17 January 2012

Packaged GaN LED market falls 6% in 2011 to $8bn on backlighting weakness

After 60% growth in 2010, the gallium nitride (GaN) LED market is now expected to fall 6% in 2011 to $8bn, according to IMS Research’s latest ‘Quarterly GaN LED Supply and Demand’, which tracks and forecasts all aspects of the LED market quarterly.

The decline can be attributed to the following:

• A widening surplus resulted in significant pricing pressure as supply grew nearly three times faster than demand from 2010 to 2011, resulting in depressed LED factory utilization levels. The LED surplus rose from a relatively healthy 7% in 2010 to 45% in 2011 and is predicted to widen further in 2012.
• With both panel shipments and LED penetration below expectations and average LED prices for backlighting falling 34% on a volume-weighted average basis on depressed utilization, backlighting revenues fell 13% to $4.8bn. Average selling prices (ASPs) for certain backlighting markets were down as much as 45% in 2011, hence backlighting fell from 64% of GaN LED revenue in 2010 to 59% in 2011 and is likely to continue falling as the backlight markets become saturated and the lighting market accelerates.
• LED revenue for TVs is expected to fall 5% in 2011 to $1.9bn as penetration is expected to reach only 39%, below the previous estimate of 43%.

However, the GaN LED market is expected to recover, enjoying annual growth each year from 2012 to 2015, including double-digit growth in 2013 and 2014 as the lighting market accelerates. Highlights include the following:

• The 2012 market is expected to grow 5% but remain below 2010 levels. Backlighting is expected to be flat due to slower unit growth and price reductions, while lighting is expected to rise 30% as LED lamp penetration jumps while prices continue to fall.
• Lighting revenue is expected to overtake TV revenue for GaN LEDs in 2012, a year earlier than previously predicted. This is due to the increasing LED lighting demand (as a result of lower pricing) while LED demand for TVs falls (due to the lower-than-expected penetration) along with the use of low-cost direct LED backlights in developing markets.
• Compared with conventional edge backlights, low-cost direct LED backlights use about half the LED die area. This is due to significantly reducing the brightness specification, along with adopting a thicker form factor that allows wide-viewing-angle packages to be adopted, which further reduces the number of LEDs required. While the adoption of these new low-cost direct-type backlights will narrow the cost differential with CCFL LCD TVs, the thicker form factor and reduced brightness capability will narrow their appeal, says IMS.
• The lighting share of the GaN LED market is expected to surge from 21% in 2011 to 49% in 2016, with lighting LED revenue expected to grow more than 300% and units expected to grow more than 1500% over this period.

See related items:

IMS downgrades 2011 packaged LED market growth to 1%

Tags: Packaged GaN LED market

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