Demand For GaN LEDs Will Be Difficult To Meet
Strategy Analytics report, “Materials Shortage to Restrict Rampant LED Market”, says lack of key semiconductor materials will hamper production of fast-growing market for high-brightness LEDs in LCD TVs
The rapid penetration of LED backlighting modules in LCD TVs has already seen demand soar, for capital equipment, particularly for MOCVD reactors used to make GaN LEDs. A similar trend is now evident in the supply of consumables, specifically the metal-organic material trimethylgallium (TMG) and sapphire wafers.
Demand for TMG already exceeds the available supply; thus manufacturers need to absorb a 20% price increase in the near term. A shortage of sapphire wafers - upon which most blue and white LEDs are produced - is also likely in the second half of 2010.
This report outlines the challenges facing LED manufacturers in 2010, as supply constraints and increasing material prices serve to restrict the rapid market expansion.
“Concerns have previously been raised over the ability of MOCVD equipment vendors to meet rapidly increasing demand," noted Asif Anwar, director of the GaAs and Compound Semiconductor Service at Strategy Analytics. “The concern for short supply of materials will create a bottleneck for LED market growth over the short term."
Taiwanese LED manufacturers in particular need to adjust to the new reality of the supply chain. Historically, they have bargained for the price of these key materials. But the balance of power in the LED industry has changed, with competitors backed by huge corporations, such as Samsung and LG, much better positioned to absorb higher material costs and to guarantee their supply in a constrained market.
Steven Entwistle, VP of the Strategy Analytics Strategic Technologies Practice, added, “Capacity expansions already in progress should relieve these constraints by mid-2011. Until then, the average selling price of high-brightness LEDs based on gallium nitride should hold up well."