LED epitaxy equipment market has always been of central interest to equipment manufacturers due to its high average selling price (ASP), strong profitability, and large market volume (compared to other equipment markets).
"Since 2010, more than 20 players (mostly from Asia) have tried to enter the MOCVD reactor market but without real success: in 2013, these new suppliers represented only 3% of market share (only +2% compared to 2010)", explains Pars Mukish, Yole Développement.
This situation arises for two main reasons:
New entrants have missed the first 2 LED growth cycles (small display and large display applications) that have allowed leaders to build their expertise and know-how as well as their networks (sales office, training cente...). Even big names, such as Applied Materials, did not achieve access to these markets. Revenue collected during the 2010-2011 investment cycle (a total of more than $2 billion for MOCVD reactors, with > 90% going to Aixtron and Veeco) have allowed Veeco and Aixtron to slash ASP and initiate a price war to lever further market entry barriers. The current LED front-end industry is largely driven by cost reduction (as technological evolutions are reaching their saturation point). The main strategy developed by a new MOCVD reactor supplier is to focus on decreasing cost of ownership through a new heating system, new gas flow design, and increased automation ...). However, even if this is the best and only strategy to adopt, we do not expect new entrants to have a big increase in future market share as the finances and expertise of the Big 2 far surpass any of their competitors.
At short term, only two types of suppliers (outside of the Big 3) will survive:
Suppliers that develop collaboration with some big LED manufacturers. Chinese suppliers that are able to scrape together bits and pieces of the huge local market.
Under this report, Yole Développement presents a detailed analysis of the LED MOCVD reactor industry, detailing key players but also new entrants. It also highlights new strategies developed by these new entrants, future evolution of the industry ...
