MOCVD and LED supply/demand outlook
In 2009, the MOCVD market was under 200 tools while in 2010 we expect 760 units to ship. Surprising to many, we show the MOCVD market continuing to rise not just in 2011 but in 2012 as well.
On July 13th, I presented IMS Research’s LED and MOCVD supply and demand outlook at the SEMI Theater during Semicon West. You can find most of the talk at:
What was most interesting to many observers was whether or not the MOCVD market would continue to rise after this year. In 2009, the MOCVD market was under 200 tools while in 2010 we expect 760 units to ship. Surprising to many, we show the MOCVD market continuing to rise not just in 2011 but in 2012 as well. In addition to strong demand growth in backlighting and lighting, significant incentives by provincial governments in China which have plans to build a robust LED supply base are contributing to continued growth in MOCVD equipment. The provincial governments are subsidizing 50% of the MOCVD cost as well as providing tax breaks, free land and low cost loans. As a result, China will account for a significant share of the MOCVD market over the next couple of years until these subsidies expire.
Fortunately for the MOCVD suppliers, new tools going into China are not expected to contribute much to the supply/demand calculation from 2010 to 2012 either as Chinese manufacturers must first master the yield challenges associated with MOCVD. In addition, utilization is likely to be low until they can prove they can regularly achieve desired yields and output. As a result, new tools will continue to flow into Taiwan and Korea. In addition, in 2011, market leader Nichia is expected to significantly expand its capacity in Japan. As a result, 2011 should be another excellent year for the MOCVD market with over 800 tool shipments projected with 450 of those shipping to China.
In 2012, continued growth in lighting and backlighting along with more volumes into China should result in over 900 tools with at least 200 going into China. The tools in China should still only have a minor contribution to total industry supply in 2012. However, as they improve their yields and utilization, they will certainly have a significant impact on LED supply/demand and lead to increased competition for LED manufacturers.
The MOCVD tools are also becoming more productive and expensive as they transition to full-fledged production tools from modified R&D tools. For example, Aixtron’s newest system, the G5, offers a 105% increase in throughput by expanding the process chamber by 33%, increase the deposition rate by 17% and eliminating a time consuming bake step to clean the process chamber. Increasing the wafer size can also significantly boost throughput by ~30% and we are seeing many manufacturers converting to larger wafer sizes. Improvements in MOCVD productivity and yields should also lead to new tool orders as LED manufacturers look to take advantage of the latest tool enhancements and larger wafer sizes.
On the demand side, I indicated that LEDs for backlights are expected to grow at a 30% CAGR to 100 billion die in 2015 with LCD TVs the largest application from 2011. From 2009 to 2010, LCD TVs are expected to rise from 3% to 22% penetration, notebooks are expected to rise from 46% to 89% and LCD monitors from 2% to 12%. 2013 is expected to be the last year of impressive unit growth in backlighting unless 3D requires significantly more LEDs and direct LED B/Ls make rapid share gains.
In the case of lighting, we expect 5X growth in 2010, over 80% growth in 2011 and a 102% CAGR from 2009 to 2015 on gains in all segments on falling costs and power and lifetime advantages as well as various subsidy programs at the national, state and city level.
For more information on MOCVD and LED supply and demand, please see our Quarterly GaN LED Supply Report