February 8, 2012 — The global high-brightness light-emitting diode (HB-LED) market grew from $11.3 billion in 2010 to $12.5 billion in 2011, surging 9.8%, according to Strategies Unlimited. 10 companies accounted for more than 68% of the global LED supply.

Demand for LED components in the lighting market grew 44% from 2010 to 2011, from $1.2 billion to $1.8 billion.

Taiwanese and Chinese suppliers gained market share at the expense of the other regions in 2011. China leapt from 2% to 6% market share on the strength of its domestic market, as well as improvements in LED quality. Korean companies lost share, despite aggressively increasing capacity during the ramp-up in 2010. Japan trended down or flat, although Nichia and TG are tapping into tablet growth.

Philips Lumileds, Cree, and Osram Optoelectronics’ expansion into 6" wafers slowed, with excess capacity available on their 4" wafer lines. Osram Optoelectronics gained a major design win, which propelled its visible LED component business to more than $1 billion.

Figure. 2011 worldwide distribution of LED supply. SOURCE: Strategies Unlimited.

The revenues for the LED packaging industry are expected to be flat in the next five years. With excess capacity in the industry there is a threat of unsustainable prices.  Consolidation, vertical, and horizontal can help improve margins. To further improve profit margin, product strategies such as LED packages tested for high temperature, narrow binning, high CRI, directional /multidirectional LEDs, and embedded controls are being tried by the market.

Mobile. This segment stayed flat, at $3.4 billion. The overall decrease in the mobile phones market was offset by a sharp rise in tablet display and flash applications. A major development in this segment is the move to organic LED (OLED) displays. Approximately 50% of smartphone displays are expected to be OLEDs by 2016.

TV/monitor backlight. The LED revenue for TV and monitor backlights was $3 billion in 2011, but it is projected to drop substantially by 2016. The key disruptive factor in this segment is the introduction of low-cost direct backlit technology, targeted at sub-42-inch LCD TVs. This new technology can result in significant savings in the BOM, reducing the gap between LED and CCFL backlit TVs. These TVs are known as “Chubby TVs” since they are thicker than the slim edge-lit design the industry has been touting for the past few years.

Lighting. The same supply conditions that reduced the price of LEDs increased the demand for packaged LED in lighting applications from $1.2 billion in 2010 to $1.8 billion in 2011. System efficacy, rather than LED efficacy, was the gating factor in 2011. The LED luminaire and replacment lmap market was $9.3 billion in 2011, an increase of 45% over 2010. The market for LEDs in lighting is expected to demonstate substantial unit growth over the next five years, but revenue growth will be much lower due to pricing pressure.

Automotive. Revenue reached $1 billion in 2011 We expect a 5-year CAGR of 34% for LED headlamps. In addition to the styling issues, this is part of the trend to convert all front lighting to LEDs, as it will provide more front-end room for the car designer and reduce the overall system cost. Revenue for interior automotive lighting will show a modest decline over the next five years as instrument panel adoption reaches saturation and the market declines with prices.

Strategies in Light Conference & Exhibition 2012 is taking place this week in Santa Clara, CA. For more information, contact Strategies Unlimited at +1 650 941-3438 (voice) or e-mail at info@strategies u.com, or visit www.strategies-u.com.

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