11 October 2011
Strategies Unlimited lowers 2011 HB-LED revenue growth forecast to 9.8%
Revenues for high-brightness light emitting diodes (HB-LEDs) grew 108% to $11.2bn in 2010, driven by applications in TV backlight units, according to the ‘High-Brightness LED Market Review and Forecast – 2011’ by Strategies Unlimited. Growth is quieting down though, as expanding supply and a slowdown in overall TV demand in 2011 pushed LED prices drastically lower, says the market research firm.
Graphic: HB-LED market by revenue and year-on-year growth rate, 2010-2015.
Except for certain specialized applications (such as headlamps), LED prices have plummeted 20-40% recently. Strategies Unlimited has consequently lowered its forecast for HB-LED revenue in 2011 to $12.3bn, up just 9.8% year-on-year.
Strategies Unlimited predicts that this industry correction will take weaker and/or newer LED manufacturers out of the market — like many from China who entered the market during 2010— hence consolidation is expected in China. As LEDs become more like commodities, only strong manufacturers with deep pockets will survive the fluctuations, the firm forecasts.
Revenue will peak in 2014, hitting $16.2bn, before dropping off to $15.3bn in 2015, it is reckoned. However, after lighting takes over as the growth driver for HB-LED adoption (predicted to occur in 2015) revenues will return to growth.
The LED price drop could lead to higher LED adoption, particularly in lighting, where LEDs are about 30% of the bill of materials (BOM). For example, a high-quality, large-volume 1W cool-white packaged LED with delivery in September 2011 was quoted at about $0.65. Revenues of LEDs for lighting should see compound growth of 33% over the forecast period.
The worldwide signage industry experienced explosive growth to $3.4bn in 2010, including the domestic Chinese market growing 54% to $1.9bn and expected to continue growing at 14% compounded annually through 2015. LED revenues for signs were $1.1bn in 2010, and are expected to grow to about $1.6bn in 2015. About 83% of worldwide signs were manufactured in China in 2010, and the trend toward Chinese manufacturing will continue.
Strategies Unlimited forecasts that LEDs for mobile devices will experience declining revenues 2010-2015, despite fast-growing device adoption (with smartphone units growing at 30% and tablet computers at 57%, compounded annually). Most mobile appliances (such as feature phones and notebooks) have reached saturation, and price suppression will contribute to LED revenues falling by 4.1% compounded annually (the only segment with negative growth through the forecast period).
Automotive applications brought in $1.1bn in LED revenues in 2010, due mainly to China-based growth. However, as China cools off in 2011 and the Japanese tsunami disrupted supply chains, growth in this sector in 2011 has been revised downwards to just 5%. Nevertheles, increased use of LEDs in daytime running lights (DRLs) and headlamps will drive revenue growth for LEDs in exterior automotive lighting to 10%, compounded annually. In contrast, falling prices and saturation of LEDs in instrument panels - reaching 90% in 2015 - will erode LED revenue for that segment by 2% over the forecast period, concludes Strategies Unlimited.