Taipei, Thursday, July 31, 2014 10:20 (GMT+8)
mostly cloudy
Taipei
29°C
Trends in the upstream LED industry
Jessie Lin, DIGITIMES Research, Taipei [Monday 9 July 2012]
Registration required (free) to purchase. Please sign in if you wish to continue.
The entire LED lighting supply chain can be divided into the following segments: rare earth, MOCVD equipment, sapphire ingots and substrates, LED chips, LED packaging, and LED lighting fixtures. This Digitimes Special Report focuses on the upstream segments including rare earth elements for producing phosphor powder material, MOCVD equipment (for manufacturing LED wafers), sapphire ingots and substrates. The upstream segments are important as they are the indicators for future developments of the industry.
Abstract
Trends in the upstream LED industry

The entire LED lighting supply chain can be divided into the following segments: rare earth, MOCVD equipment, sapphire ingots and substrates, LED chips, LED packaging, and LED lighting fixtures. This Digitimes Special Report focuses on the upstream segments including rare earth elements for producing phosphor powder material, MOCVD equipment (for manufacturing LED wafers), sapphire ingots and substrates. The upstream segments are important as they are the indicators for future developments of the industry.

Rare Earth

China's rare earth outputs account for more than 90% of total rare earth supplies in the world. In 2012, the government continues to implement measures to limit the exports of rare earths which has been causing the price of rare earths to increase significantly.

Rare earth is the main ingredient for phosphor powder, an important material for both fluorescent and LED lightings. The difference is that fluorescent lights use large amount of phosphor powder compared to LED lighting. Therefore, as the price of rare earth increases, the cost of producing fluorescent lighting products increases as well. Comparatively, LED lightings only uses a small amount of phosphorus powder and have only been slightly affected by the price increase of rare earths.

MOCVD

After booming demand for MOCVD equipment in 2010-2011, the order visibility in 2012 has been shorter because most LED chipmakers have enough capacity to meet demand. Therefore, Digitimes Research predicts global demand for MOCVD equipment in 2012 will be 275 units, a 60% decrease from 690 units in 2011.

China continues to dominate demand for MOCVD equipment in 2012 because some shipments of MOCVD equipment have been delayed to 2012 and some local governments have continued to provide subsidies for procuring MOCVD equipment. Hence, demand from China in 2012 is to account for 68% of global demand.

Digitimes Research predicts US-based equipment provider Veeco and Germany-based Aixtron will continue to dominate the market in 2012. The combined market share of the two firms in 2012 is expected to reach above 95% and in particular, Veeco's global market share is to reach 60%.

Sapphire

Sapphire ingots and substrates are important upstream materials for LED firms. Currently, most firms use LED epitaxial wafers made from sapphire substrates. Only a few firms adopt silicon (Si) or silicon carbide (SiC) substrates. Hence the price trend and market balance of sapphire substrates are also important indicators for the development of the LED industry.

For 2-inch sapphire substrates, the price stabilized in first-half 2012 at US$8-9/unit. The price is expected to remain steady in second-half 2012 because the current price is close to production costs and has no room for decreases even if there is an oversupply condition of sapphire ingots. However, patterned sapphire substrates (PSS) can help to increase the brightness of LED products effectively, hence the price of the product is likely to show a slight increase in second-half 2012.

Table of contents
Price: NT$48,000 (approx. US$1,685)
Realtime news
  • Digitimes Research: China sees increased smartphone AP shipments in 2Q14

    Bits + chips | 12h 16min ago

  • Taiwan market: FET aims at 95% 4G coverage at end of 2014

    Mobile + telecom | 12h 18min ago

  • ASE posts EPS of NT$0.64 for 2Q14

    Bits + chips | Jul 30, 21:57

  • China polysilicon maker LDK Solar to resume production

    Before Going to Press | Jul 30, 21:33

  • Digitimes Research: Taiwan ships 351 million small-to-medium-size panels in 2Q14

    Before Going to Press | Jul 30, 21:32

  • UMC reports EPS NT$0.28 for 2Q14

    Before Going to Press | Jul 30, 21:31

  • Digitimes Research: Xiaomi continues to rank as number one smartphone vendor in China in 2Q14

    Before Going to Press | Jul 30, 21:31

  • InFocus looking to become top-3 smartphone vendor in Taiwan

    Before Going to Press | Jul 30, 20:41

  • ASE to ramp up SiP packaging revenues in 2014

    Before Going to Press | Jul 30, 20:36

  • Vendors cutting notebook shipments to Latin America

    Before Going to Press | Jul 30, 20:34

  • Innolux to decrease reliance on China market

    Before Going to Press | Jul 30, 20:08

  • Wah Lee 3Q14 revenues to move higher

    Before Going to Press | Jul 30, 20:07

  • Growth in global panel demand to exceed growth in supply, says AUO

    Before Going to Press | Jul 30, 20:07

  • Intel to see difficulties shipping 40 million tablet CPUs in 2014

    Before Going to Press | Jul 30, 20:06

  • AUO expects 3Q14 small- to medium-size panel shipments to rise 5-8% sequentially

    Before Going to Press | Jul 30, 20:05

  • MediaTek 3Q14 revenues to grow 6-11% on quarter

    Before Going to Press | Jul 30, 20:04

  • Taiwan market: Everlight Electronics expected to ship 2.6 million LED light bulbs in 2014

    Before Going to Press | Jul 30, 20:03

  • AUO 2Q14 net profit hits 4-year high

    Before Going to Press | Jul 30, 20:02

  • China market: LCD TV sales in 1H14 down on year, says China Market Monitor

    Before Going to Press | Jul 30, 20:01

Pause
 | 
View more

Analysis of China's revised domestic semiconductor industry goals

RESEARCH EXTRAS | Jul 16, 18:09

Facing a funding shortage for local IC manufacturers, the China State Council in June 2014 published guidelines to strengthen government support for China's semiconductor industry, while stating the short-, mid-, and long-term goals for the related industry supply...

The transition to 4k TV - UHD TV market forecast, 2014-2017

RESEARCH EXTRAS | Jun 26, 13:59

Ultra HD TV vendors are facing challenges due to an overall slowdown in the TV industry and are concerned whether relative supply chains can provide compatible Ultra HD content and services. However, trends show that content makers as well as panel and chip makers...

Taiwan handsets – 2Q 2014

TAIWAN ICT | Jul 30, 09:17

HTC's launch of its new smartphone models shot up both its own shipments and the overall shipments from Taiwan's handset sector in the second quarter. Although own-brand shipments were strong, ODM shipments were sluggish.

Taiwan digital cameras – 2Q 2014

TAIWAN ICT | Jul 30, 09:15

Taiwan makers saw a rare rise in their DSC shipments in the second quarter of 2014, thanks to strong orders from clients who were launching new models for the spring season. While their shipments stand little chance of returning to levels seen in the pre-smartphone...

Taiwan notebooks – 2Q 2014

TAIWAN ICT | Jul 23, 12:53

Taiwan's notebook makers saw an unexpected sequential rise in shipments in the second quarter after the end of Microsoft's support for Windows XP generated a wave of replacement demand. Compared to the same period of last year, their shipments still dropped....

DIGITIMES Research Tracker Services
DIGITIMES Marketing Services
Greater China touch panel shipment forecast through 2015
  • 2014 global high brightness LED market, trends and shipment forecast

    For the global LED lighting market, the market size will reach US$25.82 billion in 2014 or a market penetration rate of 23.4%. This is attributable to exponential shipment growth for light bulbs, tubes, and directional lamps.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.