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Survey of upstream LED component industry
Jessie Lin, DIGITIMES Research, Taipei [Friday 25 February 2011]
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As demand has increased for downstream LED application products such as LED TVs and LED lighting, the upstream LED industry has become more proactive in expanding production capacity, leading to large-scale growth for MOCVD, sapphire and LED chip manufacturers. However, in 2010, sapphire manufacturers were more conservative about expanding capacity than MOCVD machinery makers, resulting in tight supply. For 2011, sapphire manufacturers are maintaining a favorable outlook for demand growth for substrates and consequently the world's seven largest manufacturers will increase capacity by close to 100%.
Abstract
Sapphire capacity expansion by company, 2009-2011

Asia-based LED chip manufacturers from South Korea, Taiwan and China are adding new equipment, with the result being that the world's two largest MOCVD machinery manufacturers - Aixtron and Veeco, who together combine for a global market share of 95% - are seeing the Asia region become the biggest contributor to their revenues. But with demand for MOCVD machinery increasing, South Korea plans to move toward independently developing MOCVD equipment.

In addition, upstream sapphire manufacturers were more conservative about expanding capacity in 2010 than MOCVD machinery makers, resulting in shortfalls in supply. Sapphire manufacturers maintain a favorable demand growth outlook for sapphire substrates in 2011, and consequently the world's seven largest manufacturers will increase capacity by close to 100% this year.

Asia will especially drive demand, with emerging LED manufacturers such as Samsung LED, LG Innotek and Lextar, and established manufacturers such as Nichia and Toyoda, contributing to helping the Asia region become the world's major manufacturing s region. In addition, China's subsidy policies for MOCVD machinery mean that the development of China-based firms like Sanan and Elec-Tech (ETi) will be even more worthy of attention.   

Questions answered in this report:
What will MOCVD capacity be in 2011?
What are the plans of sapphire players?
Who are the main players in the upstream LED Industry?

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