China MOCVD Players Break Veeco-Aixtron Dominance
All change for MOCVD market as Amec prepares to overtake Veeco in China equipment sales, reports Rebecca Pool.
As the demand for LEDs continues to grow, Chinese vendors up and down the supply chain are scooping up the business.
In his latest IHS Markit Ranking, analyst Jamie Fox, highlights how Nationstar has become the second packaged LED maker from mainland China to break into the LED top ten revenue earners, following in the footsteps of MLS. But for the first time ever, China-based MOCVD players are also muscling in on the market.
As Fox points out, this year, MOCVD suppliers Amec and Topec have seen a sharp increase in sales and are the first companies to seriously challenge longstanding industry heavyweights, Germany-based Aixtron and Veeco, US.
"A couple of years ago Aixtron and Veeco had complete market dominance with more than 90% of the market between them," says Fox. "Many other companies had tried to compete and failed, but this year has seen a drastic change."
As the analyst highlights, while only last year Amec was a minor market player with few shipments relative to the big two, its actual shipments are now catching up with Veeco.
"Veeco will remain ahead across the entire year, but Amec could rival or even overtake Veeco in the second half of this year," says Fox.
"One to two years ago, Amec wasn't perceived as being ready for the market," he adds. "But the company has taken years to develop a good system and now appears to have done this and convinced customers as well."
Right now, Amec's revenue-recognised shipments of its Prismo A7MOCVD tool chambers are estimated to come in at between sixty and seventy units for 2017. But as Fox emphasises, total shipment figures, not just those based on received revenue, are significantly larger. Indeed, latest figures from the company indicate shipments have already reached 100 since the product's introduction last year, and this figure is set to rise to 120 by the end of this year.
And while Topec's figures, of five to ten units, are much lower than Amec's mighty numbers, Fox also anticipates growth from this China-based MOCVD supplier.
But what makes these results all the more important is that only China is seeing rocketing MOCVD demand.
"Nowhere else is seeing this MOCVD growth," highlights Fox. "Veeco and Aixtron still have shipments outside of mainland China - you have Epistar and Osram - but apart from these companies, hardly any other company is buying."
Fox also expects more of the same in the next few years. "I do think Epistar will have to add some capacity at some point but the majority of the market is going to stay in China," he says. "We might see some of the Tier 1 companies such as Lumileds and Seoul Semiconductor adding a few units but it is most likely that sales outside of China will stay at the same fairly low levels."
So how exactly are industry players reacting to the rise of the China-based MOCVD suppliers? Fox reckons Aixtron, for one, is putting more effort into producing systems for materials other than GaN LEDs, including power semiconductors and AlInGaP LEDs.
"It could be possible that Aixtron is beginning to accept it may have to step out of this specific market because of the competition from China," he says.
And while the likes of Amec and Topec claim to own extensive IP - Amec reports the technology embedded in its Prismo A7 system is protected by 155 patents - the patent disputes have started.
Earlier this year, Veeco filed a patent case against Germany-based chemical company, SGL Group, which supplies graphite wafers for systems to MOCVD manufacturers worldwide.
In a move that could choke MOCVD component shipments to Chinese players, Veeco alleges infringement of patents that cover the entire MOCVD equipment and wafer carrier design.
Industry sources claim sales of the alleged components have stalled for the time being, which could eventually have a detrimental effect on production from MOCVD manufacturers in China.
Still amid the patent spats, Amec has just reported 'brisk' sales, and China-based LED manufacturing heavyweight, San'an Optoelectronics, has publicly commended the company on its tools.
"With Amec, we have a partner that can meet our advanced technical requirements...," stated San'an Vice Chairman, Kechuang Lin. "What's more, as a local China-based company known for developing leading-edge process technology, we benefit from close proximity to Amec's rich process expertise, as well as fast response times from the company's field support teams."
Indeed, Fox is certain that success from the likes of San'an is, without a doubt, helping the nation's MOCVD players. "The fact that these Chinese LED companies have done so well in the last two years has been very good for the Chinese MOCVD companies, especially Amec," he says. "So now, we're seeing market share changes and explosive growth from Amec."