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LED end market to grow despite oversupply burden

Posted: 17 Jan 2012 ?? ?Print Version ?Bookmark and Share

Keywords:LED industry? oversupply? MOCVD? lighting market?

LEDinside, the LED research arm of TrendForce Corp., noted that month-end inventory adjustment and poor end-market demand have dragged LED makers' revenues worldwide from 10-15 percent. According to the market consulting firm, despite the low utilization rates of LED firms, LED chip supply last year still amounted to 174 billion units, 35 percent higher than market demand.

Looking toward the current year, given the amount of untapped MOCVD capacity, the LED industry is expected to remain in oversupply. However, companies with patents and technology strength still have a fighting chance to manage through this downturn.

Many LED makers' exports decreased considerably due to slow end-market demand caused by global economic downturns. At present, the industry is kept afloat by orders from the commercial lighting sector and the governmental projects. Additionally, the intensifying competition is also driving some companies to the brink of going out of business before the Chinese New Year. The bleak outlook also rendered upstream manufacturers more conservative about choosing clients and managing outstanding payments.

In response to the decreasing shipments and the rising inventory level, most companies decreased their utilization rates and forced the employees to go on unpaid vacation in order to reduce production and costs. However, the high inventory level remains the biggest issue for the LED makers.

As for the TV backlight market, the gloomy global economic climate contributes to the underperforming sales of LED TV that use a huge amount of LEDs, causing the total shipments to drop from 220 million to 203 million sets.

With the forthcoming London 2012 Olympics and LED TVs with consumer-friendly prices released by big brands, the sales of LED TVs in emerging markets are expected to surge. This is predicted to breathe new life into the LED backlight market.

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