Fortunately, suppliers have taken note of these trends and have planned for increased capacity in the future. In 2011, DisplaySearch predicts global LED capacity will reach 180 billion units, and by 2013 will reach 227 billion. “While overall LED demand continues to rise, we are seeing demand taper off in LED backlights and begin to trend more in the direction of LED lighting,” said Leo Liu, Senior Analyst at DisplaySearch. “Due to high inventories and low sales for LED-backlit LCD TVs in Q4’10, Q1’11and early Q2’11, LED backlight demand dropped slightly; we expect it to pick up again and reach a maximum level in Q3’11 due to seasonal demand.”
Currently, LED backlights are used in all small/medium LCDs, and LED backlight penetration in mobile PCs is nearly 100%. Penetration of LED backlights in LCD monitors and LCD TVs continues to grow, while the number of LED packages per set is decreasing. Total LED backlight demand will be 45.9 billion in 2011. Demand for LED-backlit LCD TVs has dominated the backlight supply since 2010, accounting for nearly 50% of the total backlight demand. LED demand from TVs will reach its maximum level in 2012, but then slightly drop after 2013 due to a decrease in LEDs per unit.
Figure 1: Changes in LED Applications Over Time. Source: DisplaySearch Quarterly LED Supply/Demand Market Forecast Report
Increasing usage of LED lighting
In terms of LED penetration in lighting applications, DisplaySearch found the total average LED penetration in lighting was 1.4% in 2010 and is forecast to reach 9.3% in 2014. There is high penetration in spot lights due to halogen replacements, and government policies are expected to accelerate LED penetration in street lights after 2011. Total LED lighting demand was 3.2 billion in Q2’11, and DisplaySearch predicts that demand will quickly increase to 3.4 billion in Q3’11.
Sales of LED street lights are increasing due to government support. China will be the biggest market for LED street lights in 2011 due to government policies. The country’s market share in 2011 is 55%, but will slightly decline to 50% in 2014. The share of LED street lights by area will not change very much from 2011 to 2014.
Figure 2: LED Lighting penetration forecast. Source: DisplaySearch Quarterly LED Supply/Demand Market Forecast Report
LED lighting forecast by region
Japan is the biggest market for LED bulbs in 2011. The country’s market share is 63% in 2011, but is forecast to decline to 40% in 2014. Japan has high LED adoption in lighting due to electrical power limitations and energy-saving efforts. The country will remain the biggest lighting market until 2014. LED bulb growth in China, North America and Europe will be higher than other areas from 2011 to 2014.
Taiwan to lead LED supply after 2011
Korea was the top LED supply country in 2010. Taiwan will take over as the top LED supply country after 2011. The top three suppliers in Q2’ 11 based on 500×500 chip size were S-LED, LGIT, and Epistar. China is the wild card for LED supply, with a great deal of investment in LED production. While market growth will be high over the next several years, LED suppliers without cost competitiveness and correct strategy will face big challenges. A surplus will intensify competition and lead to dramatic price drops in 2011, causing higher LED adoption rates in lighting.
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