LED oversupply likely to continue as suppliers add production capacity

Despite a major surplus in the light-emitting diode (LED) market, top suppliers are increasing their capital spending and production because of government incentives and in order to cash in on an expected boom in the lighting business.

Global shipments of metal organic chemical vapor-deposition (MOCVD) equipment—tools that are essential for LED manufacturing—are expected to rise by 17 percent in 2013, according to Alice Tao, senior analyst, LEDs and lighting for IHS. This will be the first annual growth for the MOCVD market since 2011, and will represent a major turnaround from the 70 percent plunge of 2012.

At the same time that growth is being projected, factory utilization rates are increasing for major LED companies in Asia. In South Korea, for instance, utilization rose to about 75 percent in the second quarter, up from 60 percent in 2012. Meanwhile, utilization for some Taiwanese and Chinese companies reached 90 percent in the second quarter.

The spending and boosting of utilization rates alike are occurring despite a glut of supply that has plagued the market since 2010. The surplus started when LED suppliers made major investments in capacity in 2010 and 2011, stemming from the efforts of local governments in China to subsidize MOCVD purchasing. Governments are helping fund the procurement of MOCVD by to 80 percent of the total price of the equipment.

Many of these companies also are increasing production in the belief that they can capitalize on upcoming fast growth in the market for LEDs used in lighting.

“The global market for LED lighting is expected to double during the next three years,” noted Tao. “The prospect of this massive growth is irresistible to LED suppliers, who don’t want to be caught short of supply during this expected boom. But given the rising investments in manufacturing equipment, the acute LED oversupply already in existence is expected to continue through 2016.”

The supply of LEDs, measured in terms of manufactured die, is expected to exceed demand by 69 percent in 2013 and in 2014. The glut will decline slightly to 61 percent in 2015 and then to 40 percent in 2016.

Major LED suppliers include San’an, Elec-tech of China, Samsung and Seoul Semiconductor of South Korea, Epistar of Taiwan, and other companies including Philips Lumileds of the United States and Osram of Germany.

POST A COMMENT

Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

LIVE NEWS FEED

NEW PRODUCTS

OEM Group expands P5000 capabilities to compound semiconductor substrates
05/25/2017OEM Group has launched the P5000:CS automated single wafer cluster tool for the compound semiconductor market. ...
3D-Micromac launches the second generation of its high-performance microcell OTF laser systems
04/17/2017The high-performance production solution for Laser Contact Opening (LCO) of PERC solar cells achieves a th...
ULVAC launches NA-1500 dry etching system for 600mm advanced packaging systems
03/24/2017ULVAC, Inc. is pleased to announce the NA-1500 dry etching system for 600mm advanced packaging substrates, providing for u...