LED oversupply shrinks in 2012 on consumer demand uptick

February 16, 2012 — Light emitting diode (LED) supply exceeded demand by 30% in 2011, thanks to poor LED TV sales and slow growth in LED lighting. Recovering backlight demand and a new uptake in LED lighting are closing this gap in 2012, shows a recent NPD DisplaySearch Quarterly LED Supply/Demand Market Forecast Report, putting the LED supply glut at 19% in Q1 2012, dropping 3 percentage points by the next quarter.

After a buying spree for metal organic chemical vapor deposition (MOCVD) tools in 2010, major LED makers like Samsung LED, LGIT and Lextar found underwhelming end-market demand. This caused tool utilization rates to drop throughout 2011, hitting about 50% now. Also read: LEDs and a MOCVD bubble: We’ve only just begun

Figure. LED supply and demand, backlighting and lighting applications. Source: NPD DisplaySearch Quarterly LED Supply/Demand Market Forecast Report.

Low-cost direct-LED TV backlights should trigger renewed demand for LEDs in TVs, thanks to the lower price. CCFL-backlit LCD TVs and low-cost direct LED-backlit TVs differ in cost by only about 5% (for a 32" set). High growth is expected for low-cost direct LED TVs in 2012.

LED backlights are used in all small/medium LCD displays, and LED penetration in mobile PCs is nearly 100%. While penetration in LCD monitors and TVs continues to grow, the LED package count in these displays is decreasing.

LED lighting has been gradually growing, due to efficacy enhancements and cost reductions. Lumen per dollar costs are closing in on those of traditional light sources. Government incentives and market drivers, such as the electricity shortages following Japan’s March 2011 earthquake, can spike LED lighting sales. NPD DisplaySearch expects sales to rapidly increase in Japan in 2012. Other regions — China, the US, Korea — are aggressively promoting LED lighting.

The NPD DisplaySearch Quarterly LED Supply/Demand Market Forecast Report analyzes supply and demand on a quarterly basis for the entire LED industry. From chip prices to LED maker roadmaps, this report gives a clear outlook and reliable forecast of LED supply/demand, along with an analysis of the impacts on pricing. NPD DisplaySearch specializes in research and consultancy in the display supply chain, as well as the emerging photovoltaic/solar cell industries. For more information, go to http://www.displaysearch.com/.

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