December 22, 2011 – BUSINESS WIRE — Cree Inc. (Nasdaq:CREE) granted 5 light-emitting diode (LED) lighting manufacturers licenses to select Cree patents through its remote phosphor licensing program. Initial licensees to Cree

by Gail Overton, senior editor, Laser Focus World

December 7, 2011 – Researchers at the Samsung Advanced Institute of Technology (Yongin, South Korea) and Seoul National University (Seoul, Korea) have demonstrated the first LEDs to be fabricated on amorphous glass substrates.

Because gallium nitride (GaN)-based LEDs grown on crystalline sapphire wafers are expensive and not amenable to large-sized wafer arrays, GaN LEDs on silicon substrates (GaN-on-Si) are an improved alternative. However, GaN LEDs on amorphous glass substrates offer even lower manufacturing costs, easier scalability to large-sized LED arrays, and potential use as emissive devices due to the transparency of the glass substrate material.

The secret to controlled growth of the five-period indium GaN/GaN (InGaN/GaN) multiple quantum wells that comprise the emissive layer in the pyramidal-shaped LED array is a thin-film titanium pre-orienting layer that is similar to the GaN hexagonal crystal structure. Following the pre-orienting layer and the initial low-temperature GaN layer (LT-GaN) is a hole-patterned silicon dioxide (SiO₂) layer that further defines the nucleation sites for the emissive-layer growth stages using a local heteroepitaxy process. After polymerization of the pyramidal structures and a final indium tin oxide (ITO) electrode layer, the pyramidal LED devices were found to emit illumination in the range from 448

November 30, 2011 — MicroTech has developed a wet process station to etch patterned sapphire substrate (PSS) wafers in a way that increases light-emitting diodes’ (LED) light output and efficiency while increasing manufacturing throughput.
 
In the MicroTech wet etch system, gallium nitride (GaN) or indium gallium nitride (InGaN) coated wafers are submerged in the etch tank with a mixture of etching and buffering agents. Prior to submersion, a silicon dioxide mask is patterned via plasma enhanced chemical vapor deposition (PECVD). A lithography step exposes the pattern to etch. The sapphire etch process takes place between 260

November 10, 2011 — Philips Lumileds, solid state lighting (LED) maker, deployed Camstar Systems Inc.’s Manufacturing Execution System (MES) at all global sites in 11 months.

Philips Lumileds reports that the MES software enabled "rapid growth and improved product quality" in its LED production.

Also read: LEDs are fundamentally semiconductors from Philips Lumileds

Emile van de Pas of Philips describes how the solution scales with the business, adapts to complex manufacturing, enables process consistency and improvements across all sites, and complements the company

November 9, 2011 – Scanning the latest reports from a quartet of Wall Street analysts — Citi’s Tim Arcuri, Barclays’ CJ Muse, Credit Suisse’s Satya Kumar, and Deutsche Bank’s Vishal Shah — a number of key themes emerge explaining what’s driving a MOCVD slump in 2011-2012 (and maybe beyond), and how and when the situation might improve.

There is much interest and optimism in China’s new lighting roadmap and the clarity it provides for LED adoption (and as a beacon for other regions to follow). The plan includes a RMB 8B/US$1.3B direct demand subsidy/rebate program for consumers, which translates to about ~135M 6W-equivalent bulbs, highlights Citi’s Tim Arcuri. That’s enough to justify "anywhere from 25-60 new MOCVD reactors," he says. Unfortunately, that’s only ~10% of the MOCVD capacity already shipped into China over the past few years.

That’s the crux of the problem: rampant capacity additions on the hopes that end-markets would justify them. But those bets aren’t (yet) paying off, which has given credence to the idea of a "bubble" that needs to be deflated before it rips apart. (Strategies Unlimited’s Tom Hausken addresses the extent of the LED overexpansion, particularly China’s massive investments, in a recent column for Solid State Technology.)

The pull from end markets hasn’t been as strong as hoped: Weak macroeconomic environment have undercut TV sales, and OEMs have pushed back on using more devices. And an intensifying credit crunch has dampened not only TV sales but also firms’ subsidy strategies — many regions haven’t paid out previously committed subsidies, even though LED chipmakers have already received the tools and in some cases even put them into production already, notes Citi’s Tim Arcuri. Some regions (e.g. Wuhu) could extend their timeline (but not amount) for subsidies, while other regions (e.g. Yangzhou) are firm with a 12/31/2011 tool shipment cutoff date.

From a strictly manufacturing and tool-supplier perspective, how is this all shaping up?

Slowing tool demand

Barclays’ CJ Muse sees the MOCVD market in total at ~700 installed tools (down from nearly 800 tools in 2010), with about a -9% difference in 2H11 MOCVD chamber revenues vs. 1H11 — but actual single-chamber-equivalent installations will be -26%. But Credit Suisse’s Satya Kumar points out VECO’s 3Q11 MOCVD orders extrapolate to a ~400 tools/year runrate for the entire LED industry, about half of where they are now.

Here’s Muse’s list of who’s been buying MOCVD tools:

Deutsche Bank’s Vishal Shah digs into specific customer procurement cutbacks:

– Seoul Semi (Korea) has only spent a fraction of its pledged 80B won in capex.
– LG Innotek (Korea) hasn’t bought any tools this year and doesn’t plan any in 2012 either.
– Sanan (China) isn’t buying any new tools until 2012
– Elec-Tech (China) has bought barely a quarter of its planned 130-tool procurement and probably will revise down its 180-tool plan for YE2012.
– Jiangsu Canyang (China) also is cutting its 2011 capex budget.
– Genesis Photonics (Taiwan) is expected to buy only 8 MOCVD tools instead of a planned 10 tools.

Trimming and M&A

Meanwhile, LED makers have been reining in their production. Wall Street analysts universally agree that utilization rates are very low, though the exact number varies by region: anywhere from 60% to ~50%, and maybe even lower. "The hoped-for recovery in tool demand among the Korean and Taiwanese players never materialized," Muse writes. Don’t expect this to improve at least for the next few quarters.

Many have been anticipating a wave of consolidation to help improve the LED market and wipe out overcapacity and underutilization. Muse notes the exit of GCL — before it even started production — is "the first in likely many market exits, similar to what we saw in the Taiwan market several years ago."

Even the threat (or promise) of consolidation has ramifications. Some LED chipmakers likely will cancel more orders and slow down their own expansions, viewing upcoming consolidation as a way to gain capacity instead, Arcuri points out. And as companies consolidate, more (used) tools will be available to the rest of the market as an alternative to new purchases — though some LED firms might be hesitant to take on used (even "unpackaged") tools that might have already been exposed to another LED maker’s process recipes, Muse points out.

2012 projections

"We expect a multi-year downcycle in the MOCVD tool space," says Muse. Arcuri thinks MOCVD orders will keep declining for at least another three quarters. "The backlog cancellations have only just begun," Arcuri warns, predicting that "net orders could actually approach zero" in 4Q11 and 1Q12. "There are […] signs this situation gets worse before it gets better."

All four analysts are on the same page with 2012 expectations: around -40% fewer MOCVD shipments to roughly 400-450 units; China probably pulling back more strongly, Taiwan and Korea perhaps less so. (Initial estimates were for 600 tools or even 700.) Credit Suisse’s Satya Kumar sees a possible 2H12 upside if the TV backlighting market picks up.

But even those levels might be optimistic. "It is hard to see the industry taking >350 MOCVD tools next year," Arcuri declares. And Kumar has a worst-case scenario of 350-400 MOCVD units in 2012.

Upswing on the horizon

For those LED firms (and suppliers) who can weather this bubble and slowdown, circle 2013 on the calendar. "We do believe there is one last push in MOCVD tool demand in 2013/2014," Arcuri writes. Muse sticks with the idea of "a prolonged downturn" in LED tool demand lasting through 2013. That year should be a little better, assuming still-gradual LED demand growth, perhaps increasing overall MOCVD units to ~440.