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Aixtron watches LED TV demand build

Consumer electronics manufacturers look set to fulfill much of their own demand for LEDs, but TV applications could deliver a market eight times the size of that for mobile phone backlights.

Despite reporting a rare MOCVD system order cancellation and a big drop in sales, Aixtron is tentatively predicting a recovery in the LED market.

At the heart of the Aachen, Germany, company s prediction is increased interest from new customers in using its equipment for LED production.

Another is that existing LED manufacturers utilization of Aixtron s equipment has surged to rates as high as 80 percent, although this has been volatile and liable to fall again quickly.

To a certain extent both of these indicators are tied to a single continuing trend: LED backlighting of displays.

“We have seen backlights for laptops increase, and certainly there s been a lot more activity on backlighting for televisions,” said Aixtron chief executive officer Paul Hyland.

“This very difficult period has driven down the price of LEDs considerably, over a period of about two or three quarters. I suspect that s probably added a bit of momentum.”

Aixtron is now seeing its traditional customers begin to order deposition tools again, as they benefit from this increased activity in displays.

However, Hyland believes the biggest impact in this application will be made by vertically integrated producers of consumer goods.

“It s the new players coming in. All the key players who are manufacturing TVs and monitors today are looking very closely and making investments,” he said.

Despite business from this combination of traditional LED makers and larger electronics companies, Aixtron s order intake still fell in the quarter. Its order backlog dropped just €4.3 million in the March quarter to €100.7 million, though, after falling by €53.1 million in the prior period.

For the first three months of 2009 the company recorded revenues of €46.2 million, down from €82.3 million in the December quarter. Irrespective of this, net profit was up to €5.5 million from €4.1 million sequentially.

Profit was boosted by the sale of Aixtron s Aachen headquarters, and a “significant compensation” payment after one customer cancelled a system order after deciding to purchase, not make, LEDs.

Another profit boost came after the organic PVD system supplied to Plastic Logic had proven itself. That revenue had been delayed until the Aixtron system had shown its effectiveness in company's flexible display production process.

And while this proves the company s capabilities in producing systems for futuristic technologies, Hyland is focused on display backlighting as the driver of the near-term recovery.

“To give you some sense of the scale, if we just use round numbers, about 1 billion mobile phones are made a year and that probably consumes about 10 billion LEDs,” he said. “The number of LEDs for the TV market is probably going to be somewhere between six and eight times [that].”

“So once that starts to go we are looking at a three to five year period of increased application demand. I can't tell you with any accuracy whether those predictions of growth will come true, but certainly the last six months has shown a lot more activity in that area.”

• Aixtron also issued financial guidance for fiscal year 2009, predicting revenues of €200 million-€220 million.

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