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Favorable LED pricing seen for 2012

Posted: 20 Sep 2011 ?? ?Print Version ?Bookmark and Share

Keywords:LED chip? LED package? LED lighting?

Due to plummeting LED prices and poor market performance, the industry is finding a tough time to ease inventory. However, the Christmas season and forthcoming LED TV models is expected to pick the industry up, according to LEDinside, a research arm of TrendForce Corp.

LEDinside has forecasted that the oversupply will linger in the next few years. In light of the unfavorable market outlook, LED chip makers from China have put their expansion plans on hold. Some manufacturers have delayed production plan, postponed MOCVD installation plan and even considered exiting the market. LEDinside estimated the number of new MOCVD equipment installed in mainland China this year at less than 400 units, which is expected to have a positive impact on LED price next year. Moreover, as the competition in the LED industry intensifies, the fast response of LED makers in Taiwan regarding the changing economic climate give them a better chance of making inroads into the global LED industry, the research firm added.

LED makers faced the pressure of readjusting the percentages of their backlight and lighting products in 2Q11.�Although large-sized backlight remained the LED chip makers' target market, the inventory pressure and weak demand in the end market, LED chip makers continue to experience revenue challenges. In August this year, listed Taiwan LED chip makers totaled about $126 million (NTD 3.72 billion), a MoM decline of 5.9 percent and YoY decline of 23.9 percent. However, Formosa Epitaxy Inc. managed to deliver decent revenue of about $13 million (NTD 380 million) with 14.6 percent MoM increase. This is mostly attributed to the lowered base period value caused by decreased orders from South Korea in 1H11 and the revenue rebound after August.

LED makers stated that they started receiving rush orders for tablet and mobile device backlights in September. Some panel manufacturers' new LED TVs have not only propelled demand but also revived the industry.

Manufacturer ranking

Sales revenu

According to a survey conducted by LEDinside, the revenues of listed Taiwan LED makers reached about $285 million (NTD 8.415 billion), a MoM decline of 2.69 percent and YoY decline of 18.9 percent in August 2011. In relation to revenues of Taiwan LED package manufacturers, dampened by the weak backlight market demand and drop in LED chip price, the August 2011 revenues amounted to about $159 million (NTD 4.69 billion), a sharp decrease of 14.5 percent compared to the same time last year and 0.01 percent when compared to July this year. However, Lextar's LED package revenue, which has made its way into the lighting market, reached almost $26 million (NTD 760 million), which is a 17.9 percent growth from July this year. Lextar's growth momentum can be mainly attributed to lighting products, which is 40 percent of its total revenue. Lextar began receiving orders for large LED lighting projects at the beginning of the year. LED tubes account for majority of its shipment, averaging 2,000 to 3,000 thousand tubes per month. Moreover, GX16 tube launched in 2Q11 has seen considerable shipment growth as well.

From a general perspective, the LED lighting market has been demonstrating steady growth, even though the pace fell short of the industry's expectations. Traditional lighting manufacturers benefiting from OEM orders from Japan indicated that, aside from GX16 light tubes, R17D light tubes also made a big impact on the Japan market. According to LEDinside, May to August is the peak season for commercial lighting, and October to December for residential lighting. If the Japanese government reinstitutes the Eco-Point policy in 2H11, the industry is expected to see a significant growth in the residential lighting market.

Manufacturer's revenue ranking

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