Barclays Capital predicts that in 2012, the LED industry plagued by factors such as overcapacity, ASP, and flattening demand for LED lighting will usher in a “flat yearâ€, but MOCVD equipment is The LED and power semiconductor industries and the MOCVD equipment upgrade market still have certain opportunities.
The demand for MOCVD equipment will drop from 700 in 2011 to 400 in 2012 and 440 in 2013. Although the overall replacement cycle of MOCVD equipment has not yet arrived, the oldest generation of MOCVD equipment (such as Veeco's E-300 and K-300, Aixtron CCS and G3) have been eliminated and the latest Maxbrights and CRIUS II-XL have been eliminated. To replace it, you can get some financial support. Korean and Taiwanese manufacturers have been making such replacements.
Barclays estimates that the capacity utilization rate of MOCVD equipment in South Korean factories is between 50% and 60%, while in Taiwan it is between 50% and 70%. The LED manufacturers in the Chinese mainland have a capacity utilization rate of MOCVD equipment of less than 30%. First-line LED makers such as Cree, Osram and Lumileds appear to have higher capacity utilization rates, between 70% and 80%.
Barclays Capital forecasts the ten major themes of the 2012 LED industry:
1. Although LED manufacturers' capital expenditures are weak, MOCVD equipment upgrades may add additional revenue streams to equipment suppliers. The revenue from the MOCVD equipment upgrade will range from $200,000 (simple upgrade) to $1.5 million (if the customer reconfigures the equipment and replaces the air chamber).
2. The MOCVD equipment replacement market is unlikely to grow. The LED manufacturer's revenue and the slow growth of terminal market demand will hinder the large-scale expansion of MOCVD equipment replacement. Although some MOCVD equipment suppliers will work with major customers to refurbish used/unpackaged MOCVD equipment, remove damaged parts, upgrade, and provide warranty again, these devices are still not attractive to first- and second-tier LED manufacturers.
3. Gallium nitride (GaN)/SiC (SiC) power electronics will become a growing small application market for MOCVD equipment. STMicroelectronics (STM), Infineon and Analog Devices all purchase MOCVD equipment from AIXTRON and Veeco.
4. Although Applied Materials (Applied Materials' MOCVD customers include Samsung, Silan Micro, Toshiba, TSMC, Micron, and IMEC) and some Chinese manufacturers have also joined the market, the main supplier of MOCVD equipment is AIXTRON and Veeco. Both occupy 90% of the MOCVD market and will benefit from MOCVD equipment updates.
5. Although Barclays believes that Applied Materials can no longer acquire any large LED equipment suppliers because it acquired semiconductor equipment company VSEA in 2011, there are still opportunities for merger between LED equipment manufacturers.
6. The United States and Europe will implement the incandescent light ban, but given the existing incandescent lamp inventory, this move is unlikely to drive the LED market demand in 2012. The LED lights will really begin to pop in Japan.
7. The drop in the price of LED components/lamps will make the payback period of non-residential projects more optimistic. Barclays estimates that the average selling price of LED chips/components in 2011 will fall by 30-40%.
8. Although the government may provide various subsidies, the demand for LED in the Chinese market may decline along with the entire market. There is currently no indication that the central government’s 8 billion yuan subsidy has already begun to be deployed.
9. The market penetration of LED lighting will steadily increase. As a result of the average selling price pressure, the related revenue growth of LED component suppliers will slow down.
10. China will continue to lag behind in LED manufacturing quality; South Korea will make even more significant progress. The quality of LED products from Chinese manufacturers has been lagging behind that of first-tier LED manufacturers for many years. Barclays pointed out that the quality of Korean LED suppliers such as Samsung, Seoul Semiconductor and LG Innotek has been improving. Samsung and LG may become major threats to traditional first-tier LED manufacturers such as Cree, Osram, Nichia and Lumileds.
The demand for MOCVD equipment will drop from 700 in 2011 to 400 in 2012 and 440 in 2013. Although the overall replacement cycle of MOCVD equipment has not yet arrived, the oldest generation of MOCVD equipment (such as Veeco's E-300 and K-300, Aixtron CCS and G3) have been eliminated and the latest Maxbrights and CRIUS II-XL have been eliminated. To replace it, you can get some financial support. Korean and Taiwanese manufacturers have been making such replacements.
Barclays estimates that the capacity utilization rate of MOCVD equipment in South Korean factories is between 50% and 60%, while in Taiwan it is between 50% and 70%. The LED manufacturers in the Chinese mainland have a capacity utilization rate of MOCVD equipment of less than 30%. First-line LED makers such as Cree, Osram and Lumileds appear to have higher capacity utilization rates, between 70% and 80%.
Barclays Capital forecasts the ten major themes of the 2012 LED industry:
1. Although LED manufacturers' capital expenditures are weak, MOCVD equipment upgrades may add additional revenue streams to equipment suppliers. The revenue from the MOCVD equipment upgrade will range from $200,000 (simple upgrade) to $1.5 million (if the customer reconfigures the equipment and replaces the air chamber).
2. The MOCVD equipment replacement market is unlikely to grow. The LED manufacturer's revenue and the slow growth of terminal market demand will hinder the large-scale expansion of MOCVD equipment replacement. Although some MOCVD equipment suppliers will work with major customers to refurbish used/unpackaged MOCVD equipment, remove damaged parts, upgrade, and provide warranty again, these devices are still not attractive to first- and second-tier LED manufacturers.
3. Gallium nitride (GaN)/SiC (SiC) power electronics will become a growing small application market for MOCVD equipment. STMicroelectronics (STM), Infineon and Analog Devices all purchase MOCVD equipment from AIXTRON and Veeco.
4. Although Applied Materials (Applied Materials' MOCVD customers include Samsung, Silan Micro, Toshiba, TSMC, Micron, and IMEC) and some Chinese manufacturers have also joined the market, the main supplier of MOCVD equipment is AIXTRON and Veeco. Both occupy 90% of the MOCVD market and will benefit from MOCVD equipment updates.
5. Although Barclays believes that Applied Materials can no longer acquire any large LED equipment suppliers because it acquired semiconductor equipment company VSEA in 2011, there are still opportunities for merger between LED equipment manufacturers.
6. The United States and Europe will implement the incandescent light ban, but given the existing incandescent lamp inventory, this move is unlikely to drive the LED market demand in 2012. The LED lights will really begin to pop in Japan.
7. The drop in the price of LED components/lamps will make the payback period of non-residential projects more optimistic. Barclays estimates that the average selling price of LED chips/components in 2011 will fall by 30-40%.
8. Although the government may provide various subsidies, the demand for LED in the Chinese market may decline along with the entire market. There is currently no indication that the central government’s 8 billion yuan subsidy has already begun to be deployed.
9. The market penetration of LED lighting will steadily increase. As a result of the average selling price pressure, the related revenue growth of LED component suppliers will slow down.
10. China will continue to lag behind in LED manufacturing quality; South Korea will make even more significant progress. The quality of LED products from Chinese manufacturers has been lagging behind that of first-tier LED manufacturers for many years. Barclays pointed out that the quality of Korean LED suppliers such as Samsung, Seoul Semiconductor and LG Innotek has been improving. Samsung and LG may become major threats to traditional first-tier LED manufacturers such as Cree, Osram, Nichia and Lumileds.
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