Following a built up of 60 percent capacity expansion in 2011, LED fab investments will slow down somewhat with expected capacity expansion of 39 percent and 26 percent in 2012 and 2013, respectively. The slowdown follows the strong build up in China where incentives previously in place for MOCVD tool investments have or will soon end. In addition, 2011 proved to be a weaker market for TVs, which reduced demand for LED backlight units. Overall LED equipment investment may decline about 30 percent from $2.6 billion in 2011 to $1.8 billion this year. Spending in 2013 could see some small improvement over 2012.
China is forecasted to have the largest share of LED fab capacity by the end of 2012, though a portion of the capacity is reportedly under-utilized as some companies have yet to establish a real impact on the high-end LED market. Incentive programs from China are expected to move away from MOCVD-centric toward lighting applications, which will help driving utilization and potential future expansion projects. While fabs in China are focused on 2” wafer production, SEMI expects to see a higher percentage of 4” and above wafer capacity coming online this year from established players in Taiwan. And several leading companies — like Cree, LG Innotek, Osram, Philips Lumileds, and Samsung — have begun to invest in 6” wafer technology for LED fabrication.
While LED fab investments are cooling following aggressive expansion over the past two years, the mid- to long-term outlook remains promising. TV backlight demand should improve with the introduction of new models later this year and, in addition, growing demand for higher resolution tablets will also help spur the consumption of LED chips. Other than LED backlight, LED chip makers are moving aggressively toward lighting market as solid state lighting applications are forecasted to be the largest growth segment for LEDs through the end of this decade. The focus is on improving LED performance while driving down the cost in order to accelerate LED adoption in lighting. In addition, SEMI expects more integration and cooperation along the LED chip and lighting product supply chain of LED chips in coming years.
