21 May 2012

Supply and Demand for LEDs moving towards equilibrium in 2012

Demand from LCD backlights will continue to dominate LED demand until 2013, when it will reach its peak, according to the NPD DisplaySearch’s ‘Quarterly LED Supply/Demand Market Forecast Report’.

Graphic: LED supply/demand for backlight and lighting applications. Source: NPD DisplaySearch.

After taking off in 2010, in 2011 the growth in LED demand from LCD TV backlights reversed course, due to a combination of slower growth in LED-backlit LCD TV sales and (due to efficiency increases) slower growth in chips used per backlight. However, demand for LEDs in LCD backlights did grow slightly, as use in tablet PCs and strong penetration growth in LCD monitors made up for the drop in demand from TV. Growth was also modest in lighting, as the market penetration of LEDs only grew from 1.4% in 2010 to 1.9% in 2011.

Meanwhile, many new LED suppliers have entered the industry, and have been rapidly ramping up production. Measured in standard units of 500 micron × 500 micron chip size, supply grew by 41% in 2011, compared to only 10% growth in demand, resulting in significant over-supply throughout 2011.

“LEDs have been in surplus since the end of 2010, setting the stage for a decrease in LED prices and margins,” says NPD DisplaySearch analyst Steven Sher. “As a result of this surplus situation, there has been almost no investment in LED applications, nor any significant capacity increases in 2012. This is resulting in a halving of the supply/demand glut from 2011 to 2012,” he adds.

Due to the growing popularity of new, low-cost direct LED backlight designs for LCD TVs, the demand for LEDs in backlights will continue to increase through 2013, forecasts the report. While the number of LED packages per LCD backlight unit will peak in 2012, continued growth in penetration of LED backlights will lead to a slight increase in LED demand in 2013. By 2014, lighting will become the dominant source of demand for LEDs as price reductions and efficacy improvements drive increased adoption.

The penetration of LEDs in lighting will reach 16.8% in 2015, reckons the report. Also, spotlights and LED street lights should gain higher penetration in lighting due to government incentive programs, such as the 12th Five-Year Plan in China and the LED subsidy policy in Taiwan, as well as continued growth in commercial applications. LED bulbs and fluorescent tubes are growing in Japan due to government incentive programs and energy-saving consciousness, especially following the March 2011 earthquake, the report adds.

See related items:

Lighting market to shrink as LEDs displace conventional technology

Lighting to overtake LCDs TVs in LED demand in 2014

Tags: LCD backlights LED backlighting LEDs Lighting market

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