LED Industry Set to Enter Fast Growth Stage in 2010
New Investments, New Market Entrants
By Clark Tseng, senior manager market analyst, SEMI Taiwan
Lately, the LED industry has garnered a lot of attention, prompting the rapid expansion and substantial investment by LED-related equipment and material suppliers globally. We see MOCVD equipment makers and substrate suppliers gearing up for expansion this year to fulfill rising demand from LED makers.
LED expansion and new facility projects have literally mushroomed all over the world. Even in the downturn of 2009, the SEMI Opto/LED fab database recorded seven new LED fabs coming online. And we expect to see at least five new Opto/LED fabs in 2010 and six more in 2011, respectively. Most of these new projects are located in China and Taiwan. There will be new lines coming from Japan, India, and Russia as well.
Dedicated LED Fabs
While Taiwan enjoys the largest capacity share of LED manufacturing, Epistar and many other Taiwanese LED epitaxy/chip makers still plan to expand their capacity this year to meet the rising demand. This demand, according to industry sources, is 20 to 30 percent above existing LED supply. New MOCVD tool additions this year in Taiwan are expected to exceed 100 units. However, the bottleneck and lead time of MOCVD delivery may bring uncertainty to capacity expansion plans.
Looking at the applications market, clearly LED-backlit displays are driving large consumption of LED chips. Recently, we observe aggressive investment plans from leading LCD panel suppliers. It is reported that Samsung LED, for instance, plans further expansion by installing an additional 50 MOCVD tools, which would bring its total to an estimated 150 MOCVD tools by year-end. The strong internal demand for LED backlit modules is propelling their fastest ever LED capacity build-up plan.
On the other hand, Taiwan’s LCD panel suppliers are moving fast upstream to get hold of LED devices. AU Optronics’ LED subsidiary, Lexstar, is planning a fast expansion this year after its recent merger with Lighthouse, an LED packaging company also under AUO. New Chimei Innolux Corp. will continue their investment along the LED supply chain where they already have Chi Mei Lighting Technology for epitaxy; and GIO Opto and Advanced Optoelectronic Technology for packaging.
These new investments by panel makers are derived from securing a supply of key components and also building closer vertical integration along the supply chain. However, this may represent a challenge to dedicated LED epitaxy/chip makers in the long run as they will be vying for the same market segment with these big LCD panel companies. Still, we don’t expect to see any kind of oversupply of LED in the near future as LED-backlit is boosted both from LED adoption rate in panels and also from the growth of large panel shipments.
On another note, the fast growing LED market has also caught attention of leading semiconductor companies. TSMC, the leading foundry player, has just announced its advancement into LED markets by constructing a LED lighting R&D center and fab in Hsinchu. The first phase investment is expected to reach $170M, which may seem trivial compared to its total $4.8B capital expenditure plan this year; but, this clearly brings the LED market to a new level where one may see more large companies or conglomerates entering this hot market.
With all these new LED investments emerging, leading player Nichia is poised to maintain its leadership in LED industry. Nichia announced plans to quadruple their LED production with the setup of its new fab that is currently under construction and is expected to come on-stream in early of 2012.
We do see some similarity of LED industry compared to the early stage of semiconductor industry. LED industry is set to enter the growth stage of its life cycle. Moving forward, we expect to see more global firms enter that LED industry supply chain, and this will help to bring down costs and improve productivity.
The Opto/LED Fab Watch database contains information about 180 Opto/LED fabs worldwide. For more information and to download a free sample, visit our product page or contact Ed Hall at firstname.lastname@example.org.
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April 6, 2010