Strategy Analytics Predicts LED Market Explosion Will be Hampered by Materials Shortage
Source/Type:  LIGHTimes Online - News - Staff reports

Author: LIGHTimes News Staff

May 18, 2010... Strategy Analytics predicts that the fast-growing market for high-brightness LEDs in LCD TVs will be restricted by a shortage of key semiconductor materials in the second half of 2010. This prediction is the focus of the company's report “Materials Shortage to Restrict Rampant LED Market.” Strategy Analytics (SA) points out that demand has soared with the rapid penetration of LED backlighting modules in LCD TVs. This has also lead to a soaring demand for capital equipment, especially metal-organic chemical vapor deposition (MOCVD) reactors used to make gallium nitride (GaN) LEDs.

SA says that a similar trend is now evident in the supply of consumables, specifically the metal-organic material trimethylgallium (TMG) and sapphire wafers. SA contends that demand for TMG already exceeds the available supply; therefore manufacturers need to absorb a 20% price increase in the near term. The company also predicts that a shortage of sapphire wafers, upon which most blue and white LEDs are produced, is also likely in the second half of 2010. “Concerns have previously been raised over the ability of MOCVD equipment vendors to meet rapidly increasing demand,” noted Asif Anwar, director of the GaAs and Compound Semiconductor Service at Strategy Analytics. “The concern for short supply of materials will create a bottleneck for LED market growth over the short term.”

The Strategy Analytics contends that Taiwanese LED manufacturers in particular need to adjust to the new reality of the supply chain. Historically, they have bargained for the price of these key materials. However, according to the SA's assertion, the balance of power in the LED industry has changed, with competitors backed by huge corporations, such as Samsung and LG, much better positioned to absorb higher material costs and to guarantee their supply in a constrained market.

Steven Entwistle, VP of the Strategy Analytics Strategic Technologies Practice, added, “Capacity expansions already in progress should relieve these constraints by mid-2011. Until then, the average selling price of high-brightness LEDs based on gallium nitride should hold up well.”

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