price drops in LED chips.

Manufacturers specialized in packaging to come out on top

The LED light source sector focuses on consumer channels and brand building. The structure of the industry is more disorderly than the packaging industry layout. Stable growth-oriented manufacturers with definite production scales, quality production, production control, and brand building are to fare best. LED lighting source channel construction is more varied than that of traditional lighting source channels. LED light source manufacturers specializing in electronics will seek out traditional sales channels that are not light fixtures, such as the electronics market, household appliances, and electricity suppliers.

Electricity supplier channels help lower cost of electrical current. The difference between LED lighting factory price and retail price is currently huge, mainly due to cost of electrical current. LED lighting companies are establishing electricity supplier channels and starting direct marketing to lower sales costs, which boosts LED lighting penetration rates.

Government support for LED lighting is huge, both nationally and locally. In Guangdong Providence for example, policies require that office lighting is switched to LEDs within the next 3-5 years.

Central and local government subsidy policies for LED lighting energy consumption includes commercial subsidies of around 10 percent and civilian used subsidies of around 30 percent.

We are optimistic about the following three sectors：

1. 1. LED chip sector: optimistic about leading companies who can increase shipment volume and net profit.


2. 2. LED package sector: Optimistic about manufacturers specializing in packaging. Those that will come out on top after integration remains to be seen.


3. 3. LED light source sector: Optimistic about growth-oriented manufacturers with stable growth, definite production scales, quality production, production control, and brand building.

UBS Outlook for LED Chip, Package, and Light Source Manufacturers in 2014

COB LED Market to Grow Rapidly Through 2018

Market research firm Research and Markets forecasts that the global Chip on Board LED market will grow at a compound annual growth rate of 40.71 percent over the period 2013-2018.

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Market research firm Research and Markets forecasts that the global Chip on Board LED market will grow at a compound annual growth rate of 40.71 percent over the period 2013-2018. The company contends that one of the key factors contributing to this market growth is the declining average selling price of LEDs. The Global Chip on Board LED market has also been witnessing the increasing demand of chip-on-board (COB) LEDs in general lighting applications. However, the company says that fluctuating global economic conditions could present a challenge to the growth of the COB LED market.

According to Research and Markets, the key vendors dominating this market space are Citizen Electronics co. Ltd., Cree Inc., Nichia Corp., Osram Opto Semiconductors GmbH, Philips Lumileds Lighting Co., Samsung Electronics Co. Ltd., and Seoul Semiconductor Co. Ltd. Other vendors in the market include Everlight Electronics Co. Ltd., Lumens Co. Ltd., and LG Innotek Co. Ltd.

A company analyst stated, “The shift from traditional lighting sources to solid-state lighting technology has resulted in the wider adoption of COB LEDs. COB LEDs are wide-area light emitters and thus, are increasingly used in highway and street lighting, which require large amounts of light spread across a large area.” The analyst added, “COB LEDs produce better color mixing, better lighting effect, and require very low thermal resistance systems, thereby enhancing the total consumer experience. Thus, greater power density, efficient heat dissipation, small space requirement, and high performance makes COB LEDs more suitable than conventional LED packages for various general lighting applications.”

The company also pointed out that COB LEDs offer high intensity with a homogenous luminous field suitable for high-power LED applications, which also increases the potential for savings.

COB LED Market to Grow Rapidly Through 2018

Smart Lighting Controllers and Sensor Annual Market Revenue to Reach US$ 2.7 billion by 2020

According to a recent report from Navigant Research, worldwide revenue from occupancy sensors, photosensors, and lighting network control gear will grow from US$ 1.1 billion annually in 2013 to nearly US$ 2.7 billion by 2020.

Smart Lighting Controllers and Sensor Annual Market Revenue to Reach US$ 2.7 billion by 2020

As falling prices for LED lighting systems drive up adoption rates of LED lamps in the coming years, the adoption of intelligent lighting controls is also expected to accelerate. Intelligent lighting controls, including occupancy sensors, photosensors, and networked controls, offer building owners and managers the same central monitoring and management capabilities for lighting systems that they are accustomed to having for their heating, ventilation, and air conditioning systems. According to a recent report from Navigant Research, worldwide revenue from occupancy sensors, photosensors, and lighting network control gear will grow from US$ 1.1 billion annually in 2013 to nearly US$ 2.7 billion by 2020.

“The market for lighting controls in commercial buildings has expanded and transformed dramatically in recent years, as creative ways to visualize lighting usage and new strategies to manage lighting energy consumption proliferate,” said Jesse Foote, Research Analyst, Navigant Research. “Pure-play startup companies are leading this wave of innovation, but the large, traditional lighting companies have begun offering a range of intelligent lighting control products, as well.”

Helping to drive this transformation are increasingly stringent building codes, which have begun requiring controls for more and more applications. In both the United States and Europe, new regulations will set a high bar for overall lighting energy reduction, according to the report. These reductions will require the adoption of occupancy sensors, photosensors, and other intelligent lighting technologies.

The report, “Intelligent Lighting Controls for Commercial Buildings”, analyzes the global market for lighting controls for commercial buildings, including both new construction and retrofits. Sensors, ballasts, drivers, switches, relays, controllers, and communications technologies are examined, with a specific focus on networked lighting controls. The report details the market drivers for these technologies, as well as barriers to adoption, and includes profiles of select industry players. Market forecasts for unit shipments and revenue for each type of equipment, segmented by region and building type, extend through 2020. Forecasts are also broken out for control equipment in buildings with networked lighting controls, as well as for wireless lighting controls and LED drivers. An Executive Summary of the report is available for free download on the Navigant Research website.

Smart Lighting Controllers and Sensor Annual Market Revenue to Reach US$ 2.7 billion by 2020

Global LED lighting market worth $42 billion by 2019

LED Lighting: Market Shares, Strategies, and Forecasts, Worldwide, 2013 to 2019: Next generation lighting achieves a complete replacement of incandescent filament bulbs with LED lighting that is more energy efficient, lasts longer and has a significantly lower cost of operation. LED lighting...

The LED bulbs are implementing new semiconductor technology

LED Lighting: Market Shares, Strategies, and Forecasts, Worldwide, 2013 to 2019: Next generation lighting achieves a complete replacement of incandescent filament bulbs with LED lighting that is more energy efficient, lasts longer and has a significantly lower cost of operation. LED lighting decreases labor costs of replacing bulbs in commercial situations. The LED bulbs are implementing new semiconductor technology.

Worldwide LED lighting markets are poised to achieve significant growth as buildings and communities lead the way in implementing the more cost efficient systems. In some cases, the utility plants are providing funding and financing so that lighting users can make the shift to LED lighting.

LED lamps lower the overall cost of lighting. LED lighting costs are less than costs with incandescent lights. LED lamps offer up to 50,000 hours of illumination with a fraction of the energy used by traditional incandescent bulbs. LED bulbs generate 90% less heat than incandescent bulbs. LED bulbs extend time between bulb replacements. The bulbs are used to achieve a near zero-maintenance lighting system.

Global LED lighting market worth $42 billion by 2019

IHS: GaN-on-silicon LEDs forecast to increase market share to 40% by 2020

The penetration of gallium nitride-on-silicon (GaN-on-Si) wafers into the LED market is forecast to increase at a CAGR of 69% from 2013 to 2020, by which time they will account for 40% of all GaN LEDs manufactured, according to IHS.

IHS-Gan-on-Silicon-LED-forecast-to-increase-market-share-to-40-by-2020

The penetration of gallium nitride-on-silicon (GaN-on-Si) wafers into the LED market is forecast to increase at a CAGR of 69% from 2013 to 2020, by which time they will account for 40% of all GaN LEDs manufactured, according to IHS.

In 2013, 95% of GaN LEDs will be manufactured on sapphire wafers, while only 1% will be manufactured on silicon wafers. The growth in the manufacturing of GaN-on-Si LEDs between 2013 and 2020 will take market share from both sapphire and silicon carbide wafers, IHS believes.

“Manufacturing large ingots made from sapphire is difficult, whereas silicon wafers are available from 8-inch up to 12-inch and are generally cheaper and more abundant,” said Dkins Cho, senior analyst for lighting and LEDs at IHS. “There is a large pre-existing industry for silicon-based manufacturing that is leveraged to create economies of scale and reduce the cost of an LED.”

Repurposing manufacturing facilities to accommodate the shift toward GaN-on-Si LEDs is generally accepted to require minimal investment. Companies that previously manufactured CMOS semiconductors already own legacy 8-inch CMOS fabrication units that can be converted for LED production with a small modification. These companies already have in-house expertise and technology associated with silicon-based processes, IHS noted.

“Many of the CMOS semiconductor manufacturers already have excellent inspection tools, unlike traditional LED companies,” Cho continued. “This could help increase their process yield through in-situ monitoring. However, it is unlikely the repurposing will happen overnight; instead we forecast a shift during the coming years.”

Source: IHS, compiled by Digitimes, December 2013

IHS: GaN-on-silicon LEDs forecast to increase market share to 40% by 2020

China"s Corrupt LED Industry Can"t Avoid Unwritten Rules?

Energy efficient, long lifetimes are all technological advantages of the LED industry. However, LEDs, which once showed huge room for growth has no doubt became a “sunset industry” in China, due to messy addition of unwritten rules that are creating chaos in the LED industry.

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After a year full of strife in 2013, the LED industry has finally seen signs of market rebound. As China gradually establishes national LED standards, leading enterprises have also increased R&D. The LED industry’s oversupply frozen state is gradually being melted away, and the industry is opening up to a new phase of explosive growth, according to a Chinese Business News report.

Energy efficient, long lifetimes are all technological advantages of the LED industry. However, LEDs, which once showed huge room for growth has no doubt became a “sunset industry” in China, due to messy addition of unwritten rules that are creating chaos in the LED industry.

Guangdong Provincial Department of Science and Technology (GDSTC) Head inspection case reveals LED industry’s government subsidiary “mess”

How close a local officer and industry can be, might beyond your imagination.

GDSTC Head Li Xinghua is under inspections due to serious violations, according to Guangzhou Disciplinary Inspection Committee (GDIC) press release published on July 26, 2013. The Chinese LED industry has been in heated discussion on this issue, with those in the industry estimating there will be further industry shakeups, with wide extent of involvements. There are even those in the industry that believe, the Guangdong Province’s LED lighting for public area plans will be affected.

China Business News interviewed many LED industry insiders recently. Those in the industry recognized the Guangdong Province government’s promotion and contributions to the development of the LED industry, but noted the lack of transparency in the industry for applying for government subsidies. This has resulted in companies to put on pretentious guises for their personal gain, and to obtain further subsidies.

Companies respond to Guangdong LED government policies

The GDIC press release has ignited social discussion in China. Many in the LED industry have used Weibo.com, Alighting.co blogs, and other public social platforms to voice their opinions. A lot of those in the industry are speculating whether the incident will result in the end of Guangdong Province’s three-year promotion of public LED lighting policy. Some in the industry have also joked, “we are uncertain as to how many people have gone sleepless during this period.”

Compared to individuals, companies have remained rather silent.

Guangdong has more than 6,000 LED companies, but only two to three percent are able to receive subsidies. Many of these are listed and domestic companies. What exactly are large companies with the “bid-awarded enterprise” halo thinking about? And what have been some of the effects?

Unveiling corrupt LED industry’s “unwritten rules”

Corruption is coined as “political tumor”, and is a serious issue in the LED industry. Some government officials, who hope to achieve personal goals, have been promoting labor intensive and costly projects. Somes have been trading under the table to increase their income, while others have fallen at the feet of women and were later reported. China’s road to corruption became more evident starting from China’s five-year plan in 1982. A review of China’s anti-corruption measures and struggles over the last 30 years reveal China’s anti-corruption evolution. Chinese rulers have never loosened their grip on fighting back corruption, or their study of anti-corruption methods.

In regards to government officials corrupt and unjust conduct, the party will impose strict rules, and tighten its grip on issuing punishments, said Chinese President Xi Jingping during the plenary session at the Communist Party of China (CPC) on Jan. 22, 2013. The party should insist on beating down both “tigers and flies”. However, for the LED industry, there has always been corruptive bidding and subsidiary practices that have not been suppressed. Are not these conditions also unwritten rules that have been difficult for industry insiders to avoid?

Correcting LED industry’s corruptive practices requires government intervention

People are familiar with the corrupt union of politicians and businesses. When angered people call this collusion, corruption and graft. Many times the public recognizes this as a social phenomenon, an unwritten economic rule. This has currently become a very sensitive topic in the lighting industry, which is based on the blurred boundaries between the lighting industry and government work division.

Li’s inspection has aroused much public interest. Whether its Shanxi’s 2 billion street light’s congregated tenure, many companies failed bids, to Shenzhen’s termination of the LED industry’s seven year development project; all these have revealed collusion between government officials and businesses. Corruption which has transcended from a century old issue to the modern era has become bad option that companies have taken as a matter of fact. Companies must be organized by governments, founded through joint government ventures, or monitored by the government and operated by businessman. To conclude, the LED industry development, specifically the lighting industry’s business model has been hovering between collusion models, and marked with uncertainty.

China"s Corrupt LED Industry Can"t Avoid Unwritten Rules?

J.P. Morgan Forecast Increased Bargaining Space as LED lighting Demands Surpass Backlight in 2014

The industry is focusing its attention on LED lighting market growth performance in 2014. The demand for LED lighting will surpass that of LED backlight during the beginning of 2014.

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The industry is focusing its attention on LED lighting market growth performance in 2014. The demand for LED lighting will surpass that of LED backlight during the beginning of 2014, according to a recent report by J.P. Morgan. The dispersed LED lighting market is rewriting market game rules. LED manufacturers are hoping to overcome consumer congestion which led to limited bargaining space. With the arrival of a new era in LED lighting, manufacturers hope to enjoy more stable gross profit performance and larger space for price negotiations.

LED lighting demand is estimated to surpass that of LED backlight in 2014. LED product price drops have contributed largely to increased consumer usage, said the financial service firm. Current cost recovery for commercial luminaries A19 and PAR28 has already been reduced to a year or less. LED bulb price has room to drop 30 percent by 2015 which will attract more consumers to replacement LED bulbs economic benefits. The LED industry welcomes the new lighting era. J.P. Morgan forecasts penetration rate in Nov. 2013 will reach around 11 percent, and only reached 5 percent last year. LED lighting penetration is hoped to be over 20 percent before 2015.

LED lighting demands will bring structural changes to the LED industry, said J.P. Morgan. The LED lighting market is more dispersed than the LED backlight market where consumers are highly concentrated. The top three global lighting manufactures Philips, Osram, and GE make up 30spercent of the global market share. This dispersed nature if the LED lighting market will bring more revenue and bargaining space than LED backlight products in the past.

J.P. Morgan Forecast Increased Bargaining Space as LED lighting Demands Surpass Backlight in 2014

LED Bulb Retail Price Steadily Decline in October, Shipment Volume Anticipated to Exponentially Increase in 2014

According to market intelligence organization Trendforce’s LEDinside division’s newest LED bulb retail findings for October 2013, global 40W equiv LED bulb ASP dipped 2.3 percent to US $15.8 (NT $466), with price decline most evident in the UK region. Conversely, global 60W equiv LED...

According to market intelligence organization Trendforce’s LEDinside division’s newest LED bulb retail findings for October 2013, global 40W equiv LED bulb ASP dipped 2.3 percent to US $15.8 (NT $466), with price decline most evident in the UK region. Conversely, global 60W equiv LED bulb ASP rose slightly 1.2 percent to US $21.6.

ASP for 40W equiv and 60W equiv LED bulbs has already dropped down to US $10 in most regions, according to observations by LEDinside. Comparable prices with traditional energy saving bulbs have stimulated market demand. LEDinside forecasts 2014 LED lighting product shipment volume to reach 1.32 billion units, a growth of 68 percent from 2013. Shipment volume for replacement light source products such as LED bulbs is especially anticipated to increase, with companies such as IKEA already distributing LED bulbs in mass. Attitude towards LED lighting by traditional luminaire manufacturers such as Philips has become more aggressive. Spurred by various large lighting brand manufacturers and terminal channels, 2014 LED bulb shipment volume is anticipated to grow exponentially.

40W equiv. LED bulb price decline most evident in UK

Global 40W equiv. LED bulb ASP dipped 2.3 percent to US $15.8, with price decline most evident in the UK region. The lowest prices for 40W equiv. LED bulbs had already dropped below US $10 in all the surveyed regions during October.

UK price declined 11 percent and pre-existing product prices steadily decreased, with largest decline seen in Samsung and Osram. Price for 40W equiv LED bulb in UK dropped as low as US $8.1. U.S. ASP for October slid 5.7 percent. Pre-existing product prices steadily decreased and lowered prices for new items introduced this month. U.S. region 40W equiv LED bulb price dropped as low as US $9.

Global 60W equiv. LED bulb price fluctuates

Global 60W equiv. LED bulb ASP rose slightly 1.2 percent to US $21.6. With certain areas affected by exchange rate and ending of promotion for low-priced LED bulbs, 60W equiv LED bulb ASP increased slightly.

Price difference narrowed as the lowest prices of 40W equiv LED bulbs alldropped below US $10 in the surveyed regions

Price decrease in October for 40W equiv LED bulbs was more evident with brands from each region dropping prices below US $10, and narrowing different region products’ price gap, observed LEDinside. Price decrease was especially evident in UK where prices for certain pre-existing high priced items dipped and prices for already low priced items continued to drop. Osram, Samsung, and LG all have products that are priced close to US $10 in the UK region. In the U.S. region, aside from low priced bulbs launched by Cree and Walmart recently, Philips and Ecosmart have also released products priced below US $10 for a long time.

LED Bulb Retail Price Steadily Decline in October, Shipment Volume Anticipated to Exponentially Increase in 2014

Global LED lighting market could grow by half in 2014

The global market for light emitting diode (LED)-based lighting solutions could see its value soar by nearly one-half over the course of next year, as the technology continues to improve and consumer awareness grows, a market advisory firm has projected. Market value for LED lighting will soar...

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The global market for light emitting diode (LED)-based lighting solutions could see its value soar by nearly one-half over the course of next year, as the technology continues to improve and consumer awareness grows, a market advisory firm has projected. Market value for LED lighting will soar to US$35.3 billion in 2014, a 47.8 percent year-on-year increase.

The research firm attributed the “fast growing market” to a change in purchasing habits, as LED lighting is beginning to overtake conventional lighting in the mindset of many consumers.

Global LED lighting penetration is also expected to increase to 32.7 percent from this year’s 26 percent, the research firm predicted, while penetration of LED bulbs and tubes will reach 20 percent and 15 percent of their respective markets.

The increase in demand suggests competitive LED chip manufacturers will continue to expand production capacity in 2014, said Jack Kuo, a senior analyst with LEDinside.

Aside from raising yield rates and machine operation time, Kuo said LED chip manufacturers will be acquiring more metalorganic chemical vapor deposition (MOCVD) equipment — a major part of optoelectronics manufacturing — to expand production capacity.

MOCVD is a chemical process for the production of thin films used in semiconductors and optical equipment, which promises higher reliability and fewer imperfections in the manufacturing process.

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Global LED lighting market could grow by half in 2014

MOCVD precursor demand for LEDs to more than double to 69 tons over 2012-2016

Displaybank: Global demand for precursor material used in manufacturing light-emitting diodes (LEDs) will more than double from 2012 to 2016 as the market for LED lighting booms. Precursors are core materials that ensures optimal light efficiency for each epitaxial layer in the key MOCVD process for manufacturing LED chips. Global shipments of MOCVD equipment are rising, with shipments expected to climb by 17% in 2013. The largest buyers of MOCVD equipment – South Korea, Taiwan and China- China is expected to make up 45% of global demand for precursors in 2016.

Global demand for precursor material used in manufacturing light-emitting diodes (LEDs) will more than double from 2012 to 2016 as the market for LED lighting booms, according to a new report ‘Precursor for LED MOCVD-Market and Industry Analysis’ from Displaybank (now part of market research firm IHS).

The market for precursors used in metal-organic chemical vapor deposition (MOCVD) for LED manufacturing will more than double, rising by 114% from 32 tons in 2012 to 69 tons in 2016.

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“The boom in the precursor market reflects the rising operating rate of MOCVD as the LED lighting market grows,” says HIS’ senior LED analyst Richard Son.

Precursors are core materials that ensures optimal light efficiency for each epitaxial layer in the key MOCVD process for manufacturing LED chips. Of the major precursors, which include trimethylgallium (TMGa), trimethylindium (TMIn), trimethyl aluminum (TMA), triethylgallium (TEGa) and C2Mg2, TMGa is the most widely used and commands about 94% of total demand.

Global shipments of MOCVD equipment are rising, with shipments expected to climb by 17% in 2013. The largest buyers of MOCVD equipment – South Korea, Taiwan and China – account for about 80% of global demand for precursors. China, which is generating the highest growth in MOCVD equipment installation among the three countries, is expected to make up 45% of global demand for precursors in 2016.

In the nascent stage of the LED market, Dow Chemical Co was the unrivaled leader in the precursor market. However, with the recent growth in precursor demand, new players have been investing in R&D and manufacturing facilities while aggressively breaking into the market with low prices for similar-quality product, says the report. Such developments will intensify competition further among precursor makers, it is reckoned.

MOCVD precursor demand for LEDs to more than double to 69 tons over 2012-2016

China growing MOCVD equipment will add LED industry demand and supply stress for 2014

Due to increasing LED lighting demands, and local government MOCVD equipment subsidies, China’s MOCVD market has great growth potential in 2014. China LED chip manufacturers growing number of new MOCVD equipment will put great pressure on the LED industry demand and supply. Goldman Sachs raised its forecast for China’s new MOCVD equipment in 2014 to grow at a Year-over-Year (YOY) rate of 14% to 125 machines.

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The market is focused on the moment that LED industry can leave oversupply behind. China LED chip manufacturers growing number of new MOCVD equipment in 2014 will no doubt put pressure on the LED industry demand and supply. China’s large LED chip manufacturer San’an Optoelectronics, and vertically integrated Elec-Tech International Co. (ETI) both have expansion plans, while Nationstar Optoelectronics Co. is planning to invest in a second phase LED chip expansion project.

China’s MOCVD market has growth potential in 2014, due to increased lighting demands, and local government MOCVD equipment subsidies, according to estimates by Goldman Sachs. At the same time Chinese manufacturers are increasing capital under the consideration of adding production capacity. Goldman Sachs raised its forecast for China’s new MOCVD equipment in 2014 to grow at a Year-over-Year (YOY) rate of 14% to 125 machines. The industry is also actively observing whether China LED manufacturers increased MOCVD will add demand and supply stress.

a-made-in-China-MOCVD-machine

According to statistics, China’s two largest manufacturers San’an Optoelectronics and ETI are projected to increase 50 and 40 MOCVD equipment respectively in 2014. Nationstar has also announced its plan of injecting more than RMB 600 million (US$ 98.2 million) in a second phase LED chip expansion project. The company is expected to raise RMB 500 million for the project. Once the factory is completed, LED epitaxal wafer annual production is expected to reach 4.11 million sheets, which will all be used for LED chip manufacturing.

In addition, Chinese manufacturers including Tsinghua Tongfan Company, HC Semitek Corp., Silan Azure Company, Zhongke Semiconductor Lighting Company also have production capacity expansion plans. Taiwanese silicon wafer manufacturer Epistar also hopes to add new MOCVD equipment in China, followed by vertically integrated Taiwanese manufacturer Lextar expanded MOCVD production capacity in China.

China growing MOCVD equipment will add LED industry demand and supply stress for 2014