2014 was a year full of challenges for LED manufacturers. The performance in the first and second half of the year was like ice and fire. In the first half of the year, the lighting market demand was stronger than expected, which once caused a shortage of LEDs. However, in the second half of the year, the impact of repeated orders from customers and excessive inventory at the lighting channel gradually emerged. The LED market demand was frozen and the pressure of price competition caused the performance in the second half of the year to be generally unsatisfactory. In particular, the strong rise of LED manufacturers in mainland China has caused the price of LEDs to continue to decline. Therefore, in 2015, LED manufacturers will work hard to raise the technical threshold and invest in new special applications to get rid of the red ocean of price-cutting competition. There are five major development trends in the development of the LED industry in 2015.
The market share of mainland Chinese companies continues to increase
In 2014, the number of newly installed MOCVD machines worldwide will reach 239 units. In 2015, due to continued subsidy measures introduced by some local governments, the installed capacity will still remain above 170 units. Chu Yuchao said that LED manufacturers’ production expansion plans depend on local government subsidies, so in the future LED chip manufacturers will be the largest.
As mainland China's LED chip factories improve their technology and release their production capacity, their proportion of global LED chip output value is expected to increase from 27% in 2013 to 36% in 2014. As for the past situation where mainland China relied on foreign-funded enterprises for LED backlight and lighting applications, it is no longer the case. The proportion of mainland China packaging manufacturers using domestic chips continues to increase, and the prices are also quite competitive. Mainland China manufacturers are gradually increasing their share of the global market.
Lighting customers seek lower-cost solutions
The falling prices of terminal lighting products have stimulated massive demand in the LED lighting market. Chu Yuchao said that the growth driver of LED lighting products in 2015 will still mainly come from alternative light source products such as LED bulbs and LED tubes. Therefore, LED price and cost will become a key consideration for customers.
Medium-power LEDs with good cost performance can just meet the requirements of continued price reductions for these LED lighting products, such as 3030 and 2835 LEDs that have become mainstream in the market. In the future, LED manufacturers will continue to look for better heat dissipation materials and reduce the number of LEDs used through high-current driving. Even COB LEDs will gradually become favored by lighting customers. In addition to the price reduction of LEDs, manufacturers have also begun to pay attention to other components such as driving power supplies, hoping to obtain lower-cost solutions through overall system design.
Due to the fierce competition in LED prices, manufacturers are actively looking for new special applications that can increase profits, such as invisible light LEDs that are gradually attracting attention, including UV and IR LED applications. Although the market size of invisible light LEDs is limited and cannot be compared with applications such as LED lighting or backlighting, the technical difficulty and customization requirements require close cooperation with system manufacturers, which makes the entry barrier high, and the gross profit margin of the products is significantly better than that of white LEDs. At present, the UV LED and IR LED fields in the supply chain are mainly dominated by Japanese, European and American manufacturers. Taiwanese LED manufacturers also have a place. It is expected that more and more LED manufacturers will enter the invisible light field in the future.
The automotive market continues to grow
The automotive LED market is growing steadily, among which exterior LED lighting such as daytime running lights (DRL) and headlights (H/L beams) have the best growth. The main reason is that LED technology improvements and price declines have caused automotive LED lighting to gradually shift from high-end models to mid-range models, driving demand for automotive lighting in the next few years. In addition, in-car LED applications are still dominated by LED backlights for automotive panels. As the popularity of multimedia and sensor images increases, traditional instrument panels have also been changed to LCD panels, driving demand for automotive backlights.
The backlight pursues thinness and high color saturation
Due to the fierce price competition of backlight LEDs, LED manufacturers began to think about how to improve LED specifications to widen the gap with their competitors. Taking handheld devices as an example, high-end mobile phones are gradually developing towards thinner, lighter and higher panel resolutions. For LED manufacturers, how to make LEDs thinner, lighter and brighter has become a challenge in 2015. At this stage, the mainstream brightness of 0.4t LED backlight used in high-end smartphones is about 2500~2700mcd, and the packaging technology threshold is relatively high. Taking the 4.7-inch iPhone 6 mobile phone as an example, the backlight module requires about 10 to 12 0.4t LEDs as the backlight source. At present, the main LED suppliers are Japanese or Korean LED manufacturers, such as Nichia and other companies. It is expected that LED specifications will move toward thinner 0.3t LEDs in the future.
As for TV LED backlight specifications, in addition to improving LED brightness to meet the needs of 4K2K panels, introducing special red phosphors to achieve high color saturation LEDs of NTSC 100 is also the development focus of LED manufacturers. Therefore, the thinking direction of LED manufacturers in the future is how to raise the technical threshold and get rid of the red ocean of price-cutting competition.
ANNA