(December 3, 2010) — The top makers of LEDs; how LED fab is changing, in technological scope and geographical size; and the driving applications for LED adoption are covered in two recent reports. IMS Research primarily covers LED suppliers and markets, while EPIC and Yole look mainly at the markets and fab equipment.
IMS Research believes the market for LEDs (including all types: Standard, AlInGaP and InGaN) has grown from $6.1 billion in 2009 to about $10.0 billion in 2010, driven by economic recovery, lighting and TV and monitor backlights. This means that suppliers have to grow by 64% this year just to maintain their market share. In Yole Développement and EPIC’s jointly published base scenario, packaged LED revenues will reach $8.9b in 2010 and grow to $25.7b in 2015 and approach $30b in 2020. Growth will be driven by large LCD backlight applications through 2013-2014.
In terms of volume, LED die surface will increase from 6.3b mm2 to 51b mm2 in 2015, a 41.6% CAGR.
This will drive substrate volumes to growth from 12.7M × two-inch-equivalent (TIE) in 2009 to 84.4M TIE in 2015, a 37.1% CAGR (smaller than the die surface increase due to significant expected manufacturing yield improvements).
Nichia remains at the top of the LED sector, with Samsung LED, Seoul Semiconductor and Cree growing faster than average in 2010, according to IMS Research.
Nichia is still the number one supplier by total revenue in 2009 and 2010; however, it will be challenged strongly by Samsung LED in 2011.
Samsung LED now has the capacity to take the number one position, and increasing demand for LED TVs from Q2 2011 onwards should enable them to do so. In 2009, IMS Research ranked Samsung as 3rd and in 2010 as 2nd, changing places with Osram, which occupied second place for many years.
Lumileds, which was ranked 3rd by IMS Research in 2006, 2007 and 2008, has fallen to 4th position in 2009 and a provisional 6th in 2010. Lumileds’ market share has actually been fairly steady but they provisionally fall in rank in 2010 due to tremendous growth from Seoul Semiconductor and Cree. Along with Samsung, these suppliers are among those who have taken significant share in 2010.
2011 will be an interesting year for the LED industry, with Samsung and others further continuing to challenge Nichia’s leadership position.
There are already more than 60 companies involved in the epitaxy of GaN-based LEDs. This number will keep increasing in the next couple years, but we expect a significant amount of consolidation starting 2013 as many companies will not have reached the critical mass and technology necessary to survive and will disappear or be absorbed by larger players,” explains Dr Philippe Roussel, senior project manager at Yole.
LED manufacturing will be dominated by Asian countries, with already 90% of the epitaxy capacity located in Taiwan, Korea, China and Japan.
The packaged LED market is experiencing tremendous growth with an expected CAGR of 28.2% between 2009 and 2015, according to Yole Développement and EPIC.
The 3 cycles toward $30 billion are mobile displays, LCD TV and general lighting, say Yole and EPIC. Although the LED TV backlighting boom has temporarily fallen in Q4 2010 due to supply chain corrections, 2010 was still a year of tremendous growth in the LED industry. For lighting, IMS Research believes Cree is ahead. For automotive, Osram is the market leader. Nichia is also strong in both these sectors as well as backlighting and signage/large displays.
The initial growth cycle driven by small display applications is essentially complete and the LED industry growth is now driven by backlighting for large LCD display applications. This segment will mature by 2015 but by then, the third growth cycle driven by general lighting applications will have kicked in, therefore limiting the risk of any significant and industry-wide downcycle in the period.
The adoption of LEDs for general lighting applications is strongly dependent on technology and manufacturing improvements and standards needed to drive the cost of LED solutions to a trigger point where massive adoption can start. The exact trigger point varies per application, and will depend on intelligent design and marketing to connect LED technology with consumer demand. As a result, LED will progress into the market from niche to niche and progressively spread into all application segments. Ultimately, the long lifetime of solid state lighting technology will completely transform the business model of the lighting sector by dramatically increasing the length of the replacement cycles.
For consumers, the initial large exposure to LED for general lighting applications will come in the form of LED bulb replacement that can be used in existing sockets. As the initial perception of the technology by consumers will come from this first exposure to bulb replacement, their quality and performance will be critical to the future of the industry. Standards and regulations are needed.
Dedicated LED modules and luminaires will come in a second wave and deliver the full benefit of the technology. Additional standardization effort is needed to ensure a minimum level of upgradability and interoperability.
Growth in general lighting applications will be enabled by significant technology and manufacturing efficiency improvements that will allow the cost per lumen of packaged LED to be reduced 10-fold between 2010 and 2020:
- Economy of scale
- LED efficiency improvement, including at high power (droop effect)
- Improved phosphors
- Improved packaging technologies
- Significant improvements in LED epitaxy cost of ownership through yield and throughput.
Organic LEDs (OLEDs) are already widely commercialized for active displays, while for lighting OLEDs are still in their infancy. EPIC and Yole Développement expect AMOLED to capture a significant portion of the small-display market by 2015 and to start penetrating the large-display market by 2016. For the general lighting market, massive investment and significant technology developments are required. This technology will start being offered to consumers in large volumes in 2016.
The equipment market will experience a dramatic growth cycle with demand driving the installation of close to 1400 reactors in the 2010-2012 period.
Anticipation of future demand and generous subsidies in China will trigger the installation of another 700-1000 reactors in the same period, leading to a short period of oversupply starting in late 2011. However, since this extra capacity will be mostly in hand of newcomers with little LED manufacturing experience, oversupply will mostly affect the low end of the market.
Yole/EPIC reporting: Tom Pearsall is secretary general of EPIC. Dr. Eric Virey holds a Ph-D in Optoelectronics from the National Polytechnic Institute of Grenoble. Dr. Philippe Roussel holds a Ph.D in Integrated Electronics Systems from the National Institute of Applied Sciences (INSA) in LYON. He leads the Compound Semiconductors Techno-economical market analysis department at Yole.
IMS reporting: IMS Research is a supplier of market research and consultancy services on a wide range of global electronics markets. Learn more at www.imsresearch.com