2 March 2010


LED shortage looms in 2010

Due to heavy demand, global supply of LEDs is facing a shortage in 2010, and the year may end with an acute undersupply unless production capacity is increased, warns market research firm iSuppli Corp.

Total consumption of LEDs rose 10.5% from 57 billion units in 2008 to 63 billion in 2009. Overall LED consumption last year hence came dangerously close to the industry’s total capacity of 75 billion units, indicating that many LED makers were operating at nearly 100% utilization.

“Demand is outstripping supply,” says Jagdish Rebello, senior director and principal analyst for wireless research at iSuppli and author of the report ‘Solid State Lighting: Backlighting of LCD-TVs and General Illumination Drive a Bright Market for LEDs’. “With LED market growth forecasted to rise by double-digit percentages for at least the next three years—including 2010—a drastic undersupply situation could occur this year unless additional capacity is brought online to meet the increased demand,” he adds.

“The shortage predicted in 2010 applies to LEDs used for the backlighting of large-screen LCD-TVs,” says Sweta Dash, senior director for LCD research at iSuppli and author of the report ‘LCD market tracker, Large-LCD Market Bounces Back with Unit and Revenue Growth’. “On the demand side, the shortage is being spurred by strong consumer desire, given the growing popularity of LED-backlit LCD-TVs due to their super-slim form factors and improvements in picture quality. On the supply side, TV makers are striving to increase their sales of LED-backlit sets.”

Unlike notebooks (which typically use 50 LEDs) or monitors (which use about 100 LEDs), LCD-TVs on average consume 300–500 LEDs per panel. Also, with LEDs used for backlighting of LCD-TVs demanding a high level of uniformity, any LED shortages in the industry will mainly impact TV panels.

LEDs currently find widespread use as the backlighting units not only of large-sized LCDs used in TVs and computer screens but also of smaller LCDs in a broad range of devices, including notebooks, cell phones, portable navigation devices, digital photo frames, digital cameras and keypads.

Furthermore, LEDs are used increasingly in the general illumination market, addressing the needs of residential, commercial and industrial lighting applications. The general illumination market for LEDs is still in its infancy, but will become mainstream during the next two years, says iSuppli.

Applications for standard-brightness LEDs include indicator lamps and alphanumeric LED displays. In comparison, applications for high-brightness (HB) LEDs include large-screen LCDs used in flat-screen TVs, notebook laptops and computer monitors. Ultra-high-brightness (UHB) LEDs are used in next-generation lighting applications for the general illumination of residential dwellings and enterprise offices.

iSuppli says that participants in the LED supply chain are looking for solutions to counter the anticipated shortfall in supply, taking steps to significantly ramp up production capacity in areas ranging from raw materials, to wafers and die production, to packaging and testing of finished LED lamps. In particular, the two main suppliers of MOCVD deposition reactors — Germany’s Aixtron and the USA’s Veeco Instruments — are planning to double their production capacity by fourth-quarter 2010 compared to the end of 2009. However, the ramp-up of the overall supply chain will take time.

Among LED panel suppliers, the strategy to cope with the shortfall involves vertical integration and a greater move toward in-house sourcing. For example, Samsung Electronics has joined with affiliate Samsung Electro-Mechanics in a joint venture, while LG Display has aligned itself with LG Innotek. The two other major LED panel suppliers — Taiwan’s CMO (Chi Mei Optoelectronics) and AUO (AU Optronics Corp) — are also aggressively developing their own internal LED sourcing to ensure continued supply of LEDs.

See related items:

Sapphire faces shortage in second-half 2010, to be resolved in early 2011

HB LED demand to grow 61% in 2010, outstripping supply

HB-LED consumption to triple to $15bn in 2015

LED market to nearly double to $14.3bn by 2013

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