26 March 2012

MOCVD system shipments for GaN LEDs to fall 48% to 342 in 2012

Shipments of metal-organic chemical vapor deposition (MOCVD) reactors for gallium nitride (GaN) LED applications will fall by 48% from 654 in 2011 to 342 in 2012, forecasts IMS Research in its most recent ‘Quarterly GaN LED Supply/Demand Report’.

Due to capacity needed for LED TVs, MOCVD shipments grew 244% from 224 in 2009 to 771 in 2010 (peaking in second-half 2010), the market research firm notes. Shipments fell by 15% in 2011, but they totalled a still healthy 654 as new Chinese manufacturers and Chinese-Taiwanese joint ventures entered the market, backed by government subsidies for MOCVD reactors, despite an oversupply in second-half 2010. However, with the oversupply expanding in 2011 and China’s MOCVD subsidies expiring in most regions, shipments and orders have since stalled.

In addition to China’s supply-side subsidies, the over-supply rose on weaker-than-expected demand due to global macroeconomic weakness, slower-than-expected growth in LED TV penetration, and the adoption of fewer LEDs per panel in many backlighting applications. In addition, LED lighting is still a relatively small market. As a result, MOCVD order intake fell sharply in second-half 2011, resulting in low expectations for MOCVD revenue in first-half 2012.

“The market peaked in Q3/10 and Q4/10 with 239 and 238 GaN reactors shipments respectively. Almost every quarter since then has been a decline,” notes IMS Research analyst Jamie Fox. “For 2012, we expect the first three quarters combined to be about the same as just one of those peak quarters,” he adds. “Apart from China, the market is extremely quiet. Without the Chinese growth, the market would have almost completely collapsed [in 2011, China accounted for 76% of the market, reaching a peak of 92% in Q4/2011 - 2-inch remains the predominant wafer diameter due to China’s reliance on 2” wafers, despite a trend to 4- and 6-inch globally at tier-1 manufacturers].” However, even with the severe market decline, 2012 is still forecast to be 52% higher than 2009 (342 versus 224), he notes.

In Q4/2011, shipments actually grew sequentially, as some large orders in China came to fruition within the quarter, particularly for Germany-based MOCVD system maker Aixtron. In particular, China’s Yangzhou Zhongke Semiconductor Lighting Center Co Ltd was the biggest customer in Q4/2011, while Sanan Optoelectronics Co Ltd (the largest manufacturer of full-colour LEDs in China) was the biggest for full-year 2011. As predicted, in terms of unit shipments Aixtron led the market in Q4/2011, although Veeco had the top market share for full-year 2011.

China’s Elec-Tech heads the list for likely top customer of 2012. However, both IMS’ survey of the purchase intentions of the market research firm’s customers and the publically available information on the order intakes of MOCVD system makers Aixtron and Veeco clearly tell the story of a big decline expected in Q1/2012, which will see shipments of about half of Q4/2010’s, reckons IMS.

The first two quarters of 2012 are therefore currently expected to experience the lowest shipment levels. However, a modest recovery should then be seen in second-half 2012 as firms begin adding capacity in response to expectations of rapid growth in demand from the general lighting market in 2013 onwards, concludes IMS.

See related items:

Aixtron reports loss in Q4 on revenue down 38% year-on-year

Veeco’s revenue falls 28% in Q4/2011 due to MOCVD down 32%

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

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

Tags: MOCVD MOCVD tool shipments LEDs GaN

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