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3 August 2009


Aixtron lifts sales guidance on LED market recovery

Key equipment vendor Aixtron has increased its 2009 revenue guidance significantly, thanks to a strong rebound in demand from LED manufacturing customers.

Total sales at the German company, which are dominated by MOCVD systems, reached EUR56.7m in the second quarter of 2009. And although this represented a 14% drop compared with the same period in 2008, the company's order book is suddenly looking a lot healthier.

Like its rival Veeco Instruments, Aixtron has seen a surge in orders, particularly from customers looking to manufacture LEDs for use in LCD TV backlights.

As a result of that surge, Aixtron's management has revised upwards its revenue expectations for the year to between EUR230m and EUR250m. The previous guidance, set at what turned out to be the bottom of the demand curve, was EUR200m-EUR220m.

“We have seen a remarkable improvement in outlook,” remarked Paul Hyland, Aixtron's CEO, adding that he believed the turnaround to be a sustainable one.

Part of the reason for that confidence relates to the long-term commitment and financial strength of new entrants into the LED business. “The arrival of these strategically minded players has not only added momentum to this recovery cycle;” noted Hyland. “They enter the market with substantial and sustainable balance sheets, [and] they are more likely to maintain a longer-term investment view.”

In an investor conference call to discuss the latest results, Hyland illustrated the huge potential of the LCD TV application.

Currently, the largest single market for LEDs remains the mobile phone industry. With around one billion mobiles sold each year and an average of ten LEDs per phone, this translates to approximately 10 billion LED chips.

Estimating the number of LED chips that might be needed for TV applications is not so straightforward, however. One reason for this is that two different backlight configurations are made: edge-lit and directly back-lit.

In the edge-lit design, up to 600 white LEDs are needed, while in the alternative approach up to 1200 white or red/green/blue emitters would be required for a 42-inch TV.

Somewhere between 85m and 103m LCD TVs shipped in 2008, but only about 1% of those incorporated LED backlighting. But this means that the total addressable market in LCD TVs could already be estimated at approximately 100 billion LED chips per year.

However, total market penetration by LEDs is something that is not expected to happen until 2015 at the earliest.

Estimates of the likely market penetration by LEDs vary widely, but they average at about 25% in 2012. By that time, annual shipments of something like 175m LCD TVs are expected.

Using those figures and Hyland's estimate of an average 600 LEDs used per TV, annual demand would outstrip that from phones to reach just over 26 billion chips.

With that potential future impact on demand for production MOCVD equipment, and an order backlog that has now swelled to EUR109m, Hyland concluded by striking a positive note for the future:

“We enter the third quarter of the year with a much more positive customer sentiment, increasing momentum of LED technology demand, very high utilization rates, and an improved visibility of demand from LED manufacturers.”

See related items:

LCD backlight LEDs to grow from 8bn in 2008 to 34bn in 2012

Large-area LED-backlit LCD panel shipments pass 10m units in Q1, reaching 12% penetration

Penetration of LED-backlit LCD-TVs to grow 13-fold by 2013

Aixtron sales fall 44% in Q1/2009

Aixtron’s growth in Q4/2008 driven by Asian LED manufacturing

Aixtron rides Q3 bumps on track for full year target

See: Aixtron Company Profile

Search: Aixtron MOCVD LEDs LED backlighting


The author Michael Hatcher is a freelance journalist based in Bristol, UK.