LEDinside predicts LED TV penetration rate to be 2% in 2009 and 11% in 2012

---

---

LED TV market features infinite imagination space but is immature yet, LEDinside estimates the market penetration rate of LED TV to be 2% in 2009 and 11% in 2012

With the brand TV manufacturers all introducing new LCD TVs with LED backlights, LED TV has gradually become one of the trump applications in LED industry. LEDinside projects that if all LCD TVs feature LED backlight, the consumption of LED in TV section would be 8 times larger than that in the 1-billion-a-year cell phone market.

On the other hand, prices of LED TVs are 60% higher than that of the established LCD TVs, and the supply chain of the backlight module is still immature. For example, the edge type backlight technology causes over-denseness of LEDs and makes the heat dissipation a problem. In addition, the 40inch+ larger size light directional panel which is difficult to manufacture are currently mainly provided by Japanese manufacturers. In one word, under the situation of higher cost and some components only provided by a few manufacturers, the LED TV is still facing many obstacles before being generally produced.

Therefore, LEDinside has conservatively estimated a mere 2% penetration rate for LED TVs this year. While in the future, as the costs of LED and CCFL backlight module get closer and the LED TV’s prices are cut down, this rate can be expected to reach 11%, and the consumption of LEDs in global LCD TVs market will be equivalent to 63% of that in cell phone market.

The consumption amount of LEDs in LCD TV market will be 8 times larger than that in cell phone market

In the CES 2009 report, LEDinside had discussed the 2009 development trend of the new generation LED backlight LCD TVs. After the brand manufacturers all introducing new LED backlit high-end LCD TVs, LED TVs have gradually became a focus in the industry. Some major manufacturers even estimate the output of LED TVs to take a portion of 10% in the total output. So, the predominant strength of brand TV manufacturers will have an impact on the changes in LED industry.

Then how deep an influence will LED TV bring on LED industry? Take the cell phone market, the current biggest LED application field, for example. With an annual cell phone output to be more than 1 billion unites, LEDs can be found in the backlight source, flashlight or the keyboard buttons of each cell phone, so LEDinside has estimated the LED consumption amount in cell phones to be roughly above 10 billion grains every year.

Then if all LCD TVs adopt LED backlight(assuming the LCD TVs with edge-type c composing 70% and ones with direct-type replicate composing 30%), the overall scale of LED TV market will be 8 times bigger than that in cell phone market. This is why the LED manufacturers all look forward to see the explosive power of LEDs in TV market and are paying close attention to the blossom of LED TV market to decide when to purchase several more MOCVDs.

The development of LED backlight technology

At present, the LED TV backlight technologies can be divided into Direct Type and Edge Type. There are also three different types of light sources: RGB LED, blue LED plus double color fluorescent powder and blue LED plus YAG.

The direct type technology is good for that the LED backlight is scattered directly on the back of the panel, and Local Dimming technology can be implemented to brighten or darken the image in independent small areas to achieve a more obvious image contrast. RGB LED is adopted as the light source to blend out the white light. The disadvantage is that this method requires more LED grains and the cost is higher. Besides, the small distance between LED light source and diffuser plate causes the difficulty in light blending. What’s more, the different life times of large number of LEDs could cause unevenness of image. Because of the high cost, the direct type technology is mostly utilized in high-end products focusing on the high quality of the image.

In edge type backlight technology, the LED light source is set on the edge and white light is scattered evenly onto the panel through a light directional board. The advantage is that it can reduce the amount of LEDs and lower the cost, and the shortcoming is that Local Dimming technology can not be implemented so the contrast and saturation are not as good as that provided by direct type backlight technology.

There are also different solutions of light source, first of which is to use blue LED with double color fluorescent powder (red and green powder or yellow and green powder). Another method is to use blue LED with YAG. The white light produced by blue LED and double color fluorescent powder offers better color rendering and better image effect than that produced by blue LED and YAG. However, the blue LED plus YAG method is a better choice when considering cost and lifetime.

LED TVs are still comparatively expensive; acceptance from consumers is still unclear

LEDinside holds a conservative attitude with respect to of LED TV sales of 2009. There are not many LED TV models currently in market. To observe the end market prices of LCD TVs, both Samsung’s and LG’s 46inchers are priced around USD 2,300~2,400, while the LED TVs introduced by Sony are priced between USD 2,300 and USD 2,400. Taking Samsung’s LN46A 950 for example, the 2008 released model utilizing direct type LED backlight and Local Dimming technologies was sold at a price around USD 2,488 in the first quarter of 2009, with a price difference as high as USD 500~1,000 or 60~80% comparing with traditional 120Hz high-end LCD TVs.(Figure-2)

 

As the difference between LED backlight and CCFL backlight technologies only relies on adoption of different backlight sources, the change in TV size is not so substantial as in the transformation from CRT to LCD TVs. So is it essential for consumers to pay a price difference of USD 500~1,000 for a panel thinner by merely a couple of inches, or for an improvement in image contrast? Though the brand TV manufacturers have set proactive goals in LED TV output, LEDinside holds that the high-end LED TV sales will be suppressed during the global economy downturn this year.

Another important factor limiting LED TV’s market penetration is the immature supply chain of the LED backlight module. As the requirements on brightness and specifications of LEDs are different from NB backlight, and that the edge-type backlight technology comes with over-denseness of LEDs which makes the heat dissipation a problem, the LED manufacturers have to work in accordance with the brand TV manufacturers to provide customized services with a higher cost. With respect to the components, 40inch+ larger size light directional panel which are hard to make are currently mainly provided by Japanese manufacturers. Therefore, LED TVs are still facing many obstacles before being generally produced under the current situation.

According to panel research agency Witview’s survey, the global LCD TV output of 2009 can be expected to reach 114 million in 2009. And LEDinside estimates the global LED TV market penetration rate of 2009 to be around 2%(Figure-3), with larger size high end LED TVs playing a major role in the market. In the future, as the prices of LED backlight and CCFL backlight module get closer, there will be more space for the end product price to be cut down. And as smaller-sized LCD TVs are also beginning to implement LED backlight, the market penetration rate of LED TV can be hoped to grow up to 11% by 2012, with the amount of LEDs used in global LCD TVs equivalent to 63% of that used in cell phones.

 

Could existing LED providers keep the competitiveness in LED TV market?

The existing LED manufacturers are all ready to enter the LED TV market. Both the LED manufacturers or panel providers are hoping to replicate the success pattern in the NB supply chain in the new LCD TV backlight field. However, there is much space for discuss whether they could still keep their advantages in this market.

From the patent perspective, towards brand TV manufacturers, Japan’s major LED providers haven’t shown as strong a patent-protective attitude as towards the NB manufacturers before. In the NB supply chain, to avoid the patent issues filed by LED providers, the brand NB manufacturers had preferred to give up the purchase power of LED to panel manufacturers for them to guarantee the LED used in NB are free from patent infringement issues.

However, in the TV component supply chain, as the market share of the five major brand manufacturers including Samsung, LG, Sharp, Sony and Philip is close to 70%, and there are other products except TV in which LEDs are used for these brands, the LED providers are unwilling to offend these big customers. The immaturity of the LED TV market is the other reason why the LED providers are reluctant to file patent issues against brand TV manufacturers to avoid holding back the development of the market.

LEDinside holds that the purchase power of LED will belong to the brand TV manufacturers in future LCD TV component supply chain. For example, Samsung has observed the importance of LED in the LCD TV market and begun to establish large scale self-owned LED capacity. If the LED manufacturing technologies of these brand manufacturers are developed to a certain level, the existing LED providers of Taiwan or Japan will have no choice but colleting royalty or receiving OEM orders beyond the brand manufacturers’ own capacity. Therefore, it could be a beginning of another disaster for the LED or panel providers to blindly expand their capacity before obtaining brand advantages.