LEDinside Shanghai Market Analysis Seminar Introduces Five LED Industry Trends

On March 19, 2014, LEDinside Chief Analyst Market Analysis Seminar which is exclusively sponsored by the world's largest LED chip maker Epistar, grandly opened in Shanghai Parkyard Hotel. LEDinside's strong analyst team deeply analyzed their specialist fields respectively, shared first-hand survey data and the most intuitive and detailed analysis reports with the participants.

Flip Chip LED Officially Accelerated Expansion, with the Market Revenue Reaching USD 5.5 Billion by 2017

Firstly, LEDinside chief analyst Roger Chu introduced advanced LED packaging technology development prospect, he said that Flip Chip LED officially accelerated expansion, and the market revenue is expected to reach USD 5.5 billion by 2017.

Roger said that although the popularity of LED lighting continues to improve, the market is increasingly competitive. In addition to cutting prices to meet consumer demand, in 2014 LED lighting manufacturers start to adopt new technologies in LED lighting applications to widen the gap with competitors, thus Flip Chip LED is gradually valued by the lighting market.

Since the structure of Flip Chip LED can withstand high drive current, it has several advantages such as high reliability, high luminous flux, and the lower cost. Now it has been applied in FLASH LED, automotive lighting and other related fields. As for lighting applications, in the beginning of 2013, LED manufacturers also launched corresponding product samples to the clients in succession. Although the Flip Chip LED technology has been launched for quite a long time, it was restricted from popularization for many reasons, including technical barriers such as eutectic process yield still needing improvement. Limited manufacturers lead to high price and then low customer acceptance.

LEDinside observed that, since the second half of 2014, Flip Chip LED may be heavily applied in TV backlight applications. As more and more LED manufacturers enter into the Flip Chip LED field to gradually form economies of scale, the cost of Flip Chip LED will probably be further declined. LEDinside estimates that Flip Chip LED market revenue will rapidly grow from USD 1.5 billion in 2013 to USD 5.5 billion in 2017.

Prices Declining, LED Lamp Replacing Tide is Sweeping Worldwide

LEDinside analyst Terri Wang who long studies global LED lighting market dynamics and trends said that the rapid decline in the price of retrofit lamps brought the global LED lamp replacing tide. The market demands for LED bulbs and tubes became the highest, due to their strong replaceability and consumers' wide acceptance. Comparing with 2013, in 2014 the global demand volume for LED bulb will grow by 86%, and that of LED tube will increase by 89%。

As for global LED bulb market retail prices, LEDinside’s statistics showed that in January 2014, the global ASP of 40W replacement LED bulbs fell about 21% year on year, and the prices of 60W replacement LED bulbs fell about 28% year on year. The rapid decline in prices of first class brand products accelerated specification and integration of the regional markets. Despite the price volatility resulting from new high-performance products and product sales promotion, the bulb ASPs in various regions showed steady decreasing trend. As the prices declined, the cost performance of products in various regions also gradually improved. In addition, the LED standards and policy formulation and the start of replacement tenders in various regions have also played a catalytic role in the development of global LED lighting market.

Chinese LED Packaging Market being Divided into International, Taiwanese and Chinese Mainland Manufacturer Camps

LEDinside analyst Allen Yu made a speech about the Chinese packaging market, and said that in 2013 Chinese LED packaging market scale increased 20% year on year, lower than market expectations. Allen said that continuous price decline can be the main reason for the slow growth in market scale. In 2013 commercial lighting became the main driver of LED packaging market growth. Due to the penetration promotion of domestic TV and smart phone, backlit packaging market scale further expanded, however, in display and other mature fields, market growth is limited.

Allen divided the Chinese LED packaging market into three camps, namely international manufacturer camp, Taiwanese manufacturer camp and Chinese Mainland manufacturer camp. In 2013, international manufacturer camp in the Chinese market achieved fastest growth and Chinese Mainland manufacturer camp grew steadily, while Taiwanese manufacturer camp was relatively sluggish. Allen believes that international manufacturers have accelerated the pace of entering into the Chinese LED packaging market, and they will be affected limitedly by the rise of Chinese Mainland manufacturers in short term. The concentration of local packaging industry in Chinese mainland gradually improved, and excellent manufacturers are fast developing , however, Taiwanese manufacturers were largely affected by the rise of Chinese Mainland manufacturers, with their market share gradually declined.

The Supply and Demand in Sapphire Substrate Industry can Reach Equilibrium Throughout 2014

LEDinside assistant research manager Joanne Wu introduced the sapphire substrate market trends. Benefiting from high lighting market demand, LED industry performed well, moreover sapphire substrates continues to be widely used in smart phones, including the camera protection lens and Home keys, all of which make the sapphire substrate demand continues to grow. It is expected that the supply and demand in sapphire substrate industry can reach equilibrium throughout 2014.

In addition, the sapphire substrate market prices have gradually bottomed out, and 2-inch sapphire ingot market was benefited from LED and non-LED market demand, sapphire substrate prices began rebound to USD 4.2 ~ 4.5 in March. The 4-inch ingot market was also significantly benefited from LED market demand, with the price reached USD16 ~ 18. However 6-inch ingot market was affected by LED manufacturers' limited demand and the original SoS market’s transfer to SOI technology, consequently, the price was unchanged.

As for the proportion of the overall market demand for sapphire substrates, LED application’s proportion gradually decreased, while the proportion of non-LED application rose. It is expected that in 2014 the proportion of non-LED application will grow to 33%. Among non-LED applications, the demand for sapphire substrate on smart phone applications including camera protection lens and Home keys enlarged year by year, and is expected to reach 15%. If at the end of 2014, iPhone 6 and iWatch  adopt sapphire protection panel, sapphire substrate demand is expected to grow by leaps and bounds.

Chinese LED Lighting Industry will Present "EMS" Oligopoly Pattern

In the final speech, LEDinside senior analyst Figo Wang said that, according to performance forecast and annual reports disclosed by listed companies, in 2013 the whole LED industry increased incomes but not profits. Figo said that this phenomenon should due to tragedy of the commons caused by excessive investment, one solution is to eliminate exit barriers through inter-corporate mergers and acquisitions,, then reduce the number of enterprises and the intensity of competition. Another solution is to enhance intellectual property protection efforts and encourage innovation to curb plagiarism, thus to provide a better competition environment for outstanding enterprises.

Figo also said that in the future, the competition in Chinese LED lighting industry is likely to unfold among three camps respectively represented by Elec-Tech, MLS Lighting and Sanan Optoelectronics, which form an oligopoly pattern like "BAT" in the internet industry, which called the EMS Chinese LED lighting industry (E for ETI, M for MLS, S for SANAN).

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