LED Shortage Flares up in 2010
Total consumption of LEDs reached 63 billion units in 2009, up from 57 billion in 2008.
Given the rise in numbers, overall LED consumption last year came dangerously close to the industry’s total capacity of 75 billion units, indicating that many LED manufacturers were operating at nearly 100 percent utilization levels.
“It is clear that demand is outstripping supply,” said Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli. “With LED market growth forecasted to rise by double-digit percentages for at least the next three years—including 2010—a drastic undersupply situation could occur this year unless additional capacity is brought online to meet the increased demand.”
With demand clearly outstripping supply and LED market growth forecasted to rise by double-digit percentages for at least the next three years—including 2010—iSuppli projects that a drastic undersupply situation could occur this year unless additional capacity is brought online to meet the increased demand.
The figure below presents iSuppli’s forecast of the global market for LEDs from 2006 to 2013.
“The shortage predicted in 2010 applies to LEDs used for the backlighting of large-screen LCD-TVs,” said Sweta Dash, senior director for LCD research at iSuppli. “On the demand side, the shortage is being spurred by strong consumer desire, given the growing popularity of LED-backlit LCD-TVs due to their super-slim form factors and improvements in picture quality. On the supply side, television manufacturers are striving to increase their sales of LED-backlit sets.”
Unlike notebooks, which typically use 50 LEDs, or monitors, which employ about 100 LEDs, LCD-TVs on average consume anywhere from 300 to 500 LEDs per panel. And with LEDs used for backlighting of LCD-TVs demanding a high level of uniformity, any LED shortages in the industry mainly will impact TV panels.
LEDs now find widespread use as the backlighting units not only of large-sized LCDs used in televisions and computer screens but also of smaller LCDs in a broad assortment of devices, including notebooks, cell phones, portable navigation devices, digital photo frames, digital cameras and keypads.
Furthermore, LED solutions are finding increasing usage in the general illumination market, addressing the needs of residential, commercial and industrial lighting applications. The general illumination market for LEDs is still in its infancy, but will become mainstream during the next two years.
Applications for standard-brightness LEDs include indicator lamps and alphanumeric LED displays. In comparison, applications for High Brightness (HB) LEDs include large-screen LCDs used in flat-screen TVs, notebook laptops and computer monitors. Ultra High Brightness (UHB) LEDs, a third type, are used in next-generation lighting applications for the general illumination of residential dwellings and enterprise offices.
Large-screen LCDs to feel the worst impact of LED shortage
Participants in the LED supply chain are looking for solutions to counter the anticipated shortfall in supply.
The LED industry’s two principal players, Aixtron of Germany and Veeco Instruments of the United States, are planning to double their production capacity by the fourth quarter of 2010 compared to the end of 2009.
iSuppli believes the LED industry is taking steps to significantly ramp up production capacity in areas ranging from raw materials, to wafer and die production, to packaging and testing of finished LED lamps. However, the ramp-up will take time.
Among LED panel suppliers, the strategy to cope with the shortfall involves vertical integration and a greater move toward in-house sourcing.
Samsung Electronics, for instance, has come together with affiliate Samsung Electro-Mechanics in a joint venture, while LG Display has aligned itself with LG Innotek. CMO and AUO, the two other major LED panel suppliers, also are aggressively developing their own internal LED sourcing to ensure continued supply of the devices.
Learn more about LED supply and demand dynamics in Rebello’s special report, Solid State Lighting: Backlighting of LCD-TVs and General Illumination Drive a Bright Market for LEDs, and Dash’s LCD market tracker, Large-LCD Market Bounces Back with Unit and Revenue Growth.