Driven by surging demand from the lighting, tablet and cellphone backlighting segments, global revenue for gallium nitride (GaN) light-emitting diodes (LEDs) rose 10.6% from $11.2bn in 2012 to $12.4bn in 2013, but this could mark the last hurrah for the era of double-digit dollar growth for the market, according to IHS Technology, as revenue is forecast to grow just 4% to $12.9bn in 2014. Although unit shipments will continue to rise, the market will enter a sustained period of flatness starting in 2015, based on data from the new IHS report ‘Quarterly GaN LED Supply and Demand Market Tracker: Q4'13’.
“The GaN LED market has experienced strong revenue growth in recent years, propelled by the combination of growing demand from the lighting and display backlighting segments,” says Jamie Fox, principal analyst for LEDs at IHS.
LEDs are used extensively as backlights for liquid-crystal display (LCD) panels. But backlighting applications including TVs and monitors will soon reach 100% LED saturation. Furthermore, the value of the LEDs in each TV and PC monitor shipped has begun to decline. Meanwhile, the fast growth of LEDs in tablets is slowing. The backlighting market in this area is starting to mature in terms of LED technology, and shipments of tablet devices are also not growing as rapidly as before. Overall, the GaN LED backlighting segment is projected to fall from $4.3bn in 2013 to $3.7bn in 2018.
“LED backlighting market revenue has begun to decline - although lighting will continue to expand,” Fox notes. The GaN LED lighting segment will rise from $4.2bn in 2013 to $5.9bn in 2018, forecasts IHS. While all GaN LED backlighting applications combined still exceeded the lighting segment in 2013 (at $5.5bn versus $4.2bn), lighting and backlighting revenue will be on a par in 2014 and 2015, before lighting takes a decisive lead in 2016.
“The combination of the contraction in backlighting and rise in lighting will result in flat revenue for the GaN LED market in the coming years,” says Fox.
While revenue growth will stall, GaN LED unit shipments will continue to rise in the coming years, but at a more moderate pace than before, forecasts IHS. Following growth of 17.3% in 2013 and 7.3% in 2014, unit shipments will rise 3-4% from 2015 through 2018.
With its latest GaN LED report, IHS has significantly expanded its estimate of the market’s size. IHS adjusted its market view to account for all captive revenue (e.g. for captive LED supplier Cree Inc of Durham, NC, USA, which makes both LEDs and lighting products that use the LEDs) and also to represent the true size of the Chinese market.
