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Weak demand, poor economy hurt LED market

Posted: 08 Aug 2012 ?? ?Print Version ?Bookmark and Share

Keywords:LED market? LEDinside? TrendForce? smartphone? tablet?

LEDinside has revealed that despite the rush orders in 2Q12 that kept LED chip and package makers' utilization rates high, the Q3 outlook for LED backlight market remains uncertain due to the European debt crisis and the weak demand in China. The LED research division of TrendForce added that no demand surge is imminent due to the weakened market confidence and the conservative attitude of LED companies.

As for the TV backlight market in 3Q12, prices of LED packages such as 7030 and 3528 saw a decline of 5-6 percent after they entered mass production and reach economies of scale. The price of LED for other backlight application saw limited price drops, averaging 2-3 percent.

White LED prices

Figure 1: The Q3 outlook for LED backlight market remains uncertain due to the European debt crisis and the weak demand in China.

Affected by the lukewarm economic outlook, smartphone and tablet makers revised their shipment forecast. As for smartphone, the global shipment for 2012 is estimated at 660 million units, 55 million units less than the forecast made in early 2012. The forecast of orders for HB side view LEDs also lowered to 425 million units. Although the 2H12 LED backlight market remains uncertain, the price of LED for mobile phones application still dropped by 2-3 percent QoQ due to the requirement for higher backlight brightness from the mobile phone makers.

In addition, TrendForce estimates that the global shipments of notebooks in 2012 will see no growth, which will affect LED backlight market growth in the notebook sector. On the other hand, the demand for tablet PC remains strong in 2012, with the global shipments seeing a YoY growth of 52 percent. However, as Apple takes up 60 percent of the tablet PC market, Apple's LED backlight demand is supplied by two Japanese package makers. 0.8t side view LED price dropped by three percent in 3Q12, while 3014 packages for notebooks are sold at cost, whose price dropped by two percent in 3Q12.

The end of Q2 and the beginning of Q3 is usually the time for TV makers to start develop new TV models. Aside from Japanese TV brand vendors, Korean TV makers are still going through the LED patent cases. For this reason, Korean companies adopt Taiwan package makers' LED product. Therefore, certain Taiwan package makers may see booming growth in their orders by the end of 2012.

Although direct-type LED TV's sales in 1H12 fell short of expectations, 3528 price dropped by six percent in 3Q12 as the sales went up, while 7030's price dipped by five percent. Moreover, direct-type LED TV's LED usage will be reduced by 30 percent come 2013. For example, 3528's current will be increased to 400mA and only require 21 LEDs instead of 32 LEDs. Seeing that Korean companies have stopped production of CCFL TVs, TrendForce estimates that the LED backlight penetration in the TV market will further increase to 73 percent in 2012.

According to TrendForce, given the uncertain outlook for 2H12, if the market outlook for 3Q12 remains stagnant and the LED inventory for the backlight market level remain high, clients may start to cut orders.

Hence, if LED companies can seek strategic alliances with other firms and continue to improve their products (reduce the use of LED or increase brightness under even lower voltage), it will be harder for them to be replaced in the LED industry. Additionally, new LED packages for TV backlight will start to affect the market in 2013.

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