The demand for LED chipsets, primarily for the LED lighting market, is forecast to increase substantially through 2018. According to DisplaySearch, now part of IHS (NYSE: IHS), measured in standard units (500 x 500 micron chip size), demand for LED chipsets are expected to increase 293 percent from 35.8 million in 2013 to 1.4 billion in 2018.

“This forecast growth in the LED market is due in large part to increasing demand from the LED lighting segment,” said Steven Sher, analyst for DisplaySearch. “As average selling prices continue to fall, shipments of all LED lighting products will remain on the rise.”

In 2014 the LED market became more integrated from chip to channel, as competing companies merged and supply-chain companies acquired LED industry players. “The LED chip industry is expected to fare better than the LED package industry, as demand for lighting continues to increase through 2018,” Sher said.

While previously strong, the chipset demand from LCD TV backlights has slowed, due to a combination of sluggish growth in LED-backlit LCD TV sales, as well as improved efficiency in the number of chips used per backlight. For those reasons, growth in the global demand for chipsets used for display backlighting flattened after 2012, with a slow decrease forecast after 2014.