Worldwide LED Investment Momentum to Continue into 2011
By Clark Tseng, SEMI Industry Research and Statistics (July 1, 2010)
Coming out of a down year, 2010 is destined to be a year of new records for the semiconductor industry. With recent forecasts showing almost 30 percent revenue growth this year, the semiconductor market is heading to an all-time high for revenues and units shipped. In addition, the SEMI World Fab Forecast shows semiconductor fab spending growing 117 percent this year, surpassing the spending levels of 2008. While all this is encouraging news, there is another spotlight market that outshines the growth of overall semiconductor market: light-emitting diodes (LED).
LED and solid state lighting (SSL) are two markets in the spotlight that attract a lot of attention and new investments. Driven mostly by the surge of LED-backlight demand for LCD TV panels and the huge potential market in general lighting, demand for LED is set to explode in the coming years. In view of supply tightness and market potential, new facility and capacity addition plans have suddenly emerged all over the world in the past year.
More New Fabs than Any Other Sector
According to the SEMI Opto/LED Fab Watch report, there were 85 LED-dedicated (epitaxy/chip) fabs worldwide in 2009. That fab count number will increase to 94 this year, accounting for 60 percent of all Opto/LED fabs (which also include fabs making optoelectronic devices such as optical sensors, waveguides, and lasers). With recent new announcements coming in, we expect to see at least 11 new LED fabs coming online next year too.
A geographic analysis shows that Taiwan still owns the largest number of dedicated LED fabs (See Table 1); however, most new facilities coming online will be in China. The major reason is that some local governments in China subsidize the purchase of MOCVD equipment or, in many cases, will make direct investment into the LED fabs as a joint venture partner. One thing to note is that the majority of these new LED fabs in China are investments by Taiwanese LED makers.
Table 1: Worldwide LED Fab Count by Region
Source: SEMI World Fab Forecast, June 2010
Capacity Growth with Double Digits
Overall LED fab capacity will grow 33 percent this year and we currently forecast another 27 percent capacity increase in 2011, reaching a worldwide total of 1,392,000 wafers per month (4” equiv.). This capacity growth is much higher than overall semiconductor capacity growth where we only expect single digit increases in 2010 and 2011.
Table 2: Overall LED Capacity, 2009- 2011
*Capacity in 100mm equivalent
Source: SEMI World Fab Forecast, May 2010
A closer look at the capital spending in the LED sector shows that equipment spending on fabs will grow by almost three times from US$ 480 million in 2009 to US$ 1.3 billion in 2010, which sets a new high for this sector. This spending surge is largely attributed to the fast penetration rise of LED backlight technology. Moving forward, we expect the investment momentum to remain in 2011 with equipment spending currently forecasted to surpass US$1.3 billion.
Concerns of Oversupply for LEDs?
Aggressive investments always bring about concerns of oversupply and market uncertainty, so the LED sector is no exception to this. With all the new capacity coming online, the end market certainly needs to ramp up fast enough. On one hand, there are reported concerns with limited material supply and equipment availability this year with sapphire substrate in shortage and longer delivery time for MOCVD tools, which may limit capacity growth. On the other hand, demand from general lighting seems to be progressing faster than previously expected. These two factors combined may very well create a more balanced supply-demand outlook.
The SEMI Opto/LED Fab Watch is a database providing an overview of the global High Brightness Light Emitting Diode (HB LED) and Optoelectronics fabs for the prior quarter. These facilities manufacture devices that source, control, or detect light. The data includes information by facilities including fab location, theoretical capacity, wafer size, and more. The listing also provides an overview of equipment spending by region.
The World Fab Forecast report, also list optoelectronics and LED fabs. This database provides from high-level summaries and graphs; in-depth analyses of capital expenditure, capacity, technology and products, down to the detail of each fab; and forecasts for the next 18 months by quarter. These tools are invaluable for understanding how 2010 and 2011 will look, and learning more about capex for construction projects, fab equipping, technology level, and products.
Please visit www.semi.org/fabs for additional information on these databases.
San Jose, California
July 1, 2010