iLED iLED, June issue : 3

JUNE 2011 ISSUE N°1 ED IT ORIAL In 2012 China will dominate the LED production capacity LEDs have already reac hed a suf fic ient pr ic e/per for manc e level to enable massive adoption in LCD display applic ations. G eneral lighting applic ation will be the nex t and largest mar ket for LED light sourc es. H owever, for most of the applic ations, LEDs are still too expensive. The industr y c onsensus points toward the need for an additional 10x reduc tion in pac kaged LED c ost of owner ship expressed in $ / lumen in order to c ompete broadly with inc umbent tec hnologies and enable massive adoption in most lighting applic ation segments. The pac kaged LEDs still represent a large f rac tion of the c ost of an LED based luminaire and are c r itic al to per for manc e and reliabilit y. It is also a key element of dif ferentiations for most LED manuf ac ture r s. Pac kaging represents about 6 0% of the c ost of a Led. A s per for manc e is get ting c lose to expec t ation for those applic ations, the industr y is c ur rently shif ting f rom a per for manc e d r i ve n t o a c o s t d r i ve n p a r a d i g m . The entranc e of semic onduc tor giants like Samsung or LG with unprec edented pac e of c apac it y ramp up signaled a signi fic ant c hange in the industr y in 20 0 8. But the then spec t ac ular c apac it y build up is now dwar fed by the bid of Chinese c ompanies to enter and dominate the mar ket. The grow th of the Chinese LED manufac tur ing industr y is f ueled by a multiplic it y of inc entives provided by the Chinese gover nment and the loc al provinc es in multiple for ms: subsidies, t a x inc entives, inf rastr uc ture… This unprec edented c apac it y ramp up might c reate initial pains but will ultimately benefit t h e i n d u s t r y by a c c e l e r a t i n g a d o p t i o n o f s o l i d s t a t e l i g h t i n g a n d f o r c i n g e s t a b l i s h e d a n d n e w leader s to c onst antly innovate to st ay ahead of the rac e. The 2010 -2012 c apac it y build up has tr iggered an unprec edented grow th for equipment manufac turer s. H owever, our models indic ate that an overc apac it y of about 5 0% c ould have built up by ear ly 2011, forc ing the industr y into a 12-18 month equipment down cyc le. G row th c ould however resume as ear ly as 2013 as signi fic ant adoption in general lighting applic ations will help absor b exc ess c apac it y and leading manufac turer s position themselves to c apture signi fic ant share. W ith a tremendous M O CV D reac tor c apac it y expansion going f rom 14 0,0 0 0 TIE (2 ” inc h equivalent) per month in Q 4 20 0 9, to almost 2 millions TIE /month as forec asted for Q 4 2011, China will definitely dominate the LED industr y c apac it y in 2012 if all announc ements are realized. “ W ill h u g e capacit y expansion help reach 10 times cost reduction goals? ” Dr Philippe Roussel, Senior Project Manager, Yole Développement roussel@yole.fr EVENT S • International LED Expo 2011 June 21 to 24, 2011 – Seoul, Korea • Semicon West July 12 to 14, 2011 – San Francisco, CA • LED professional Symposium September 27 to 29, 2011 – Bregenz, Austria • Strategies in Light October 4 to 6, 2011 – Milan, Italy i LED 3

Editorial

In 2012 China will dominate the LED production capacity LEDs have already reached a sufficient price/performance level to enable massive adoption in LCD display applications. General lighting application will be the next and largest market for LED light sources. However, for most of the applications, LEDs are still too expensive.The industry consensus points toward the need for an additional 10x reduction in packaged LED cost of ownership expressed in $/lumen in order to compete broadly with incumbent technologies and enable massive adoption in most lighting application segments. The packaged LEDs still represent a large fraction of the cost of an LED based luminaire and are critical to performance and reliability. It is also a key element of differentiations for most LED manufacturers. Packaging represents about 60% of the cost of a Led. As performance is getting close to expectation for those applications, the industry is currently shifting from a performance driven to a cost driven paradigm. The entrance of semiconductor giants like Samsung or LG with unprecedented pace of capacity ramp up signaled a significant change in the industry in 2008. But the then spectacular capacity build up is now dwarfed by the bid of Chinese companies to enter and dominate the market. The growth of the Chinese LED manufacturing industry is fueled by a multiplicity of incentives provided by the Chinese government and the local provinces in multiple forms: subsidies, tax incentives, infrastructure… This unprecedented capacity ramp up might create initial pains but will ultimately benefit the industry by accelerating adoption of solid state lighting and forcing established and new leaders to constantly innovate to stay ahead of the race. The 2010-2012 capacity build up has triggered an unprecedented growth for equipment manufacturers. However, our models indicate that an overcapacity of about 50% could have built up by early 2011, forcing the industry into a 12-18 month equipment down cycle.Growth could however resume as early as 2013 as significant adoption in general lighting applications will help absorb excess capacity and leading manufacturers position themselves to capture significant share. With a tremendous MOCVD reactor capacity expansion going from 140,000 TIE (2” inch equivalent) per month in Q4 2009, to almost 2 millions TIE/month as forecasted for Q4 2011, China will definitely dominate the LED industry capacity in 2012 if all announcements are realized. Dr Philippe Roussel, Senior Project Manager, Yole Développement roussel@yole.fr

Previous Page Next Page

Publication List
Using a screen reader? Click Here