The upstream LED chip market has been in oversupply causing the price of MOCVD equipment to drop 30-40% compared to the price two years ago.
According to Digitmes Research, Asia accounted for 80% of global demand for MOCVD equipment in 2011, and the proportion is expected to reach 90% in 2012. Most of the demand has come from China.
China-based Sanan Optoelectronics currently has more than 80 units of MOCVD equipment operating in Wuhu, China and it owns a total of 144 MOCVD tools, (including AlGaLnP and blue LED). Elec-Tech also announced recently the total number of MOCVD equipment is to reach 20 units.
The China government's MOCVD equipment subsidies have recently ended, which means demand for equipment will decrease. Equipment firms such as Veeco and Aixtron have seen revenues fall in 2012. According to LED firms, there are fewer firms willing to procure equipment, hence the price of MOCVD equipment has fallen 30-40% compared to the price levels two years ago. For MOCVD equipment that normally costs NT$60-100 million (US$2-3.4 million) per unit, prices have dropped 50% in some cases.
China's government has included producing MOCVD equipment domestically as one of the goals in the 12th Five-Year Plan. The ultimate goal, according to LED firms in China, is to lower MOCVD equipment price to US$1 million. Nevertheless, many LED firms have concerns over the reliability of such equipment and the falling price of MOCVD equipment from international firms will crippled China MOCVD suppliers' competitiveness.
