Increased LED fab establishments prompt strong growth

Jan 26, 2016

THE GLOBAL LED production equipment market will continue to grow strongly, thanks to an increasing number of fab establishment in the APAC region.

 

The LED production equipment market is set to generate more than US$1.5 billion by 2019, at a CAGR of more than five percent, claims Technavio.

 

In 2014, the LED production market had strong growth, with an increasing number of LED fab establishments in Taiwan and China, driven by the increasing demand for LEDs in the Asia-Pacific region.

 

APAC, as the production centre for LEDs, accounted for an 86 percent share of the global LED production equipment market in 2014, and this share will increase to over 88 percent in 2019.

 

While the LED market will continue to grow towards 2019, this growth is not expected to fluctuate by much, due to the 5 to 7 year product life cycle of front-end equipment, and the reduced rate of new LED fab establishments globally.

 

 As LEDs continue to emerge as potential substitutes for traditional lighting sources such as incandescent, fluorescent, and halogen lighting, there will be increased demand for them. Their increased use in LCD displays,  LEDs have high luminous efficacy and consume less power in comparison to traditional lighting sources, increasing the high demand for LEDs in general lighting applications. Additionally, LCD displays are employing LEDs in backlight units, significantly contributing to the market. The market is also witnessing high demand from the automotive sector, with the integration of LEDs in automobiles.

 

The LED supply chain has undergone drastic changes since its inception, but since 2010, restructuring has taken place, involving the strengthening of the upstream, midstream, and downstream of supply chains.

 

One of the factors for a strong and established supply chain is the vertical integration by some of the major vendors such as Cree, Philips, and OSRAM, which control a major portion of the value chain.

 

These strong supply chains increase profitability, due to lower inventory levels and controlled manufacturing costs. The reduced cost of LEDs, when passed on to the market, in turn fuels the adoption of LEDs in new areas.

 

The key for achieving low-cost LEDs are low-cost manufacturing and adoption of advanced processes for their manufacturing. This means manufacturers are actively advancing the manufacturing processes and upgrading the LED production equipment. Increasing LED epitaxy wafer size can also reduce cost.

 

Source: Electronics News