LED players in Japan have been spared major impacts from the March 11 massive earthquake and tsunami that hit the country, as their plants are mostly far away from the stricken areas. With Japan not having a high market share in the LED industry, the global LED supply chain is not expected to be much affected, according to Digitimes Research.Japan-based players whose plants did feel some impact from the quake include Taiyo Nippon Sanso, Namiki Precision Jewel, Showa Denko and Citizen Electronics.Taiyo Nippon Sanso, which produces MOCVD machinery, only had a 2.5% share of the global market in 2010, and therefore any possible impact on its production would have little effect on the global MOCVD supply, Digitimes Research said.Sapphire suppliers Kyocera and Namiki are expected to have a combined global market share of 15.4% in 2011. Kyocera's plants were only rocked mildly by the quake, while Namiki was only affected by power outages with its facilities all remaining intact.Global sapphire supply is unlikely to see major impacts, but prices may stop falling, Digitimes Research said. Japan LED supply chain Sector Company Quake impact MOCVD Taiyo Nippon Sanso Only had 2.5% of global market in 2010 Sapphire Kyocera Sapphire facilities not affected; ranked 5th globally Namiki Affected by power outage; facilities intact; ranked 6th globally LED chip Nichia Facilities far from quake areas; supply unlikely to be affected Toyoda Gosei Facilities far from quake areas; supply unlikely to be affected Showa Denko Facilities near quake areas, but not hit with power outage; it only supplies to specific clients Citizen Electronics Facilities near quake areas; affected by power outage Source: Digitimes Research, March 11Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011

While the massive tremor that ravaged the northeastern part of Japan did not cause damage to Japan's major production sites for DRAM and flash memory products, it may disrupt the supply of some key materials for the global semiconductor industry.Elpida Memory's DRAM plant in Hiroshima and Toshiba's flash memory plant in Yokkaichi (Mie prefecture) escaped the slam of the devastating quake, but silicon wafer maker Shin-Etsu Handotai (SEH) was not so lucky.SEH's main silicon wafer plant (the Shirakawa plant) is located in Nishigo Village of Fukushima, a prefecture close to the epicenter of the earthquake. SEH has shut down the plant due to a lack of electricity.Although SEH has expanded the number of its production bases for silicon wafers to four in order to reduce its operation risks, the Shirikawa plant remains the most important production base for SEH. SEH has a production capacity of 1.2 million units of 12-inch wafers a month, of which 800,000 are produced at the Shirakawa plant, accounting for a 22% global share.With most wafer foundry houses normally keeping a certain amount of inventory, a two-week suspension at the Shirikawa plant may not trigger a supply problem for silicon wafers. However, if it takes two months or even longer for the Shirikawa plant to resume normal production, it will become a major problem for global wafer shipments.

Japan-based Hitachi on March 7 announced that it has sold subsidiary Hitachi Global Storage Technologies (HGST), a top three hard disk drive (HDD) maker globally, to Western Digital (WD) for US$4.3 billion, which includes 25 million WD shares worth about US$750 million.Since Toshiba acquired Fujitsu's HDD operation in April 2009, the industry has consolidated into five main players - WD, Seagate, HGST, Toshiba and Samsung Electronics. The top two companies, WD and Seagate, were separated by less than one percentage point in market share. With the latest HGST acquisition, WD is looking to widen its lead over the rest of the field.Hitachi's quick decision and sudden change of heart stunned the market. In November 2010 when the company released results for the fiscal second quarter, it pointed out that HGST had improved financially and was scheduled to be listed on NASDAQ. In just a few months, Hitachi has changed plans, which could be an indication that the HDD industry is indeed seeing stronger-than-expected threats from SSD and cloud computing technologies.

Sony in February announced 24.5-inch and 16.5-inch OLED display monitors priced at JPY2.42 million (about US$30,000) and JPY1.31 million, respectively. Their targets are professional users such as TV stations and movie production houses.So far Sony has unveiled four OLED products. Besides the 11-inch OLED TV, which had already been phased out, the other three are monitors for the professional segment.The price gap between OLED TV and LCD TV is too wide to generate consumer interest. The smaller screen and shorter product life are also issues that need to be overcome. The professional segment on the other hand is less concerned about size. Its main requirement is video quality and image authenticity. Furthermore, the price gap between professional-level LCD and OLED products are comparatively smaller, and therefore Sony has placed more emphasis on developing the professional segment for OLED.South Korea's Samsung Electronics and LG Electronics are in less hurry to commercialize large-size OLED solutions. LG introduced a 15-inch OLED TV in 2009, and Samsung's OLED TV is still in test production.Though Samsung and LG are less aggressive in new product launch, they are very active in research and equipment investments. LG Display recently announced that it will have the capability to mass produce 30-inch OLED TV panels by year's end, and Samsung is scheduled to begin test production of 32-inch OLED TV in the second half of 2012.In regards to 8G OLED panel facilities, LG Display said that it will have 8G volume production capability in 2011, and Samsung Mobile Display will begin to invest in 8G lines in the third quarter.

Sony Ericsson saw revenues in the fourth quarter of 2010 fall 4.7% sequentially to EUR1.53 billion (US$2.12 billion). Revenues for 2010 came to EUR6.29 billion versus EUR6.79 billion in 2009. Europe, Middle East and Africa (EMEA) are the company's largest revenue source, but the three markets also combined for the largest sales drop off.To curb operating expenditure, Sony Ericsson let go 4,000 employees amid a corporate restructure. Its operating expenditure in 2010 was down 16.4% compared with 2009.Sony Ericsson shipped 43.1 million units in 2010. Its Xperia X10 generated strong sales in Europe and Japan, but the rest of the Xperia series failed to achieve the same success.However, its strategy to target the high-end segment successfully raised ASP to EUR146, up EUR27 from the previous year. The company returned to profitability in the first quarter of 2010 and has remained in the black since.The future of Sony Ericsson will depend on its strategy for the high-end segment moving forward to maintain profit margin, and whether the company can increase shipments in the US, which is traditionally its weakness, to raise market share.

As global penetration of LED TV's increases and LEDs get ready to take the lighting sector by storm, global demand for metal organic chemical vapor deposition (MOCVD) has been increasingly markedly since 2010, according to a recently published DIGITIMES Research Special Report titled "Survey of upstream LED component industry." The report notes that global demand for MOCVD equipment increased by a staggering 277%, from 212 units in 2009 to around 800 units in 2010. DIGITIMES Research explained that the main reason behind this is that LED manufacturers in regions of Asia such as South Korea, Taiwan and China are actively expanding MOCVD equipment capacity. Over the last two decades, LEDs have gone from obscure components to indispensable parts of everyday life. Today, everything from computer and TV screens to household lighting and even car parts contains LEDs, and this increase in demand is driving a boom in upstream components, materials and equipment for the LED sector. The most critical of these are LED components themselves, chiefly chips and packaging; the artificial sapphire materials from which key LED components are made; and the MOCVD equipment (reactors) used in their manufacture. In the context of this booming demand, a sea change is taking place within these industries. World leaders in sapphire production such as US-based Rubicon are expanding capacity while focusing on profitability. The traditionally strong Japan-based manufacturers such as Toyoda Gosei and Nichia are facing new challenges from increasingly technically sophisticated and commercially ambitious competitors based in Taiwan and South Korea; while the Taiwan and Korea-based manufacturers are expanding capacity and developing their own technologies, with government assistance in some cases. Moreover, a new wave of China-based companies is emerging, many of which will find themselves ideally placed to capitalize on the LED boom, as a result of the government subsidies they are receiving, and their undeniable advantages in terms of labor costs and proximity to customers. The LED industry recovered quickly from the recent global financial crisis, but has also faced challenges from recessions around the world, and rising prices of vital rare earth materials, further complicating the picture. The DIGITIMES Research Special Report brings together all these complex threads, providing an understanding of the key issues and major players that are reshaping the upstream LED industry. The report provides a clear overview of the industry and forthcoming trends on both a company-by-company and region-by-region basis, accompanied by a wealth of easy-to-read charts, useful data and incisive analysis. Source: Digitimes Research, February 2011 For more information about the reportAbout DIGITIMES Research DIGITIMES Research is the research arm of DIGITIMES Inc., Taiwan's leading high-tech media outlet. Operating as an independent business unit, DIGITIMES Research focuses on monitoring key high-tech industries, while also guiding clients toward suitable new business as well. Market intelligence and analysis is provided to more than 1,000 corporate customers worldwide. Research and consulting services cover a full range of industries, including information and communications technology (ICT), flat panel display (FPD), renewable energy and semiconductor design and manufacturing. Contacts: Michael McManus (Michael.mcmanus@digitimes.com) Shannen Yang (Shannen.yang@digitmes.com)

Tablet PCs were the main attractions at this year's CES and MWC. Though smartphone and computer vendors introduced their latest tablet PC at the exhibitions, Apple, the company that brought tablet PCs to the forefront, did not unveil the next generation iPad until March 2.The iPad 2 made improvements in industrial design, hardware and operating system, and is also priced competitively like its predecessor. Sales for the iPad and iPad 2 are projected to combine for more than 35 million units in 2011.iPad users in 2010 were mainly business professionals, which was a small market. Since the business segment is expected to see more competition from other tablet PC such as RIM's PlayBook, the iPad 2 aims to open up the consumer segment. At the launch press conference, Apple focused on the iPad's multimedia entertainment capabilities such as iMovies. The iPad 2 also includes outer covers to create color differentiations similar to that of the iPod music player.Sales of the iPad 2 in the consumer market will determine whether Apple will ship more than 40 million tablet PC in 2011 and grab a 70% share of the global market.

Founded in April 2009, Samsung LED has become Samsung Electronics' main LED supplier in LED TV backlight applications. Samsung LED is aggressively expanding its MOCVD capacity and up until the second quarter of 2010, it had maintained revenue growth.Samsung LED has remained as South Korea's largest LED company since 2009. Its 2010 revenues reached 1.32 trillion won (US$1.2 billion) to become South Korea's first LED company to surpass the 1 trillion revenue mark.Though Samsung LED will continue to focus mainly on TV backlight applications in 2011, it expects LED lighting to contribute about 25% of revenues. The company will place more resources on the lighting market since it saw revenues began to decline in the second half of 2010 with TV vendors looking to lower inventory.

During a February 14 Mobile World Congress (MWC) press event, ST-Ericsson CEO Gilles Delfassy indicated that Internet devices will increase to 50 billion units. This means that in addition to existing Internet devices, there will be more devices capable of Internet connectivity, realizing machine-to-machine (M2M). Besides ST-Ericsson, many telecommunication equipment providers and communication hardware makers also showcased their M2M solutions at MWC. Though M2M is still nowhere near vast commercialization, with support from hardware players, the technology has strong potential.Due to their longer development history, near field communication (NFC) and mobile payment will be the most promising M2M applications in the near term. Nokia, in the second half of 2010 announced that all its smartphones will have built-in NFC functionality. Since then, Samsung Electronics and other vendors have unveiled NFC models at MWC 2011, which is great news for the development in payment and security applications. The rise in NFC has also attracted more software developers and cash flow platform companies to the mobile payment segment.

Samsung Mobile Display (SMD) is a joint venture between Samsung Electronics and Samsung SDI. It was the main reason why Samsung's LCD business was able to remain profitable in the fourth quarter of 2010.AMOLED technology is superior to TFT LCD in picture quality and flexibility to design thinner and lighter products, which will be critical in future developments of 3D applications and flexible displays. AMOLED is widely considered to be the most promising technology in the post-TFT LCD era. South Korea-based companies will invest heavily in AMOLED production lines in 2011-2014. The two main manufacturers will combine for US$17 billion in related investments, and Taiwanese makers should dedicate more resources on this area.In addition to the first phase of its 5.5G capacity going on line in 2011, Samsung is expected to complete phase 2 and 3 of expansion in 2012 and 2013, bringing new capacity to about 8.3 times larger than that of its 4.5G lines. It is clear that Samsung's AMOLED plan has extended from handset applications to tablet PC, and likely provide new opportunities and challenge for Taiwan's panel industry.