NEWS REVIEW
IHS: LED manufacturers to continue oversupplying
DESPITE A MAJOR SURPLUS in the LED market, top suppliers are increasing their capital spending and production. That’s because of government incentives enabling firms to cash in on an expected boom in the lighting business.
Global shipments of MOCVD, tools that are essential for LED manufacturing are expected to rise by 17 percent in 2013, according to Alice Tao, senior analyst, LEDs and lighting for IHS.
This will be the first annual growth for the MOCVD market since 2011, and will represent a major turnaround from the 70 percent plunge of 2012.
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 percent in the second quarter, up from 60 percent in 2012. Meanwhile, utilisation for some Taiwanese and Chinese companies reached 90 percent in the second quarter. 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 subsidize MOCVD purchasing.
Governments are helping fund the procurement of MOCVD by to 80 percent of the total price of the equipment. Many of these companies also are increasing production in the belief that they can capitalize 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 Tao. “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 percent in 2013 and in 2014. The glut will decline slightly to 61 percent in 2015 and then to 40 percent in 2016.
Major LED suppliers include San’an, Elec-tech of China, Samsung and Seoul Semiconductor of South Korea, Epistar of Taiwan, and other companies including Philips Lumileds of the United States and German firm Osram.
Natural disasters cause GaAs substrate market to flounder
SLOW GROWTH in the GaAs device market in 2012, coupled with new developments and competitive technologies in cellular power amplifiers dropped demand for semi-insulating GaAs bulk substrates.
Wafer pricing is returning to normal levels after a pricing spike caused by the 2011 earthquake and tsunami in Japan. This, coupled with falling demand drove market revenue to double digit declines.
The recently released Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs) spread sheet model and Forecast and Outlook report, “Semi-Insulating GaAs Substrate Markets: 2012-2017”, forecasts that total demand for semi-insulating (SI) GaAs bulk substrates from manufacturers such as Freiberger Compound Materials (FCM), Hitachi Cable, AXT, Sumitomo and Dowa fell by nearly 10 percent from 2011 levels.
conspired to reduce GaAs bulk substrate demand”, notes Eric Higham, Director of the Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs).
The report estimates that this demand resulted in roughly $193 million in revenues in 2012. The forecast indicates demand will return to slow growth and reach nearly 32300 ksi in 2017. The slow growth in demand, coupled with substrate pricing dropping to more normal pricing profiles will cause revenue to decline to an estimated $189 million in 2017.
“The GaAs device market struggled to a small gain in 2012. This and the on going conversion to multi-band cellular PAs that replace several single-band devices both
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www.compoundsemiconductor.net August / September 2013
He adds, “As multi-band PA architectures become even more prevalent in cellular architectures and silicon-based technologies continue to gain market share, this segment will be challenged to find growth.”
Asif Anwar, Director in the Strategy Analytics Strategic Technologies Practice (STP) continues, “The disruptions in the GaAs bulk substrate supply chain caused by the Japanese earthquake and tsunami in 2011 seem to be working their way out of the system. While this is good for the companies involved, the effect has been to drop substrate pricing back to pre- earthquake levels and this, coupled with lower demand has decreased substrate revenue substantially.”
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