LED manufacturers need dedicated toolset and cost savings

June 27, 2011 –Until now, LED makers used retrofitted IC equipment and materials. Yole Developpement predicts that the market has enough sway now to attract dedicated toolsets for LED fab and packaging. LED growth will not be boring, however, as a few mini down-/up-turn cycles will occur through 2016.

Yole will release "LED Packaging 2011" in July, covering the market for capital equipment, packaging trends (hint: lower the cost), and LED manufacturing capacity expectations through 2016.

With packaging eating up 20-60% of the packaged LED’s total cost, it represents the biggest area for cost reduction on this emerging technology. Although LEDs can have longterm cost benefits over traditional lighting technologies, for example, their upfront costs have inhibited widespread adoption.

More than $2 billion will be spent through 2016 on new equipment for LED packaging, including laser lift-off [LLO], permanent wafer/die bonding, singulation, and testing. Yole notes that the LED packaging houses’ reliance on retrofitted IC fab equipment is now constraining the LED industry. What once was a cost-saving and field-proven option is now becoming too far removed from the specific needs of LED devices. Yole forecasts that equipment and materials suppliers will now develop dedicated LED manufacturing and packaging products. These fab investments will allow LED makers to boost yields and throughputs and obtain other benefits.

Unfortunately, an over-investment in LED packaging equipment in the last 2 years will create a mini down-cycle in 2012-2013. The rush to add capacity for the upcoming general LED lighting spike meant aggressive investment from 2009 onward. This cycle, initiated in Korea, is now essentially fueled by subsidies and other incentives in China. New entrants are investing heavily to displace existing manufacturers. This will lead to a world averaged overcapacity that will briefly exceed 50% for some tools (ie: capacity utilization rate of <50%) by mid-2012.

The resultant 12-18 month down cycle may bring up some consolidations before utilization rates return to the 80% neighborhood. By mid-2013, a new investment cycle will begin, fueled by general lighting again. This might lead to another, shorter excess investment to be absorbed in 2016.

Material and component suppliers will enjoy a smoother ride: 27.6% compound annual growth rate (CAGR) between 2011 and 2016.

Package substrate makers will see the fastest growth: 45% CAGR through 2016. Phosphors will experience strong price pressure but still enjoy double digit growth with a 12% CAGR. More innovation in this field could pay off in more added value. For such products however, it remains paramount that the solution offers an overall reduction in cost of ownership ($/lumen) to LED manufacturers.

"LED Packaging 2011" reviews the major challenges associated with the key LED packaging process steps. It focuses especially on the most recent technologies and market trends for high power LED and packages and arrays and provides quantification for various materials and equipment associated with each of those key steps. Trends are analyzed in detail including emerging technologies like silicon substrates, wafer level packaging (WLP), chip on board (COB), etc.

Companies mentioned in the report:

3M, A-Bright, ACC Silicon, Accretech, ADT Dicing, Advanced Photoelectronic, ALSI, AM Technology, Amceram, American bright, American Opto Plus, AOT, Apeax, APT, Asahi Glass, ASM Pacific, Assymtec, Autec, Avago, Axxon, Bayer, Bergquist, Brightled, Brightview, BYD, Cascade Microtech, Century epitech, Ceramtec, Ceratech, CETC, Chroma, Citizen, CMO, Cofan PCB, Cree, CS Bright, Curamik, Daitron, Datacon, Delphi Laser, Denka, Dian, Disco, Dominant semiconductor, Doosan, Dow Chemical, Dow Corning, Dowa, Dupont, Dynatex, Edison Opto, Enfis, Epistar, Epitex, Epoxy Technology, EPWorks, ESEC, ESI, Essemtec, Everlight, EV-Group, Evident Technologies, Excellence, Fangda, Fittech, Formosa Epitaxy, Friatec, GE, Gia Tzoong,Golden Valley, Han

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