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IQE

22 December 2016

LED suppliers to accelerate expansion into niche markets in 2017

The value of the global LED market is estimated to grow 3.4% annually to $14.8bn in 2016, according to LEDinside (a division of TrendForce). Although the LED industry will again be under tremendous competitive pressure in 2017, and participants will need to accelerate their entries into more profitable niche markets such as fine-pitch LED displays, UV LEDs and IR LEDs, the market will grow 4% from 2016 to $15.4bn in 2017, forecasts LEDinside.

"The projected growth in LED market value for this year is marginal, but the industry has witness some major changes," says LEDinside's research director Roger Chu. "The surge in demand for fine-pitch LED displays has caused a general tightening of chip supply. As a result, some chip and package products have seen price hikes for the first time in five years," he adds.

Rising prices for hard commodities such as copper and aluminum during second-half 2016 have also led to significant price hikes for LED lighting products. "LED lighting vendors have adjusted their prices to reflect the increase in material costs," says Chu. "The actual contribution of this wave of price increases to the vendors' profits is limited," he adds. Since the general state of the LED lighting market remains weak, LED suppliers are actively developing strategies to transform their businesses and accelerate their entries into the blue-ocean niche markets.

Fine-pitch LED displays to be highly contested application in new few years

Traditional LED display makers shifted much of their development efforts towards fine-pitch LED displays through 2016 as consumers demand better image quality from these products. "LED display makers' focus on fine-pitch LED displays has resulted in a several-fold increase in LED usage volume," says Chu. "And many Chinese LED package suppliers have undertaken capacity expansion just to capture a share of this market."

However, this scramble has also generated intense pricing competition. To avoid getting trapped in a price war, suppliers will have to improve their product specifications and make packages more compact. Currently, fine-pitch LED displays with pitches measuring 1.5mm and less constitute a market segment where LED suppliers are not under pressure to lower their prices.

UV-C LEDs to find more applications as efficiency improve

UV-C LEDs are another emerging market with a lot of blue-ocean opportunities, reckons LEDinside. "Deep UV has sterilization and purification features that would be useful in many application areas, including home appliances, water treatment, air purification and so on," says Chu.

While there is high demand for UV-C LEDs, there are challenges in developing this market. UV-C LED chips are currently very expensive and have low external quantum efficiency. Also, application development for UV-C LEDs used to be led mainly by research institutions based in Japan, Europe and the USA. These organizations came up with solutions that could not achieve economies of scales. Nonetheless, more LED suppliers are starting to see the importance of UV-C LED products and investing more in developing related applications. The industry's contribution therefore will speed up growth of the UV-C LED market in the near future, forecasts LEDinside.

Applications for IR LED components to become even more diverse

IR LEDs comprise a relatively mature technology and offer inexpensive solutions in many applications. Iris recognition sensors and motion sensors for virtual reality (VR) devices, for example, are two of many newly emerged applications that provide lucrative opportunities for IR LED suppliers. The vertical-cavity surface-emitting laser (VCSEL) is another related technology that has attracted greater market interest in recent years. VCSELs now features in handheld devices and sensor equipment related to the Internet of Vehicles. "The expansion of applications for IR LEDs depends on the willingness of end-system integrators to adopt them," says Chu. "Successful adoption of IR LEDs in turn is based on the values that they can add to different devices and equipment."

Micro-LED displays may arrive on the market as early as next year

The micro-LED constitutes a next-generation display technology that has the potential to overtake organic light-emitting diodes (OLED) in the future. While major branded companies in various industries have begun to invest in this technology, it will be some time before micro-LEDs can supplant TFT LCD and OLED solutions currently on the market. Meanwhile, there are many other advanced display technologies that are in the race with micro-LEDs to achieve commercialization and mass production.

Branded companies that intend to launch micro-LED products have developed market-positioning plans and applications that would set this technology apart from LCD or OLED. Furthermore, they are working to find the right trade-off between pixel volume and pixel density (as expressed in pixel per inch, or PPI) so they can begin mass production as quickly as possible. Therefore, micro-LED displays that will soon hit the market can either have high pixel volume or high PPI but not both together. LEDinside anticipates that devices featuring micro-LED displays will arrive on the market in 2017 at the earliest.

Tags: LED market

Visit: www.ledinside.com

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