9 November 2011

MOCVD tool shipments fall to 170 in Q3; 2011 forecast cut to 700 tools

Shipments of metal-organic chemical vapor deposition (MOCVD) systems for all applications fell both quarter-on-quarter and year-on-year to 170 units in Q3/2011, according to the newly released MOCVD chapters of the ‘Quarterly GaN LED Supply/Demand Report’, from market consultancy firm IMS Research, which reveals significant changes in both MOCVD market share and outlook.

Graphic: Total MOCVD unit share.

Q3 was the first year-on-year decline in shipments in at least 2.5 years. The decline can be attributed to depressed utilization in the gallium nitride (GaN) LED sector, along with growing oversupply in LEDs, tight credit, facility readiness and expiring subsidies in China. A bright spot was rising shipments of MOCVD systems for GaN on silicon.

MOCVD system revenues were down sequentially for the third consecutive quarter and down year-on-year for the first quarter in at least 2 years, falling to $340m.

Veeco Instruments Inc of Plainview NY, USA led in both total MOCVD unit shipments and revenues for the first time, earning a 63% share of tools shipped and 65% share of revenues. The share of Germany’s Aixtron AG fell from 50% to 34% in units and 52% to 32% of revenues. Veeco benefitted from the recognition of previously shipped MaxBright reactors to the GaN LED market. However, if those were excluded, Veeco would still have enjoyed a commanding 56%:40% unit share advantage, indicative of the acceptance of this new platform and Aixtron’s customer delays.

GaN MOCVD shipments

Since they are used to produce blue/green LEDs, GaN is the dominant application for MOCVD tools. In Q3/11, GaN MOCVD tools accounted for 90% of the total MOCVD market, with shipments of 152 units (down 18% quarter-on-quarter and 34% year-on-year), the lowest total since Q1/2010. If previously shipped but unrecognized reactors from Veeco had not been included, shipments would have been the lowest since Q4/2009.

GaN MOCVD system revenues were down sequentially for the third consecutive quarter, falling 21% quarter-on-quarter and 37% year-on-year to $308m.

China took its highest share of unit shipments to data, at 82%. No other region had a double-digit share. India took its first MOCVD system for GaN in at least three years. Of the top 13 customers in Q3/2011, 11 of them installed tools in China. Elec-Tech was the top customer in Q3, followed by Epilight and Tongfang Opto.

Veeco’s unit share of GaN MOCVD tools surged from 48% to 70%, while Aixtron’s share fell from 49% to 26%. If previously shipped but unrecognized MaxBright reactors were excluded, Veeco would still have had a share of 63% versus 32% for Aixtron. Veeco’s share was even larger on a revenue basis.

Veeco had the two best-selling models in Q3/2011, with its MaxBright and K465i each enjoying more than a 30% share. They were followed by Aixtron’s CRIUS I, CRIUS II and G4.

By region, Veeco led in China for the fourth consecutive quarter and also led in Taiwan for the first time. By wafer diameter, 2” systems once again dominated (due to China’s dominance), with an 87% share of tools installed in Q3. Including all of its majority-owned subsidiaries in China, Taiwan’s Epistar had the highest number of merchant MOCVD systems installed, followed by Korea’s Samsung LED and China’s San’an tied for second.

MOCVD market outlook

As a result of Q3’s weakness, reduced guidance from MOCVD manufacturers and discussions with LED makers, IMS Research has reduced its forecast for system shipments in 2011 by 9%, from its most recent forecast of 833 (which had itself been reduced from the initial forecast of 1097) to less than 700.

This quarter, IMS has provided LED makers’ optimistic, base and pessimistic forecasts for 2012 GaN MOCVD installations. The base forecast is now less than 400 tools (cut from the prior forecast of 583 tools), down 43% on 2011. However, the firm still sees 2012 as the third best year ever for GaN MOCVD installations due to additional players entering from China, the existence of multi-year MOCVD subsidy agreements between certain Chinese provinces and local MOCVD suppliers, and existing players buying new, more cost-effective tools with wider process windows to go after new markets. China is expected to account for a 71% share of the 2012 market, down from 77% in 2011. Taiwan’s share is expected to rise from 12% to 13%, with Korea’s rising from 6% to 8%.

IMS also expects to see 4”- and 6”-wafer installations surge as companies prepare for growth in lighting market demand.

“The remainder of the Q4/11 issue of our Quarterly GaN LED Supply/Demand Report will be distributed shortly and will include updated forecasts for lighting demand, given China’s recent incandescent ban announcement and the latest backlighting results and forecasts factoring in new, low-cost direct LED backlights introduced into developing markets,” says IMS Research senior VP Ross Young.

See related items:

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

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

Tags: MOCVD MOCVD tool shipments LEDs GaN

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