Trend Outlook: 2012 LED industry ten themes

Barclays Capital forecast, 2012, by excess production capacity, average price (ASP) by pressure and LED lighting demand slow growth factors such as LED industry will usher in a "flat year", but the LED and MOCVD devices in power semiconductor industry and MOCVD equipment upgrade market there is still a chance.

MOCVD equipment demand will decline from 700 units in 2013 to 2012 in Taiwan and Taiwan's 400 units in the year of 440 in 2011. Although the overall MOCVD equipment replacement cycle has not yet come, but out of the first generation have been fully depreciated MOCVD devices (such as Veeco E-300 and K-300 Aixtron, CCS and G3) and the new Maxbrights and CRIUS II-XL to replace can obtain certain economic support. South Korea and Taiwan manufacturers have been making such a replacement.

Barclays estimates that South Korea's MOCVD plant capacity utilization between 50% to 60%, while Taiwan is between 50% to 70%; MOCVD capacity of mainland China LED manufacturers to use less than 30%. First tier LED manufacturers such as Cree, OSRAM and Lumileds capacity utilization seems to be higher, between 70% to 80%.

Barclays Capital forecast 2012 LED industry ten themes:

1 although LED vendors weak capital spending, but MOCVD device upgrades may increase additional revenue streams for equipment suppliers. MOCVD device upgrades bring revenue from $200 thousand (simple upgrade) to $1 million 500 thousand (if customers reconfigure the device and replace the air chamber).

2 MOCVD equipment replacement market is unlikely to grow. LED vendor revenue and slow growth in the terminal market demand will hinder the large-scale expansion of MOCVD equipment replacement. Although some MOCVD equipment suppliers will cooperate with major customers who use the refurbished and / or packaging of the MOCVD equipment, remove the damaged parts and upgrade, and provide the warranty period of the equipment again, first and second tier LED vendors are still not attractive.

3 gallium nitride (GaN) / silicon carbide (SiC) power electronics equipment will become a growing market for small MOCVD applications. STMicroELectronics (STM), Infineon and Analog Devices and so on from AIXTRON and Veeco procurement of MOCVD equipment.

4 although the United States applied materials (Applied Materials MOCVD customers include Samsung, Silan, Toshiba, TSMC, micron and IMEC) and some China manufacturers have joined this market, but the main suppliers of MOCVD equipment is AIXTRON and Veeco, the two share MOCVD market share of 90%, and will benefit MOCVD equipment update.

5 although Barclays that applied materials can't buy any large LED equipment suppliers, because it has acquired a semiconductor equipment company VSEA in 2011, but there is still the possibility of mergers and acquisitions between LED equipment manufacturers.

6 the United States and Europe will implement the incandescent ban, but given the existing incandescent inventory, this initiative is unlikely to drive the LED market demand in 2012. The LED lights will really start in japan.

7 LED component / lamp prices will make the non residential project payback period more optimistic. Barclays estimates the average selling price of LED chips / components decreased by 30-40% in 2011.

8 although the government may provide a variety of subsidies, but the Chinese market demand for LED may decline with the market as a whole. There is no indication that the central government's 8 billion yuan subsidy has begun to deploy.

9 LED lighting market penetration will steadily increase, due to the average selling pressure, LED component supplier revenue growth will slow down.

10 China will continue to lag behind in LED manufacturing quality; South Korea will make greater progress. Chinese manufacturers of LED product quality over the years continue to lag behind the first-line LED manufacturers. Barclays pointed out that Samsung, Seoul semiconductor and LG Innotek and other Korean LED supplier product quality has been improving. Samsung and LG may become a major threat to Cree, OSRAM, Nichia and Lumileds and other traditional LED manufacturers.