Upstream LED chipmakers have been operating close to full capacity. To meet demand, LED chipmakers such as Epistar and Formosa Epitaxy are planning to expand capacity. Nevertheless, market uncertainties continue to cast a cloud over market growth.
Industry leading MOCVD equipment firms Veeco and Aixtron have both reported falling revenues. Nevertheless, the firms have expressed optimistic views about the second half of 2012, and 2013 as demand for LED lighting is expected to grow. Aixtron believes demand for MOCVD equipment will grow significantly in 2013.
LED firms have been mixed about market conditions as LED TV makers have been trying to decrease the number of LED chips used to reduce costs. In addition, LED equipment subsidy programs introduced by local governments in China, such as the Anhui provincial government, will be ending in the near future.
Furthermore, the price of LED lighting products continues to be high, affecting consumers' willingness to buy. With China-based LED chipmakers penetrating into Taiwan, Taiwan-based peers need to consider the necessity of expanding capacity to secure market share.
Despite growing demand, LED firms have been reluctant to expand capacity and procure MOCVD equipment.
