LEDinside: Competition for LED Supply Chains Heats up in 2014

December total revenue for Taiwanese market listed LED manufacturers dipped 0.1% to NT $10.6 billion (US $350.7 million). Revenue for Taiwanese LED chip manufacturers reached NT $3.98 billion (+0.8% MoM) and NT %6.67 billion for Taiwanese package manufacturers, a slight decline of 0.9% MoM.

LED backlight was impacted by preorders in January due to upcoming Lunar New Year. Stock up began in November, and LED chip and package manufacturers such as Epistar, Forepi, Everlight, and more saw a dip in revenue in December. Manufacturers will show a conservative stance for January stock up. Backlight performance in 1Q14 will be affected by Chinese Lunar New Year sales, said LEDinside. Direct- type TV penetration rate will increase to 70%. In order to reach an even more slenderized width, OD15-20 will become the mainstream direct- type TV model which will lead to shortages in mid to high power LED chip. Package power for direct- type LED TV has required at 1W and above. EMC lead frames need to be used as they have better heat dissipation. A portion of manufacturers have started establishing their own EMC production capacity, such as Everlight, while other other packaging manufactures purchase their EMC lead frames from lead frame manufacturers, such as Unity Opto, AOT, and Liteon.

LED lighting end market demands for lighting application is growing, especially for LED bulbs, tube lights, and MR16 which drove LED industry development. Global market penetration rate is rapidly growing and LED lighting market value in 2014 will reach US $17.8 billion with shipment volumes reaching 1.32 billion, a 68% growth from 2013. Dropping prices has spurred on the global LED lighting replacement wave, which is most evident in replacement light source products. Bulbs and tubes were especially popular in 2013, making up 38 percent and 25 percent respectively of LED lighting products. Future demand for integrated LED lighting products will also gradually increase, especially for combined smart lightning application products. Therefore it is estimated that LED lighting product proportion will increase year after year.

All in all, LED supply chains have entered into another round of elimination in 2014. In order to maintain a competitive edge, LED manufacturers are actively developing high value added LED products with high NTSC and CRI, or seizing specialty component raw material such as mid to high power chips, EMC lead frames, red phosphor and others.

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