165 billion LEDs shipping in 2011 fueling niche markets for equipment

NEW TRIPOLI, USA: The Light Emitting Diode (LED) market is expected to explode as unit shipments increase more than 40 percent in 2011 and double between 2010 and 2013.

The rapid increase in the market for LEDs used in various applications such as notebook backlights and automobile headlights is also spurring heavy capital investments by LED makers LEDs are creating a niche market for conventional suppliers of semiconductor processing tools and a lucrative market for MOCVD suppliers.

High brightness LEDs (HB-LEDs) will reach nearly 135 billion units shipped in 2011 from less than 100 billion in 2010. Backlight LEDs (BLU-LEDs) will reach 30 billion units shipped, up from 20 billion in 2011.

In 2010, Nichia led the market with a 15 percent share, down from a 16 percent share in 2009. Samsung LED rocketed to the number two position with a 10.5 percent share, up from a 6.5 percent share in 2009. Cree was in fifth place with a 6 percent share in 2010, followed by LumiLEDs with a 5.5 percent share. In 2009, its market share was reversed.

In 2010, Aixtron led the market in MOCVD tool shipments with a bit more than a 55 percent share followed by Veeco with a 41 percent share of 786 tools sold. In 2009, Aixtron held nearly a 70 percent share followed by Veeco with a 25 percent share of only 228 tools sold.

Pushing for further growth in MOCVD installations is China, which introduced a MOCVD stimulus program that is expected to result in $1.6 billion in spending on MOCVD tools from 2010 to 2012. In 2010, China represented nearly 35 percent of MOCVD installations.

LEDs are currently a $10 billion niche market compared to the $250 billion semiconductor market. The consensus forecast of 786 MOCVD tools represents a market of nearly $2 billion based on an average selling price of $2.5 million for each MOCVD tool. MOCVD represents 8% of the typical cost breakdown for a packaged LED.

Other front-end tools represent more than 3 percent of the cost and equates to an additional $500 million market for lithography and metrology tools. The biggest sector, 65 percent, represents back-end processes such as substrate removal, chip separation, and packaging.

The backlight sectors will exhibit the fastest growth in the HB LED market with an overall CAGR of more than 40 percent, led by the LCD TV sector exhibiting a CAGR of 300.3 percent between 2007 and 2012.

Source: The Information Network, USA.