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LED Market Trends in the Year of the Goat

A China Times report has highlighted five major LED market trends in 2015:

  1. LED backlight market will remain weak, due to stagnant TV volume growth. 4K2K TVs has become the major growth momentum for LED usage volumes in backlight applications, followed by smartphones and other small-screen applications.
  2. The smartphone LED flash market has been an oligarchy dominated by Everlight and Osram. Increase in smartphone volumes have contributed to continual LED flash market growth.
  3. The lighting market will see long term growth, due to the huge market potential from lighting replacements.
  4. Some of Japanese LED manufacturer Renesas Electronics orders have been transferred to Taiwanese manufacturers, as the company exits the non-visible LED market.
  5. Large display market demands have continued to grow in China, and some are niche products for smaller manufacturers.

In the LED backlight market, LED TV penetration rates reached above 95% in 2013. The trend was mainly spurred by Chinese TV manufacturers. By 2014, LED TVs had fully replaced Cold Cathode Fluorescent Lamp (CCFL) TV models. The TV backlight application market is gradually becoming a saturated market, and company market shares are generally well established. Although, there was no significant growth in TV volumes, large TV brands have continued to promote 4K2K LED TVs. These ultra-high definition TVs have a resolution of 3,840 x 2,160 pixels, and usually use 1.5 times to 2 times the amount of LEDs compared to average TV models. The market penetration rate for 4K2K TV’s is estimated to reach 10% to 15%. It is estimated TV backlight LED usage volume will decline by 1.3% in 2015 compared to 2014.

Taiwanese LED manufacturers performance in the backlight application sector have remained excellent in 2014-2015, and is rebounding from the revenue slump observed in 2011-2012. Many Taiwanese manufacturers are reclaiming TV and lighting orders from Chinese manufacturers with their reliable product quality.

LED industry restructure has reached a pinnacle in 2014, as the industry continues to eliminate small LED manufacturers. The trend of large LED enterprises expanding has become increasingly evident, with large manufacturers gaining pricing advantages in the process. There is hope that Taiwanese LED manufacturers can regain market share with good product quality.

The lighting market sector still holds huge potential, as the lighting replacement tide continues to sweep over the globe. Initially, LEDs were designed with the concept of becoming replacement light sources that were more energy efficient and environment friendly. Lighting energy consumption has increased significantly as countries become increasingly developed. The world’s annual bulb demand is estimated to have surpassed 30 billion bulbs based on the global population of 6 billion people. The yearly lighting market value is estimated to be worth NT $2.5 trillion (US $80 billion). In comparison, the LED market value is a mere NT $20-30 billion, revealing there is still huge market potential for LED lighting.

The trend of LED manufacturers becoming even larger has become very evident in the industry. By acquiring FOREPI, Epistar has gained pricing advantages and firmly established its position in the LED industry’s elimination race. Still, Epistar faces challenges from China, where the country is actively investing in the upstream LED sector.

Looking into the mid-stream sector, high LED TV penetration rates led to the success of LED package manufacturers with excellent cost/performance (C/P) ratios in 2013. This trend is expected to continue well into 2014-15. Taiwanese LED package manufacturers with a bright future ahead include Everlight, which has its own lighting brand, and Lextar that has well established ties with international lighting manufacturers.