The Analysis of 2013 LED Market
2012 was a tough year for worldwide LED industry that suffered weak economic situation, serious oversupply, the sharp price decline and LED manufacturer’s bankruptcy. With 2013 economic environment improving, will global LED industry also see better performance? The following are the rough prediction of 2013 LED market from Trendforce.
1. high-brightness LED
In 2013, the value of global high-brightness LED is projected to amount to $12.4 billion, an increase of 14% from 2012, mainly driven by the backlight and lighting demand from handheld devices. As for nest few years, lighting will be the next round of driving force for high-brightness LED industry. However, due to the continuous decline in LED unit price, LED value in 2012 to 2016 will only see CAGP of only 4%. From LED chip market perspective, the LED chip value in 2012 reached $3.8 billion with Taiwan and Chinese mainland accounting for 66% of the entire chip sales; and oversupply is still the largest challenge for global chip manufacturers, so in the future, chip makers will focus more on diverse operations or strategic cooperation. Across packaging manufacturers, packaging enterprises gradually move toward a vertically integrated business model. In addition, with the rise of China’s packaging manufacturers, some has entered the field of backlight, but encounter the patent obstacle, so their major opportunity is to cut cost and export products to oversea countries, especially emerging markets.
2. Sapphire substrate market
Given the oversupply in the overall sapphire substrate market, part of manufacturers integrates into PSS process. In addition to self-building capacity, the case of mergers and acquisitions and strategic alliances also gradually increases. LED application represents the largest shares, reaching around 84% in 2012, but will decrease proportion in 2013 due to the competition of non-LED market applications, including window film, telecommunications components (SOS), Watch cover, and handheld applications. In particularly, telecommunications component (SOS) products show the trend of replacing GaAs with compound annual growth rate up to 47% from 2012 to 2016 due to the adoption in PA amplifier. Increasingly more brand manufacturers will use sapphire substrate in cellphone and camera lens, which is predicted to enlarge market shares in the second quarter. Due to the considerable large smartphone shipments, sapphire substrate industry may be out of stock if any part is introduced into sapphire substrate material.
3. The performance of China’s LED backlight market
From the handheld devices perspective, driven by smartphone, the demand for FlashLED rapidly increased; but due to the fast falling in unit price, the average unit price in 2013 has lowered than USD0.5, less than half of 2011, and after increasing more competitors participate into this segment and grab order through low pricing, the annual revenue begins to decline directly from 2011.
In addition, the rapid growth of cellphone and tablets has caused the slowdown even shrinking in notebook industry; in particularly, large-size smartphone directly erodes the tablet segment, which forces the highest-market-share 7-inch tablet to move to 8-inch, whose LED volume will increase by 25-30%.
Furthermore, on the large-size TV backlight market side, China’s LED packaging market will be still very fierce in the coming 3-5 years. The business strategy of China’s first-tier packaging manufacturers target at lighting market; but due to the lower-than-backlight gross margin, packaging companies will take LED backlight as springboard, LED lighting layout as goal. This strategy contributes to the quick rise of China’s packaging manufacturers in recent two years, their active share-seizing with Taiwan and South Korea-based LED packaging enterprises in China’s backlight market. In the precise of lagging behind Taiwanese and South Korea-based manufacturers in packaging technology and size, Chinese suppliers will focus the packaging size on 3020、3014、5630 to enter China’s TV backlight supply chain in succession.
4. China’s LED lighting market analysis
By 2013, the US, Japan and Western Europe will still be the major export market for China’s LED lighting where the US accounts for 24% of the total exports, ranking the largest target market of LED lighting products. And the top 8 export markets represent over 60%. In addition, Russia first enters the top ten largest export target market list.
On China’s LED lighting market size, LEDinside said, four large general lighting markets including outdoor lighting, engineering lighting, commercial lighting, and home lighting will achieve value of around 67.8 billion yuan. Outdoor lighting will enhance the penetration in various regions due to the government procurement. As for industrial lighting, due to the limitation of threshold, the overall price is higher than other segments. It is expected China’s industrial lighting market to see the total penetration reach 20% by 2015 and maintain more than 30% of compound annual growth rate.