August 18, 2011 -- A rising light emitting diode (LED) surplus surpressing prices, slower LCD/LED panel growth, a slow-to-ramp LED lighting market, tighter credit in China, and other factors are converging to stall out metal-organic chemical vapor deposition (MOCVD) equipment installs in 2011. Once the LED oversupply is drained off, LED manufacturers will kickstart capacity expansions, likely in 2012, according to IMS Research.
IMS Research has released the MOCVD chapters of its 300-page Quarterly LED Supply and Demand Report, which reveals significant shifts in MOCVD adoption for LED manufacturing. In Q2 2011, GaN MOCVD shipments were down year-over-year for the first time since 2008 (falling 14% if Veeco's MaxBright reactors were excluded as Veeco has not yet recognized revenues for this new tool in according with GAAP; falling 2% if MaxBright is included).
As the LED oversupply grows, LED manufacturers are holding off on many MOCVD system installs in 2011, causing IMS Research to downgrade its MOCVD shipment forecast significantly.
IMS Research expects 833 reactors to ship in 2011, lowering its 2011 GaN MOCVD forecast by 24%. 2011 will see 4% growth over 2010 (see figure).
This slower MOCVD growth should help alleviate the LED oversupply, which in turn could stabilize pricing. Near-term, LED makers will see a profitability boost. This, of course, will kickstart capacity expansions again, so expect more tool sales in 2012.
|Figure. 2009-2012 GaN MOCVD results and forecast. SOURCE: Q3 2011 IMS Research Quarterly GaN LED Supply/Demand Report.|
In addition to restarted expansions, 2012 should see 15 new Chinese LED manufacturers stocking fabs. 569 GaN MOCVD tools will ship, down 36% vs. 2011, but higher than previously expected and "healthy," according to IMS Research. The new LED makers are a major capex driver, accounting for 110 of the 569 tools. Tool shipments are forecasted quarterly and identified by customer and wafer size.
Taiwan and Korea, which are in the low double-digits for 2011 market share, will challenge China's MOCVD tool demand in Q4 2012, shrinking China's MOCVD demand to 61% of the total market. Epistar is expected to be the #1 MOCVD customer in 2012 followed by San’an, GCL Opto, SemiLEDs and Genesis Photonics. The report also identifies two new MOCVD manufacturers who are expected to win business from 2H 2011.
LED device revenues should hit $10B in 2012, up 15% from 2011's $8.7B, with packaged LEDs for lighting up 35% to $2.3B.
Q2 2011 updates:
-- 9 of the top 10 MOCVD buyers in Q2 2011 have operations in China. Lextar was the top customer.
-- Aixtron held its lead in GaN MOCVD shipments. Including MaxBright reactors, Aixtron’s advantage slips to 49% vs. 48% for Veeco, the closest it has ever been between the two competitors.
-- The 4" shipment share rose more than 50% while the 6" share more than doubled -- larger wafer sizes are boosting output at lower costs.
IMS Research's Quarterly GaN LED Supply and Demand Report also forecasts LED demand by application through 2016, panel and LED panel shipments by supplier, number of LEDs/panel by supplier by size, LED and MOCVD supply/demand through 2016, sapphire supply and demand and sapphire pricing. IMS Research is a leading independent supplier of market research and consultancy to the global electronics industry. Learn more at www.ledmarketresearch.com.