March 23, 2012 — About half as many metal organic chemical vapor deposition (MOCVD) tools for gallium nitride (GaN) light-emitting diode (LED) manufacture will ship in 2012 than last year, IMS Research reports in its most recent GaN LED Quarterly Supply and Demand report. This means 342 GaN LED MOCVD reactors in 2012 vs 654 in 2011.
The forecast is a downward revision from IMS Research’s mid-year 2011 forecast, which showed 569 GaN MOCVD tools shipping in 2012. Last month, Barclays Capital set its 2012 MOCVD shipments expectations at 300-400 tools.
Even with this severe market decline, 2012 should see 52% higher MOCVD spending than 2009 (342 reactors vs 224). Q1 and Q2 2012 will see the lowest MOCVD shipment levels, IMS Research reports. Expect a modest recovery in Q3 and Q4, as LED makers add capacity to meet demand growth in solid state general lighting applications in 2013.
The first 3 quarters of 2012 will see around the same number of MOCVD reactor orders as just 1 peak quarter, said IMS Research analyst Jamie Fox. The market peaked in Q3 and Q4 2010, with 239 and 238 GaN reactors shipments respectively.
LED TV manufacturing ramp ups energized MOCVD capex in 2009-2010. MOCVD spending remained healthy in 2011 thanks to new Chinese LED manufacturers and Chinese-Taiwanese joint ventures entering the market with government subsidies to buy MOCVD reactors. This exacerbated an emerging oversupply of LEDs, which, combined with subsidy expirations in China, stalled MOCVD shipments in late 2011-2012.
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| Figure. MOCVD units shipped, 2009-2012. SOURCE: IMS Research. |
Several factors are to blame for the LED oversupply: weaker-than-expected demand due to global macroeconomic weakness, slower than expected growth in LED TV penetration, new backpanel designs with fewer LEDs per panel, and the small size of the LED lighting market.
China accounted for 76% of the 2011 market, reaching a peak of 92% in Q4 2011. "Apart from China, the market is extremely quiet. Without the Chinese growth, the market would have almost completely collapsed," Fox said. Big orders in China actually pushed Q4 2011 shipments up quarter-over-quarter (Q/Q). This was a short-term improvement, however; Q1 2012 will see shipments of around half of Q4’s.
Veeco was the top MOCVD supplier in 2011, although strong demand pushed Aixtron to the lead in Q4. The top MOCVD tool buyer of 2011 was Sanan. IMS Research predicts that Elec-Tech will buy the most MOCVD tools in 2012.
Despite a trend to 4" and 6" wafers globally at Tier 1 manufacturers, 2" remains in the majority due to China’s manufacturing lines.
IMS Research supplies market research and consultancy to the global electronics industry. Access reports at http://imsresearch.com.