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16 December 2009


HB-LEDs to drive doubling of MOCVD sales to 415 systems in 2011

The high-brightness light-emitting diode (HB-LED) market is expected to explode as unit shipments more than double between 2009 and 2012 according to market research firm The Information Network in its report ‘The Solid State Lighting Revolution: Market Analysis And Insight On Reducing Manufacturing Costs’.

“The rapid increase in the market for HB-LEDs used in various applications such as notebook backlights and automobile headlights is also spurring heavy capital investments by LED makers,” says president Dr Robert Castellano. “LEDs are creating a niche market for conventional suppliers of semiconductor processing tools and a lucrative market for MOCVD suppliers.”

In particular, MOCVD reactor maker Veeco Instruments Inc of Plainview NY, USA notes that a consensus from six sell-side analysts forecasts a doubling in MOCVD demand, from 208 tools in 2009 to 415 tools in 2011.

The Information Network’s analysis indicates that in 2009 each MOCVD tool was capable of processing about 30 million LEDs. In 2011, based on the same throughput, there will be a cumulative supply deficit of 15.5 million LED units, unless MOCVD equipment suppliers increase throughput and yields to reduce cost of ownership (CoO). The US Department of Energy’s Solid State Lighting Manufacturing Roadmap targets a factor of two improvement in CoO for manufacturing equipment every five years. If suppliers are successful, then enhancements in processing time, uniformity, repeatability, temperature control, and flow geometries will mitigate the supply deficit, says the market research firm.

“Clearly it is not within the best interests of MOCVD tool suppliers to improve CoO as it will reduce sales,” adds Castellano. “But competition is the key enabler, which will force suppliers to enhance their tool capabilities,” he adds.

HB-LEDs are currently a $5bn niche market compared to the $250m semiconductor market. The consensus forecast of 415 MOCVD tools represents a market of greater than $1bn (based on an average selling price of $2.5m for each MOCVD tool). MOCVD therefore represents 8% of the typical cost breakdown for a packaged LED. Other front-end tools represent more than 3% of the cost and equate to an additional $500m market for lithography and metrology tools. The biggest sector, 65%, consists of back-end processes such as substrate removal, chip separation, and packaging.

The Information Network notes that backlight sectors will exhibit the fastest growth in the HB-LED market, with an overall compound annual growth rate (CAGR) of more than 40%, led by the LCD TV sector with a CAGR of 300.3% between 2007 and 2012.

See related item:

HB-LED market to grow at 24% to 2013 after 3.7% dip in 2009

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