Weak NB Demand and Chinese Mobile Phone Market Affected LED Makers' May Performance; Demand in LED Lighting and TV Backlight Expected to Boom in 3Q11

According to LEDinside, a research division of TrendForce, the Taiwanese listed LED manufacturers’ revenues in May, 2011 reached NTD 9.96 billion (MoM+5.8%; YoY+8.3%). As for the upstream players of the LED industry, the revenues of Taiwan’s listed LED chip makers in May, 2011 increased 8.3% to NTD 4.63 billion, compared to the same time last year (MoM+5.8%; YoY+8.3%). As for the downstream players of the LED industry, the revenue of Taiwan’s listed LED package makers in May, 2011 dropped 0.8% to NTD 5.33 billion compared to the same time last year  (MoM+1.6%, YoY-0.8%).

The sales performance of LED backlight market fell short of expectations. With more manufacturers investing in TV backlight market, currently, only LED manufacturers of TV vendors and major panel makers were favored with the increasing demand. On the other hand, due to the high NB inventory levels in Europe and China, the orders related to NB backlight have been trending downward. As for the mobile backlight demand, since the Chinese government began to suppress the knockoff mobile phone market, the revenue growth paled in comparison with the same time last year. Besides, due to the prospects for energy-saving market boosted by the electricity rationing, demands for commercial lighting increases considerably in Japan.

As for the outlook of 3Q11, on account of the growing LED backlight penetration rate in TV-related applications, WitsView expects the TV backlight market to meet a vast growth in 3Q11. In regard to the lighting market, the Japanese government has enacted an energy-saving policy that offers 19 million households in the service area of Tokyo Electric Power Company incentives such as LED light bulb exchange coupon, which is believed to boost growth for the LED lighting market.

LED Chip Makers’ Revenues
In regard to Taiwanese chip makers’ revenues in May, 2011, due to the increasing backlight orders and growing demand for AlGaInP LEDs, Epistar was the sole maker that brought rather impressive figures, which were the 2nd highest record in the company history. As for other LED chip makers, since the backlight market remains slow, growth was barely realized in their revenues.

LED Package Makers’ Revenues
On the other hand, in terms of Taiwanese package makers’ revenues in May, 2011, the weak demand in the NB and Chinese mobile phone market has put a dent in the revenues of most Taiwanese package makers except for Everlight and Lite-On who received increased backlight orders.

LED Backlight Market: Sales Performance Suffered a Setback due to High Inventory Level of NB and Suppression against Knockoff Mobile Phones
According to WitsView, a research division of Trendforce, the LED backlight penetration rate of the panel makers has been continuously increasing. In terms of TV-related products, the LED penetration rate of major panel makers AUO and LGD is expected to increase from 45% in 2Q11 to 65% by the year-end, which indicates an increasing total demand. However, in light of the fact that there are more manufacturers investing in the backlight market, at the moment, those who benefit from the increasing demand are mostly LED manufacturers of brand vendors and major panel makers.

As for tablet and NB, their prospects differ vastly. According to LEDinside, the NB inventory level of Europe and China is expected to remain high in 2Q11, which results in a recent decrease in LED backlight orders. On the other hand, the LED backlight orders of tablet have been increasing lately, which provides momentum for the LED industry.

LED Lighting Market: Electricity Rationing in Japan to Propel Energy-Saving Products
From the perspective of the LED lighting market, with the electricity rationing and increasing energy-saving awareness, the Japanese government enacted a series of energy-saving policies in response to the high energy consumption of enterprises, commercial stores and households in the hope of meeting the electricity demand in summer. With the aim of reducing the electricity consumption by 15 % during the peak time, the Japanese government announced the Electricity Business Law's Article 27, which applies to the service area of Tokyo Electric Power Company and Tohoku Electric Power Company and is expected to increase demands for low-temperature LED lighting and commercial lighting. As for the 19 million households within the service area of Tokyo Electric Power Company, the Japanese government launched an incentive policy and offered complimentary products including coupons for free LED light bulbs and other energy-saving products. After the launch of Eco-point system, LEDinside expects the demand for LED light products to continue increasing in Japan. In addition, due to appreciation of Japanese yen, Taiwanese manufacturers, including Unity, LiteOn, Everlight,  Lextar, Epistar, Forepi, Genesis, Delta, Calcomp…etc., which successfully made their way into the Japanese supply chain, are able to benefit from the energy-saving policies launched by the Japanese government.

Furthermore, China’s “Ten Thousand LED Lights in Ten Cities” program will enter the second stage in 2012, which plans to establish 2 million LED street lamps in 50 cities such as Beijing, Shanghai, Shenzen and Wuhan. With additional energy-saving policies launched by local governments, the LED market in Asia is on the verge of booming growth.