market analysis LEDs
This can cut the nation’s electricity needs, reducing demand to build more nuclear power plants. “That’s important for an economy growing as large and fast as that of China’s,” explains Young. Some of China’s chipmakers are fulfilling the government’s wishes, and producing LEDs with a cool-white emission of 130-150 lm/W at 350 mA, a performance good enough to cater for general lighting. These firms include SemiLEDs, which has just started installing tools in China to increase its capacity.
“SemiLEDs is right up there with its vertical structure with its metal carrier, which does a really good job of getting the heat out,” explains Young. He says that the company decided to expand into China because costs are low, including those for equipment, which is reduced thanks to the subsidy programme. This in turn allows the company to price its products more aggressively.
has developed the process, and another is struggling but has the tools or capital, it make sense for them to consolidate.”
San’an Optoelectronics, Silan and HC SemiTek are leading the sales of nitride LEDs by Chinese firms, with revenue for the red and yellow cousins based on AlInGaP spearheaded by Changelight. Efforts from them and all the other LED chipmakers in China led to device sales of RMB 4 billion ($ 0.6 billion) in 2010, and revenue is expected to increase to RMB 10 billion in three-to-four year’s time, according to the Chinese media outlet GG-LED.
Young believes that the vast majority of these sales are to the domestic market. “Before [these companies] can start aggressively exporting, they will have to make sure they have their IP licenses in place.” Obtaining this crucial piece of documentation can be a lengthy process, due to the number of companies requesting licenses.
The Chinese government’s motivation for ploughing cash into its LED industry is its desire to roll out solid-state lighting, particularly in street lighting, across the country.
Some other Taiwanese companies are also pursuing joint ventures in China, and producing high power chips with 130-140 lm/W efficacies. These significantly outperform the domestic Chinese companies, which have products below 100 lm/W. These less-efficient LEDs fail to meet the requirements for the country’s solid-state lighting program, and are serving other applications.
Failing to hit the big screen The last few years have witnessed an explosion in the number of LEDs deployed in backlighting screens, and some Chinese chipmakers have tried to get into that market. But, in general, there are few success storiesand they may miss the boat. According to Young, this market will saturate in 2013: “One issue is that the number of LEDs per panel is going down as efficiency goes up. And TV manufacturers have reduced the brightness to 400 cd/m2
on their entry panels, so they are using less LEDs there.”
Figure 1: Shipments of MOCVD tools have rocketed in recent times to unprecedented levels
40
www.compoundsemiconductor.net June 2011
Today, most of the LED chipmakers in China are shipping to ‘off-spec’ markets, with devices are going into low- value-added applications. “These LEDs are not backlighting displays, but backlighting the keyboard on a notebook or a phone,” explains Young, who adds that these chips are also being used in Christmas tree lights, the heel of children’s sneakers and in indicators that reveal whether an electrical item is ‘on’ or ‘off’. The ramping production of these low-performance LEDs in China, plus their high-power cousins, is not welcomed in some quarters. “You have supply growing at a time when demand isn’t there,” points out Young. He says that the 1100 MOCVD tools being installed all over the world in 2011 can meet the anticipated demand right through to 2013 or 2014 – when incandescents are banned and solid-state lighting kick offs. Today it simply leads to oversupply, driving down chip prices.
One company already hurting from global LED overcapacity is the US chipmaker Cree, which has failed
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