15 August 2011

IMS lowers 2011 GaN MOCVD forecast by 24% to 833 reactors and upgrades 2012 forecast

The latest chapters on metal-organic chemical vapor deposition (MOCVD) in IMS Research’s 300-page ‘Quarterly LED Supply and Demand Report’ reveal significant shifts in MOCVD adoption for LED manufacturing.

In June, the previous quarter’s report lowered the growth forecast for annual gallium nitride (GaN) LED revenue to just 4% (to $8.7bn). This was based on the rapid reduction in first-half 2011 average selling price (ASP) due to a rising surplus, slower growth in the LCD and LED panel market, and the lighting market not yet being cost competitive. With growth slowing, margins shrinking, the oversupply worsening and credit in China tighter than expected, LED makers have pushed out a significant number of MOCVD reactor installations in 2011, resulting in a surprisingly large downgrade in MOCVD shipments.

Graphic: GaN MOCVD results and forecast (2009–2012). Source: IMS Research’s Q3/2011 ‘Quarterly GaN LED Supply/Demand Report’.

IMS Research has hence lowered its 2011 GaN MOCVD forecast by 24% to 833 reactors. However, this still represents 4% growth over 2011. The lower capacity growth should slow down LED oversupply and stabilize pricing, which will benefit near-term LED manufacturer profitability and eventually lead to more tool sales, says IMS, resulting in an upgrade to the 2012 outlook.

The 2011 delays, along with 13 new entrants in China that are taking tools, should result in a healthy GaN MOCVD market of 569 tools in 2012, down 36% on 2011 but higher than previously expected. Tool shipments are forecasted quarterly and identified by customer and wafer size. These new entrants are a key reason for the growth, with these firms accounting for 110 tools in 2012. Due to the smaller surplus, the lower price reductions should boost the 2012 GaN LED market to $10bn, up 15% on 2011 (with packaged LEDs for lighting up 35% to $2.3bn).

China is expected to continue to dominate the market for GaN MOCVD tools, but shrink to 61% in Q4/2012 as Taiwan and Korea rebound. Taiwan’s Epistar is expected to be the top MOCVD customer in 2012, followed by China’s San’an Optoelectronics, GCL Opto, Taiwan-based SemiLEDs and Taiwan's Genesis Photonics. The report also identifies two Chinese manufacturers of MOCVD tools that are expected to win business from second-half 2011.

The most recent report also quantifies Q2/2011 GaN MOCVD shipment results. Highlights include:

  • Shipments were down year-on-year for the first time since at least 2008, falling 14% if Veeco’s MaxBright reactors were excluded (as Veeco has not yet recognized revenues for this new tool according with GAAP). Including MaxBright reactor shipments, installations were still down 2%.
  • Excluding MaxBright shipments, China continued to dominate the market, accounting for 70% of installations, with Korea and Taiwan at 11% each.
  • Lextar was the top customer in Q2/2010, and nine of the top 10 customers had operations in China.
  • Aixtron remained top in GaN MOCVD shipments, gaining 4 points of market share to 57% (excluding MaxBright), with Veeco losing 3 points to 41%. However, including MaxBright reactors, Aixtron’s advantage slips to 49% versus 48% for Veeco (the closest it has ever been between the two competitors).
  • By region (excluding MaxBright), Veeco led in China, USA and Europe, while Aixtron led in Korea and Taiwan. Veeco’s K465i remained the industry’s most popular tool, but Aixtron’s CRIUS II and G5 each gained share and rose to the number 2 and 3 positions, respectively.
  • The share of shipments that were for 4” wafers rose more than 50%, while the 6” share more than doubled as companies move to larger wafer sizes to boost their output and lower costs.

IMS Research says that its latest ‘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.

See related items:

MOCVD reactor shipments down 18% in Q1 but still up 31% year-on-year

LED shipments growing 40% to 165bn in 2011

GaN LED market to grow 38% in 2011


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