12 September 2011
Global LED capital spending forecast cut by 13% due to LED TV sales slowdown
Recognizing the long-term potential of solid-state lighting and high-brightness LEDs, the Chinese government has supported both demand and supply sectors of the industry, estimated by some analysts to grow from about $10bn in 2010 to over $100bn worldwide by 2020, according to ‘The China LED Fab Industry Report’ of global industry association Semiconductor Equipment and Materials International (SEMI), which provides a summary of the rapidly growing China LED industry, including the latest data on capital and equipment spending, fab capacity, and sales rankings of Chinese LED makers. The report is prepared by SEMI China-based market analysts and is based on the SEMI Opto/LED Fab Watch and Forecast service that monitors LED capital spending at over 160 fabs worldwide.
In recent years, China and various local governments have adopted a series of industrial planning policies and incentives to promote the development of solid-state lighting. China has become the world’s leading consumer of solid-state lighting and the leading producer of LCD TVs (currently the leading demand driver of high-brightness LEDs).
In response to these market developments, LED production investments have escalated rapidly. From 2010 to 2012, the report forecasts that gallium nitride (GaN) epitaxial wafer production capacity will grow more than 300% to 1,282,000 wafers per month (2-inch equivalents), with metal-organic chemical vapor deposition (MOCVD) system installations growing from a cumulative total of 323 tools in 2010 to over 1000 tools by the end 2012. Capitalizing on this growth, ten new sapphire substrate projects (a market currently dominated by non-Chinese suppliers) have been announced.
The latest update of the Opto/LED Fab Watch also reflects current LED capital and equipment spending dynamics resulting in the slowdown of LCD TV sales worldwide. The China LED market in particular both drives and reflects global LED demand and capital spending. Sales of LCD TVs (currently the primary application for LEDs) are expected to be down to 32 million units (compared with the previously expected 40 million), as LG, Sony, Samsung and Panasonic have all cut sales forecasts for the year. According to Digitimes, Taiwan-based LED firms reported July revenues down 6.35% for the month and 18.8% for the year. IMS Research forecasts a market of $8.4bn in GaN devices in 2011, up only 4% on 2010.
The Opto/LED Fab Watch and Forecast service reflects the impact of the forces on LED capital and equipment spending and capacity on a global, regional and fab-by-fab basis. The latest August update reduces the equipment spending forecast by 13% from the May report, but this is still a 23% increase over 2010 spending. The report provides details of these changes down to the fab level, including the movement of some spending by Taiwan LED makers to their China joint venture projects.