Light-emitting diode (LED) manufacturers had an especially tough year in 2015. “Despite rising LED lighting market demand and the large scale replacement of traditional lighting products, the oversupply situation has caused the average LED sales prices (ASPs) to plunge 30% to 40% year on year,” said Roger Chu, research director for LEDinside, a division of TrendForce. “Growing number of manufacturers have incurred heavy losses and exiting the market.”

LEDinside estimates that the value of the global high-brightness LED market will increase by just 2% year on year to US$14.52 billion in 2015 and by another mere 3% year on year to US$14.95 billion in 2016. Even though lighting demand has spurred LED usage volume growth, the ongoing increase in LED’s luminous efficacy has the opposite effect of reducing usage volume. Additionally, LEDs are still under an immense downward price pressure. Based on these observations, LEDinside projects that in the next five years the LED industry’s compound annual growth rate (CAGR) is unlikely to reach more than 10% as before.

Listed below are five major trends that will shape the LED industry in 2016:

 

Price decline to moderate in LED market as more manufacturers make their exits

Demand in LED backlight and lighting markets has been lower than expected this year, which has caused sliding ASPs of LED chips and LED packages. This trend has been markedly observed during this year’s second half, when LED chip and package prices have sharply plunged to point that prices of some products are now close to material costs. Facing losses, manufacturers are being pressured to lower their prices in the short term. However, prices are now almost equal to production costs for many of them. As more companies drop out of the chip and package markets, further LED price cuts will be limited.

 

Chinese LED manufacturers start acquiring foreign companies to transform their business models

Chu noted that Chinese LED enterprises are now in a strong position to make merger and acquisition deals after raising funds from the stock market and receiving government backing. Their targets are major international LED players’ patents and lighting brands, which the Chinese hope will strengthen their patent portfolios and overseas distribution channels. Additionally, more Chinese LED manufacturers are also transforming their business models. Mergers and acquisitions are a way for them to leave the hotly contended red sea markets and enter other market sectors.

 

Penetration of flip-chip technology in LED TV backlight application will keep rising

Previously, only a few manufacturers highlighted their flip-chip LEDs as major products due to low yield rates, production costs and other technology challenges. However, an increasing number of Taiwanese and South Korean manufacturers begin to invest in the R&D of this technology starting in 2014. Consequently, flip-chip products have gradually become more efficient and profitable as their quality improves and costs go down. This year, South Korean LED manufacturers started to apply flip-chip LEDs on a large scale in TV backlight. South Korean branded TV vendors have also significantly raised their usage of flip-chip LEDs as the source of LED backlight. LEDinside expects that LED manufacturers will continue their aggressive promotion of flip-chip and the even smaller chip scale package (CSP) LEDs in the TV backlight market. Hence, the penetration of flip-chip technology in this application is projected to exceed 50% by 2017.

 

Replacement of traditional lighting products to accelerate as prices of LED lighting products continue to decline

LED lighting replacement products (e.g. LED bulbs and tubes) are becoming more standardized and have been eagerly promoted by many branded lighting companies. As a result, LED bulb prices around the globe are nearing their traditional, energy saving counterparts. Lighting companies will continue to find cost-cutting solutions in 2016. They will not just be looking at the cost of LEDs when it comes to lowering the price of an entire LED lighting product. They also consider lowering the costs of driver and other components. Bringing costs down help with efforts to lower product prices, which in turn expand sales and market share. LEDinside expects LED lighting replacement products to be widely adopted in the next three years.

 

Non-visible LED light increasingly valued in special applications

Due to the intense LED pricing competition in the white LED market, LED manufacturers are searching for innovative or special lighting applications to boost profitability. Some of the newly emerged applications that have drawn manufacturers’ attention are related to non-visible light spectrum, such as ultraviolet (UV) and infrared (IR) LEDs. Compared with lighting or backlight applications, the non-visible light applications are very limited in their market sizes. However, UV and IR LED markets have a very high technology barrier and production is highly customized. LED manufacturers supplying these application markets will need to work closely with solution providers/system manufacturers. On the other hand, non-visible light LEDs will have significantly higher gross margins than white LEDs.

UV LEDs, for example, currently has exposure and curing as its largest application markets, but manufacturers are also paying attention to other applications such as disinfection. Developing LEDs of UV-C wavelength, which is suited for disinfection, requires manufacturers to overcome an exceptionally high technology barrier. Though the UV-C market has relatively few players, the number of active entrants is expected to increase.

 

IR LEDs have a broad range of applications. Primarily, they are used in remote controls or security/surveillance solutions. They are also present image sensors, motion sensors, position detection sensors, proximity sensors, biometric recognition systems and photoplethymography sensors (which measure a person’s pulse rate and blood oxygen level). IR LEDs will also find value-added applications in handheld devices, such as information security and health management. On the whole, the IR LED market is highly profitable and has lots of room for growth on account of the technology’s diverse uses.

• Smartphones Shipment Grows Steadily
• Mobile LED Shipment and Market Value Outlook
• LED Shifts From Niche to Highly Competitive Market
• Applying Flip Chip Technology into FLASH LED
• OLED’s Estimated Penetration Rate in Mobile Market

• TV Shipment Volume Sees Slow Growth
• TV Backlight LED Shipment and Value of Production Outlook
• CSP Flip Chip LED Penetration Rate in TV Backlight Market
• Edge-type LED TV Road Map
• 2016 Edge-type TV LED Specifications
• Direct-type LED TV Road Map
• 2016 Direct-type TV LED Specifications

• Lighting LED Market Will Enter the Plateau Period During 2015 to 2020
• Middle and Low Power LED Products’ Specifications are Tending to be Concentrated, Competitive Opportunity to Emerge
• 2835 and 3030 LEDs are the Most Competitive in Lighting LED Field
• LED Manufacturers Introduce Higher Performance COB Products to Enhance the Added Value
• CSP LED Solution Price Advantage is Increasingly Evident, However, Production Yields is Low in the Short Term
• Chinese Manufacturers’ are Using Ultra-low Priced Low and Mid Power LEDs to Block CSP LED Applications in Lighting Products

• Philips Grabs LED Lighting Market Share with Low Pricing Strategy
• OEM LED Bulb Prices Continue to Decline
• LED Bulb Shipment Volume Growth Increase Target of Lighting Brands is 20% to 30% in 2016
• LED and Conventional Lighting Market Value and Volume
• LED Lighting Replace Expectation
• LED Lighting Industry Trends Expectation

• Exterior Automotive LED Market Value Steadily Growing
• Exterior Automotive LED Market Volume Steadily Growing
• Interior Automotive LED Market Value Gradually Declining
• Automotive Panel Spurring Interior Automotive LED Volume Growth Momentum
• Standard Power LEDs for Automotive Application Market to Shrivel up From 2015-2020
• Automotive Lighting Product and Power Classification

• Automotive H/L Beam LED- High Power Market Applications
• High-end Headlights-Adaptive Driving Beam Advancements
• Active Headlights-ADB Control Strategy
• Mid Class Headlights- Diversified Designs
• Low to Mid Class Headlights-Improvements in C/P Ratio

• Benefit From Increasing Fine Pitch Display, Display LED Market Continues to Grow
• LEDs’ Proportion in Various Cost Structure Displays

• Mainstream Fine Pitch Display LED Supplier and Specification
• Fine Pitch Display LED and General Display LED Specifications
• Fine Pitch Display Market Supply Chain Overview
• Display Products Market Size Forecast
• Leasing Display Market is Rapidly Rising
• Major Manufacturers Market Share in Display Application

• 2015-2020 UV LED Market Forecast

• Principles of UV Curing
• UV Curing Conditions
• Superior UV Curing Processing Factors
• UV Wavelength Distribution and Optical Design
• UV Irradiance vs. Radiant Energy Density
• UV Resin and Photoinitiator
• Thickness and Energy
• Cooling System
• UV Curing Machine List
• UV Adhesive Manufacturer List

• Analysis of Newly Installed MOCVD Worldwide
• Analysis of LED Chip Manufacturers Utilization Rates By Global Region
• Changes in Global LED Chip Expansion
  • Osram to Build LED Chip Plant in Malaysia, Which Could Change The Development of LED Industry
  • Potential Changes in The Industry Supply Chain Following the Completion of Lumileds’ Business Transaction to Go Scale Capital
  • Impact From China’s 13 Five-Year Plan on LED Industry
• Global LED Wafer Production Outlook
• Severe Imbalanced Oversupply Can Only Be Resolved By the Withdrawal of Second- Tier Manufacturers