TrendForce: LED Lighting-Use Market Contracted Up to 16% in Fourth Quarter

The lighting-use LED market contracted 5-16% in the fourth quarter, while backlighting-use LED products fell 4-13% according to a new report from LEDinside, a division of the Taiwan-based market intelligence firm TrendForce. The average price of lighting-use LED products is falling with the arrival of the non-peak season and as competition intensifies among manufacturers, said Jack Kuo, an assistant research manager at LEDinside. “Orders are falling and profits are being squeezed,” he said. “For manufacturers to increase their market share, they need to introduce more new products.” 

Prices declined across the board in the lighting-use LED market in the fourth quarter due to increasing lighting product inventory. As demand in the 3030 market gradually fell, it increased the speed of price declines and overall the market contracted 16%. 5630 prices also fell, but only by 5%. High power LED products did not fall notably in price for the most part, but the 1500mA was an exception, decreasing 6%. Moreover, prices of backlight-use LED products used in mobile phones and tablets dropped by 13%. LED specs for smartphones, tablets and PC are very similar, and can actually be shared in these applications, Kuo said. 0.6t LED prices fell $ 0.035. Furthermore, LED price for monitor application was fairly stable, decreasing just 2%. LEDinside predicts LED specs for TV applications will be further standardized in 2015. 7020 LED, representing LED specs in the edge-type LED TV sector, fell 6% to $ 0.113 in the fourth quarter. Meanwhile, the direct-type LED TV penetration rate is expected to reach 60% in 2015. 3528/3030 LED package prices fell 10% in the fourth quarter. 

The lack of MOCVD experts in China to operate MOCVD equipment is no longer an issue, since the Chinese have been able to continue producing LEDs with high utilization rates, Kuo said, adding: “Even if the machines’ production yield is not optimized, Chinese manufacturers have still achieved economies of scale because of their high production volume and low manufacturing costs, which is putting enormous pressure on Taiwanese, Japanese and Korean LED manufacturers.”  Looking ahead to 2015, LED manufacturers will face a number of challenges, Kuo said. They will need to figure out to maintain their competiveness in a saturated market, where low prices are common. Additionally, there are 5 LED manufacturers in the industry that have most of the patents: Nichia, Cree, Toyoda Gosei, Philips and Osram. It will be imperative for other vendors to form strategic alliances with them to avoid patent lawsuits and expand into new markets.