LEDinside: High-Brightness LED Market Value in 2011 Estimated at USD 9 Billion; LED TV Backlight Market Value Dropped By 18% from 2010

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According to LEDinside, a research division of TrendForce, the global market value of high-brightness LED in 2011 is estimated to total USD 9 billion instead of USD 10.6 billion as previously expected, with a mere annual increase of 8%. Contributing factors include: backlight market’s weak demand, drastic plummeting LED’s average selling price, which resulted in over supply in the LED market.

TrendForce indicates that the excess supply situation is likely to remain unchanged in the short-term. In fact, if the inventory level continues to rise and the price declines more than expected, High-Brightness LED Backlight market value might go a further decline.

2011 LED Backlight Annual Output Value Exhibits Decline Compared to 2010

According to TrendForce, despite the fact that the High-Brightness LED Backlight market has increased slightly in 2011, the LED market value for the TV backlight application merely reached USD 1.4 billion, with an 18% YoY decrease. The trend can be attributed to the enhanced light guide technology, resulting in a considerable reduction in the LED usage volume for the TV backlight requires. As for the 42- inch TV specification, when Samsung launched its LED TVs in 2009, 360 LEDs were needed, but in 2011, the number averages about 130 for standard LED TVs and 100 for the entry level  LED TV model. The technology advancement has largely compromised LED usage for the TV backlight application.

Moreover, the unfavorable end-market sales contribute to the speedy downturn in LED price. As a result, despite the surging LED penetration rate for the TV application,  market value still suffers setback.

In 2012, South Korean panel manufacturers plan to launch entry-leveled LED panels, in the hope of reducing cost and propelling sales. Such a move will further increase the LED penetration rate, but it will also cause the LED usage volume to drop another 20-30%.

Few Taiwanese Manufacturers Benefit from Tablet PCs Fever

Brand vendors are increasingly requiring higher panel resolution for tablet PCs; in 2011 the amount of LED usage volume per tablet PC averages 36-42, but the LED usage volume may double in 2012. Although the tablet PC shipment will likely exceed 50 million units in 2011, but Apple iPad and iPad 2 account for most of them. Currently, since Apple’s LED backlight demand is mainly supplied by Japanese manufacturers, few Taiwanese makers benefit from the tablet PC fever.

Incandescent Light Bulb Ban from 2012 May Trigger Potential Business Opportunity for LED Lighting Market

In light of the weak backlight demand, the lighting market becomes the new source of revenue that underpins LED makers. For example, the electricity rationing in Japan has increased energy-saving awareness and demand for LED, and LED makers that manage to break into the supply chain of the Japanese lighting market are able to deliver impressive revenues.

For instance, Roadmap for China Abolishing Incandescent Lamps (draft), recently published by The National Development and Reform Commission, proposes that the sales and imports of regular incandescent light bulbs will be prohibited from October 1st, 2012. Moreover, the Chinese government is about to announce the policy for the solid-state lighting industry as a part of the 12th five-year plan. The Chinese government will strive to increase the popularity of LED light products by enacting incentive and subsidy policies regarding criteria, purchase and energy-saving efficiency of LED. On the other hand, the bans against incandescent light bulbs will be enforced in areas such as Europe, North America, South Korea and Australia in 2012, which are expected to greatly benefit the global LED lighting market.

Market Downturn : A Test for LED Makers’ Cost Competitiveness

TrendForce believes that the delayed demand for end-market applications will likely pick up in 2012 and 2013. In addition, the rising popularity of LED lighting products will drive the High-Brightness LED market value for continous growth. However, the oversupply caused by manufacturers’ significant MOCVD expansions since 2010 will most likely persist. The ASP of LED is expected to undergo a decline of 20% in 2012, which will pose a challenge for LED makers in terms of technology advancement speed and cost competitiveness.