The price of blue LED chips has dropped to almost half compared to the price last year, putting a great pressure on many manufacturers. The price of 4-inch wafer (without sorting and binning) has fallen from US$ 22 in 1Q17 to around US$ 15 in 1Q18. As the cost is about US$ 15, the decrease of price could lead to deficit for LED chip makers.

(Image: LEDinside)

LEDinside anticipates that as LED chip price had risen by around five to ten percent in 2017, many LED packaging companies might have overbooked chips in case they would not get the shipment on time. Those overbooked shipments are now in stock so the demands from LED packaging firms diminished in 2018. The tariff war may also be a reason for the price drop, as international OEMs might reduce their order to Chinese chip makers. However, red LED is still in demand, so companies who have RGB LED portfolio would be less influenced by the price drop.

According to the price trend released by LEDinside in July, the demand in the lighting market has been weak. Thus, LED chip makers have cut down the share of lighting business and shifted the capacities to niche markets such as automotive applications and special lighting.