Affected by inventory adjustment, LED price quotation in 2011 continues to decrease, and backlight products are deemed to create low margin profits

TAIWAN: Based on the survey of LEDinside, the LED research division under TrendForce, LEDinside indicated that the speed of LED market demand recovery in the first quarter of 2011 is lower than expected. Affected by inventory adjustment of the large-sized panel display market and the LED lighting market, LED manufacturers are facing the pressure of price reduction.

LEDinside indicated that profit margin of LED backlight products is believed to remain small in 2011 and the current market price quotes could go down further. The LED purchase orders have increased since March and the extent of the price decrease is expected to shrink.

Moreover, many LED manufacturers increased their capacities in the second half of the year and the low-end backlight specification has been modified as the Chinese LED enterprises’ technology skills on chip and package manufacturing have improved. It is estimated that some backlight products will experience even fiercer price competition in the future.

As for the high power LED lighting market, the price quotation is expected to continue to decrease in the short term. Notably, the market demand depends on whether the reconstruction demand from Japan will show up in the second half of 2011 or other countries will launch other subsidy policies for energy saving and carbon emission reduction.Source: LEDinside, Taiwan.

As for the LED chip price quotation, the extent of decrease for different specifications varies. The average price in the first quarter of 2011 has dropped by 15~20 percent, but the price of small-sized chips has decreased by over 30 percent.

In terms of LED package component, there are different magnitudes of decrease in the LED backlight price quotations as well. The largest decrease is the price for LED backlit TV which has dropped by 10~15 percent.

However, the LED specification development for the NB and monitor applications has become mature, and the price has plummeted to the bottom in the past two years. Therefore, the price merely decreased by 3~5 percent, and the extent of decrease is limited.

Besides, due to relatively stable demand for the mobile backlight products, the price is much more stable with a slight decrease of 3 percent, compared with products of other specifications. As for high power LED lighting applications, affected by inventory adjustment, the price has dropped dramatically, and average price has fallen by 15~20 percent.