Status of the LED Industry

  • October 2013
  • -
  • Yole Developpement

Emergence of low price LED solutions are pushing technology adoption toward general lighting but cost reduction is changing industry structure and pushing M&A

GENERAL LIGHTING APPLICATIONS HAVE TAKEN OFF

Growth of the LED industry has come initially from the small display application and has been driven forward by the LCD display application. 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.
Yole Développement estimates packaged LED will reach a market size of $13.9B in 2013 and will peak to $16B by 2018. Growth will be driven mainly by general lighting applications (45% to 65% of total revenue during this period), completed by display applications.

OTHER APPLICATIONS ARE STILL IN MOTION

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.
This report presents all applications of LED and associated market metrics within the period 2008-2020, detailing for each application: drivers & challenges, associated volume and market size (packaged LED, LED die surface), penetration rate of LEDs, and alternative technologies (…). For general lighting, a deeper analysis is developed with details on each market segment.

TO KEEP THE MOMENTUM, LED-BASED LIGHTING PRODUCT COSTS STILL NEED TO BE REDUCED

Cost represents the main barrier LEDs must overcome to fully compete with incumbent technologies. Since 2010, the price of packaged LEDs have sharply decreased, which has had the consequence of decreasing the price of LED-based lighting products. 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…).
The report presents LED-based lighting product cost reduction opportunities, detailing: cost structure of packaged LED and LED lamp, key technologies and research areas (…).

MERGER OF LED INDUSTRY WITH LIGHTING INDUSTRY HAS STARTED

Over the past 3 years (2010 to 2012), the number of mergers and acquisitions (M&A) has continuously grown, reflecting the increased consolidation of the LED industry. During this period, we have listed ~60 significant M&A deals. And 17 additional deals have already been identified during H1-2013. Main objectives of these deals are:
1. Vertical integration
A consistent trend in the LED space, reinforced by the promising boom of general lighting applications. Such deals are motivated by the need for companies to access to new technologies, to close knowledge gaps in the LED supply chain, secure supply (…).
2. Strategic acquisition
The LED lighting market remains highly fragmented in all regions of the world (i.e., local features of fixtures…). In this environment, strategic acquisitions are mainly motivated by economies of scale, desire for improved market share, access to a wider customer portfolio, and increase the sales force (…).
3. Geographical acquisition
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 M&A deals is likely to continue to growas 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.
The report presents the LED industry, detailing: evolution of supply and value chain, reactor capacity by region, analysis of M&A deals (…).

EMERGING SUBSTRATES COULD CHANGE THE RULES IN AN INDUSTRY DOMINATED BY SAPPHIRE

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:
• Benefits of GaN-on-Si LEDs rely on decreasing manufacturing cost by using cheaper Silicon substrate but mainly by switching to an 8” substrate and using fully depreciated and highly automated CMOS fabs.
• Benefits of 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.
However, several barriers need to be overcome:
• GaN-on-Si LEDs are closer to GaN-on-Sapphire LED performance but increased manufacturing yields and full compatibility with CMOS fab still need to be achieved.
• GaN-on-GaN LEDs suffer from GaN substrate availability and its cost.
While GaN (GaN-on-GaN LEDs) holds some potential on specific high-end niches, we consider Silicon (GaN-on-Si LEDs) as the more serious contender as a potential alternative to the widespread use of Sapphire. But the success of GaN-on-Si LEDs will depend on the development of associated LEDs performance and development of manufacturing techniques. The report presents GaN-on-Si and GaN-on-GaN LED technologies, detailing: benefits and challenges, status (…).

The objectives of this report are to understand and to evaluate:

• LED applications: small size displays, large size displays, general lighting, automotive lighting (…)
• LED markets: status, drivers, challenges (...)
• LED industry (supply and value chain), player dynamics and future evolution
• Market volume (Munits) and market size ($M): 2008 to 2020
• Emerging technologies: GaN-on-GaN LED and GaN-on-Si LED
• Competing technologies: OLED (...)

Table Of Contents

• Objectives of the report 9
• About the author of the report 10
• Company index 11
• Glossary 12
• What we saw and what we missed 13
• Executive summary 15
• Packaged LED forecast 44
> Introduction to high-brightness LEDs
> Segmentation of high-brightness LEDs
> Overview of LED applications
> History of LED industry
> Packaged LED revenue and volume forecast
by application
> LED adoption rate (2013 vs. 2020)
> Recent trends
> Packaged LED price trends
> LED supply by region
> LED reactors
> Conclusion
• Display Applications 66
> Introduction
> Small size displays: Cell phones
> Medium size displays: Notebooks and tablets
> Large size displays: LCD TVs and monitors
> Other display applications
• Sign and outdoor display
applications 149
> Overview
> Details on large outdoor displays
> Details on signals / emergency lights
> Packaged LED revenue and volume from
signs and outdoor displays
• Projector applications 156
> Overview of technologies
> Table top projectors
> Ultra-portable and pico projectors
> Example of teardowns
> LED penetration rate
> Packaged LED revenue and volume from
projectors
• Personal lighting applications 170
> Overview
> Packaged LED revenue and volume from
personal lighting
• Automotive lighting applications 173
> Introduction
> History of LEDs integration
> Drivers for LEDs integration
> Focus on interior and exterior lighting
> Challenges
> Trends
> LED penetration rate
> Alternative technology: OLED
> Packaged LED revenue and volume from
automotive lighting
> Conclusion
• General lighting applications:
Lumen consumption forecast 205
> Introduction
> International Energy Agency (IEA) model
> Sandia National Laboratory (SNL) model
> Model developed in the report
> Importance of light consumption model
> Conclusion
• General lighting applications:
Driving forces, status and trends 213
> Introduction
> Supply and value chain
> Drivers and challenges
> Regulations, lifecycle and standards
> Future trends
> Alternative technologies
> Conclusion
• General lighting applications:
Design trends 326
> Introduction
> Major trends and evolutions
> Chip-on-Board (COB)
> Middle power LEDs
> AC / HV LEDs
> Small die vs. large die
> System design choice
> Design considerations
> Conclusion
• General lighting applications:
Market segment review 347
> Residential / Commercial / Industrial /
Outdoor lighting
• General lighting applications:
Analysis by region 428
> Lamp market volume per region
> Trends per region
> Focus on leading countries
• General lighting applications:
Conclusion 444
> Drivers for adoption
> Evolution of socket occupancy by technology
> Packaged LED volume and revenue for
general lighting applications
> A declining market
• Mergers and acquisitions:
in the LED industry 450
> Introduction
> Details on significant deals (2010 to H1-2013)
> Analysis
> Conclusion
• Chinese LED industry 460
> Overview
> Domestic market highlights
> Trends
> Conclusion
• Emerging LED technologies 483
> GaN-on-Si LEDs
> GaN-on-GaN LEDs
> Conclusion
• General conclusion 504

COMPANIES CITED IN THE REPORT

Aaxa, Acculite, Acer, Aiptek, Aixtron, Allegro Micrsosytems, Aone, Aoto, Apple, Archos, Armstrong, World Industries, ASP, ATMI, AUO, Autolux, Avago technology, BenQ, Beta LED, BMW, Bodine, BOE, Bridgelux, Burton, Cadillac, Cambridge Display Technology, Casio, CeramTec, Ceravision, Chimei Innolux, China Electric Manufacturing, Cigna, Citizen Electronics, Color Kinetics, Cotco, Cree, Dakco, Daktronics, Dow, Dynalite, EDN, Eldo, Elightbulbs, Encelium Technologies, Epistar, Erco, Eschenbach, Everbright Lighting, Everlight, Facebook, Felco, Flextronics, Formosa Epitaxy, Foxcon, Gaggione, GE Lighting, GE OLED, Genlyte, GLT, Google, Havells Sylvania, Hella, Hellfont, Hitachi, HTC, Hulu, I-Chiun, Indal, International Energy Agency, Irico, Khatod, Kodak, Laird Technologies, LED Lighting Fixture, Ledlux, Ledman, LedOptics, Lemnis, Leotek, Leviton, LG, LG Display, Lianovation, Lighthouse, Lighting Science, Lite-On, LTI, Luceplan, Lumistemas, Lustrous Technology, Luxim, Maglite, Meanwell, Melton Optoelectronic, Micron, Microvision, Mitsubishi, Motorola, Motorola Lighting, Nanosys, Nationstar, Natural Lighting, NCW, Netflix, Nichia, Nikon, Nintendo, NIST, Noanophotonica, Nokia, Nonoco, Nuventix, Opel, Optimum Lighting, Optoma, Optotek, OREE, Osram, Osram OS, Osram Sylvania, Panasonic, Partners Lighting, PGandE, Philips Color Kinetic, Philips Hadco, Philips Lighting, Philips Lumiblade, Philips Lumileds, PhotonStar LED, QD Vision, Redwood Systems, Retop, Ruud Lighting, Samsung LED, Samsung Mobile Display, Sanan Optoelectronics, Sandia National Laboratory, Selecon, Seoul Semiconductor, SET Light Apparatus, Sharp, Sharp Microelectronics, Shenzhen Fuxiang Optoelectronics, Silan, Siteco Lighting, Soldonsun, Sony, Stanley Electric, Street Light Control, SunnyWorld, Surefire, SVET, Teletrol, Thermal King Technology, Tianma Micro Electronic, TIR, Topanga, Toshiba, Toshiba Lighting, Toyoda Gosei, Traxon Technologies, Tridonic, Trilux, TSMC, ULM Photonics, Unilumin, Unity Opto, Veeco, Viewsonic, Visionox, Wei Min Industrial, Wellypower, Zumtobel.

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