25 May 2010


LED market explosion hampered by materials shortage

The fast-growing market for high-brightness LEDs in LCD TVs will be restricted by a shortage of key semiconductor materials in second-half 2010, forecasts Strategy Analytics in its report 'Materials Shortage to Restrict Rampant LED Market'.

The rapid penetration of LED backlighting modules in LCD TVs has already seen demand soar for capital equipment, particularly for metal-organic chemical vapor deposition (MOCVD) reactors for making gallium nitride (GaN) LEDs. A similar trend is now evident in the supply of consumables, specifically the metal-organic precursor material trimethylgallium (TMG) and sapphire wafers.

Demand for TMG already exceeds the available supply, so manufacturers need to absorb a 20% price rise in the near term. A shortage of sapphire wafers (upon which most blue and white LEDs are produced) is also likely in second-half 2010.

The report outlines the challenges facing LED makers in 2010, as supply constraints and increasing material prices serve to restrict the rapid market expansion.

“Concerns have previously been raised over the ability of MOCVD equipment vendors to meet rapidly increasing demand,” notes Asif Anwar, director of the GaAs and Compound Semiconductor Service at Strategy Analytics. “The concern for short supply of materials will create a bottleneck for LED market growth over the short term.”

Taiwanese LED makers in particular need to adjust to the new reality of the supply chain, Strategy Analytics says. Historically, they have bargained for the price of these key materials. However, the balance of power in the LED industry has changed, with competitors backed by huge corporations, such as Samsung and LG, much better positioned to absorb higher material costs and to guarantee their supply in a constrained market.

“Capacity expansions already in progress should relieve these constraints by mid-2011," says Steven Entwistle, VP of the Strategy Analytics Strategic Technologies Practice. "Until then, the average selling price of high-brightness LEDs based on gallium nitride should hold up well.”

See related items:

AkzoNobel doubling TMG production capacity

Taiwanese LED makers expanding to meet backlighting demand

LED-backlit TVs to reach 20% of 180m-unit LCD TV market in 2010

SAFC Hitech expanding TMG capacity in UK plant

LED shortage looms in 2010

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

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

Search: LCD TV backlighting LEDs MOCVD systems GaN TMG Sapphire wafers