LED front-end equipment market leaders continue to dominate
“Since 2010, more than 20 players (mostly from Asia) have tried to enter the MOCVD reactor market but without real success: in 2013, these new suppliers represented only 3% of market share (only +2% compared to 2010),” explained Pars Mukish, Yole Développement.
Yole explains in the company’s ‘LED Front-End Equipment Market report’ that the two main reasons for the lack of success has been that new entrants have missed the first two LED growth cycles (small display and large display applications) that have allowed leaders to build their expertise and know-how as well as their networks (sales office, training center…). Even big names, such as Applied Materials, did not achieve access to these markets. In addition Yole estimates that the revenue collected during the 2010-2011 investment cycle (a total of more than $2 billion for MOCVD reactors, with >90% going to Aixtron and Veeco) have allowed Veeco and Aixtron to slash ASP and initiate a price war to stall further market entry barriers.
Yole reckons the current LED front-end industry is driven by cost reduction (as technological evolutions are reaching their saturation point). The main strategy developed by a new MOCVD reactor supplier is to focus on decreasing cost of ownership through a new heating system, new gas flow design, and increased automation. However, even if this is the best and only strategy to adopt, the market analyst does not expect new entrants to have a big increase in future market share as the finances and expertise of the Big Two far surpass any of their competitors.
In the short term, Yole predicts that only two types of suppliers (outside of the Big Three) will survive:
- Suppliers that develop collaboration with some big LED manufacturers.
- Chinese suppliers that are able to scrape together bits and pieces of the huge local market.
Under this report, Yole Développement presents a detailed analysis of the LED MOCVD reactor industry, detailing key players but also new entrants. It also highlights new strategies developed by these new entrants, future evolution of the industry …
Related articles and links:
www.yole.fr
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