LED NB is ready to go(2): Brightness and patent issues keep LED backlight highly priced

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The biggest obstacle of improving LED NB’s penestration rate is the high cost of LED backlight modules. The price of LED backlight modules is still 70% higher than CCFL backlight. The reason why a LED backlight module remains highly priced is the issues of its brightness and patent. Therefore though LED NB has created a big market, not every LED maker can take advantages from it.

LED VS.CCFL

At present the biggest obstacle of bringing LED backlight into NB is LED’s higher costs and lower yield rate compared to CCFL. According to the research of LEDinside, in the first quarter of 2008, one single CCFL module for 12-inch panel costed about 11.9 USD, and its price drops almost 20% to 9.6 USD in the third quarter, meanwhile, the price of one single LED backlight module drops 33% from 24.8 USD(Q1) to 16.62 USD(Q3).

Also, the price gap between LED and CCFL backlight drops from 108% in the beginning of this year to 70%(Figure-1).

Although under the upstream oversupply of Epi the price of LED has a big drop this year,the price gap between LED and CCFL backlight is still wide.

Figure- 1 LED BLU compared to CCFL BLU (12" panel)

Source: LEDinside

Brightness and patent issues influence the price of LED backlight module

The cost of LED chip has a very high ratio in the total cost of a LED backlight module, and its price differs a lot when it comes with a patent or gives higher brightness. According to the research of LEDinside, the main couse of the high price of LED backlight module is still the high cost of LED chip. A LED chip(>2000mcd) comes from Japan with patent costs more than 0.2 USD. In the second half of this year, with Taiwanese assembly houses join into the production, the price of a patened LED chip packaged in Taiwan drops largely to 0.13 USD(1700~1800 mcd), if without the patent, the price would be only half.

Figure-2 LED backlight price with or without patent

Source: LEDinside

The viewpoint of LEDinside

Although LED NB creates a big market, few LED manufacturers succeed in entering the supply chain for mainstream NBs whose screens are 12 inches or more. The main reason for their failures is that the cost of LED backlight module is only 2~4% of the total cost of NB, most NB manufacturers don’t want to take the risk of being sued for using non-patented LED, which may block their NBs’ way to the European and American markets.

Therefore, there are only few manufacturers who own a patent can enter the supply chain for branded NB makers, such as Toyoda Gosei and Nichia. These LED makers not only have patents but their LEDs also provide high brightness, so even when supply exceeds demand in the LED industry, their profitabilities remain.

As for the Netbook, most of their panels are below 10 inches, therefore most of them adopt LED backlight technology. With demand for Netbook from the emerging market grows gradually, the market of LED backlight is also growing, which attracts many LED makers who don’t own a LED patent. The price competition is so keen that the second-tire manufacturers can only profit by selling a huge amount and it’s not easy for them to keep profitability.

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