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LED oversupply likely to continue

Posted: 06 Aug 2013     Print Version  Bookmark and Share

Keywords:IHS  MOCVD shipment  LED manufacturing  metal organic chemical vapor-deposition 

According to the latest report from IHS, global shipments of metal organic chemical vapor-deposition (MOCVD) equipment—tools that are essential for light-emitting diode (LED) manufacturing—are forecast to rise by 17 per cent this year. This will be the first annual growth for the MOCVD market since 2011, and will represent a major turnaround from the 70 per cent plunge of 2012, added the market analytics firm.

Despite a major surplus in the LED market, top suppliers are increasing their capital spending and production because of government incentives and in order to cash in on an expected boom in the lighting business.

At the same time that growth is being projected, factory utilisation rates are increasing for major LED companies in Asia. In South Korea, for instance, utilisation rose to about 75 per cent in Q2, up from 60 per cent in 2012. Meanwhile, utilisation for some Taiwan and Chinese companies reached 90 per cent in Q2.

The spending and boosting of utilisation rates alike are occurring despite a glut of supply that has plagued the market since 2010. The surplus started when LED suppliers made major investments in capacity in 2010 and 2011, stemming from the efforts of local governments in China to subsidise MOCVD purchasing. Governments are helping fund the procurement of MOCVD by to 80 per cent of the total price of the equipment.

Many of these companies also are increasing production in the belief that they can capitalise on upcoming fast growth in the market for LEDs used in lighting.

The global market for LED lighting is expected to double during the next three years," noted Alice Tao, senior analyst, LEDs and lighting for IHS. "The prospect of this massive growth is irresistible to LED suppliers, who don't want to be caught short of supply during this expected boom. But given the rising investments in manufacturing equipment, the acute LED oversupply already in existence is expected to continue through 2016.

The supply of LEDs, measured in terms of manufactured die, is expected to exceed demand by 69 per cent in 2013 and in 2014. The glut will decline slightly to 61 per cent in 2015 and then to 40 per cent in 2016.

For more statistics and forecasts, click here.





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