Low price LEDs accelerate technology adoption into general lighting, says Yole Développement

Low price LEDs accelerate technology adoption into general lighting, says Yole Développement

Market news |
By eeNews Europe

Low Power Techniques and Approach
Sandrine LEROY

The reports highlights that growth will be driven mainly by general lighting applications (45% to 65% of total revenue during this period), completed by display applications.

Growth of the LED industry has come initially from LED use into small displays and has then been driven forward by the LCD display industry. In 2012, General lighting has surpassed all other applications, representing nearly 39% of total revenue of packaged LEDs. Indeed, the LED TV crisis of 2011 (following an overestimation of the market) had the benefit of decreasing LED prices and intensifying the competitive environment. As a matter of fact, LED-based lighting product prices have decreased more rapidly than expected, increasing the penetration rate of the technology.

Regarding display and other applications, most products currently on the market integrate LED technology. Saturation mixed with strong price pressure and competition from OLED will make most of these markets decline starting from 2013 / 2014. Contrary to general lighting, overcapacity (inducing price pressure) has engendered a decrease in market size more rapidly than predicted.


Costs still a barrier for LEDs in general lighting

“Cost represents the main barrier LEDs must overcome to fully compete with incumbent technologies”, explains Pars Mukish, Market and technology analyst, LED at Yole Développement. “Since 2010, the price of packaged LEDs have sharply decreased, which has had the consequence of decreasing the price of LED-based lighting products”, he adds.

However, to maintain the growth trajectory, more efforts are needed in terms of price. LED still has some potential for cost reduction, but widespread adoption will also require manufacturers to play on all components of the system (drivers, heat sink, PCB…).

Over the past 3 years (2010 to 2012), the number of mergers and acquisitions has continuously grown, reflecting the increased consolidation of the LED industry. During this period, Yole has listed about 60 significant mergers and acquisitions deals. And 17 additional deals have already been identified during H1-2013. Vertical integration deals are motivated by the need for companies to access to new technologies, to close knowledge gaps in the LED supply chain, secure supply.

Strategic acquisitions are mainly motivated by economies of scale, desire for improved market share, access to a wider customer portfolio, and to increase the sales force. Mergers and acquisitions, rather than organic growth, have proved to be the main market-entry strategy by overseas acquirers. Such deals have been driven primarily by companies seeking access to new markets and local distribution networks.

The number of mergers and acquisitions deals is likely to continue to grow as LED technology has created a Solid State Lighting (SSL) chasm, modifying all traditional aspects of the lighting industry (light source, system design, test…) and forcing supply chain players to acquire new competencies.


Emerging substrates

Sapphire (and SIC) remain the most widely used substrates for GaN epitaxy but many research teams are working on finding better alternatives in terms of performance and total cost of ownership. In that context, Si and GaN are the main new substrates developed in the LED industry.

GaN-on-Si LEDs benefit from decreasing manufacturing cost by using cheaper Silicon substrate and switching to an 8” substrate, with fully depreciated and highly automated CMOS fabs.

GaN-on-GaN LEDs stem from the lower defect density in the epitaxial layers, allowing the device to be driven at higher current levels and to use a lower number of LED devices per system, but at a price premium. GaN-on-Si LEDs are closer to GaN-on-Sapphire LED performance but their need to be improvements in manufacturing yields and full compatibility with CMOS fabs.

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