“The LED market is a complex but promising market,” commented Pars Mukish, Business Unit Manager, LED, OLED and Sapphire at Yole Développement (Yole). In 2015, companies are not relying on more technical breakthroughs, except at the LED module level, where integration remains an important issue.
“However, there is still overcapacity,” said Mukish. “This is causing many changes in the supply chain, first at the chip level, then at the module/system level. The spin-off Royal Philips announced in July 2014 of its LED business, which grew from its acquisition of Lumileds in 2005, is one example.”
The LED industry’s complexity results from numerous technical issues, its many players and a multitude of lighting applications. Its promise comes thanks to especially large volume lighting opportunities, stresses Yole in its latest reports. Yole, the ‘More than Moore’ market research and strategy consulting company, foresees a global business reaching almost $516 million at the system level by 2016. (Source: LED in road and street lighting report, Jul. 2013, Yole Développement & Luxfit)
Today, LED technology’s average penetration rate is from 10-20 percent depending on geographic area. Each country has its own policy and has set up different measures to help LED implementation. For example, in Japan, penetration has reached 30 percent, thanks to government involvement.
Governmental measures are clearly welcome, as the technology is still considered expensive by the public. “Even though we saw a real breakthrough for LED technology from 2006 to 2014, upfront LED costs are still high compared to existing technologies,” explains Mukish. “Today, the real growth is in external lighting applications where LED technology is partially implemented. Commercial and industrial lighting players are also considering LED technology but today implementation is still developing.
In 2015, technical issues are different to previous years. They are mainly located at the LED module level. LED market leaders are therefore developing answers to packaging and integration needs. In the report entitled LED Packaging Technology and Market trends (Sept. 2014, Yole Développement), Yole has detailed the positive impact of advanced packaging technologies on LED manufacturing, especially LED packaging materials.
Mukish adds: “In 2015, we clearly see the value moving later in the supply chain. It was initially at the LED chip level, but we have identified strong investments at the module and system level to develop smart solutions in terms of packaging technologies and functionalities.” In this context, Yole is focusing its 2015 activities on analyzing new technologies at the LED module level. The company is investigating the impact on the supply chain and determining key players’ strategies (LED module, related technologies and equipment report: available mid-2015).
