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LED Supply and Demand Picture for 2011

Anyone that did any holiday shopping in electronics stores probably noticed the latest generation of TVs sets with LED backlighting. Like the first HD liquid-crystal display (LCD), LED backlighting is a noticeable improvement in TV technology.

“Consumers are attracted to LED-backlit LCD TVs by attributes including their thinner form factors, improved picture quality, better color saturation, power savings and other green attributes,” said Riddhi Patel, director and principal analyst for television systems at {complink 7427|iSuppli Corp.}

LED-backlit LCD TVs accounted for 19.6 percent of TV purchases in the third quarter of 2010, according to the market research firm. That's up from 17.9 percent the previous quarter and 4 percent during the third quarter of 2009.

Right now, LED-backlit screens can command a price premium, but {complink 8879|IMS Research} is predicting LED supplies are hitting the point where supply outpaces demand. As a result, LED prices are going down.

Better LED yields are one of the reasons supply is increasing, according to IMS' Ross Young. China has been investing in the ramp up of MOCVD—a chemical vapor deposition technology—as part of a stimulus program. “Because of China’s MOCVD subsidies, MOCVD shipments and supply growth are not expected to slow down in 2011,” says Young. “This is expected to lead to an accelerating supply imbalance that is expected to widen through 2012. The oversupply will be constrained by sapphire substrate and TMG supply, however.”

Television and panel makers are investing in technology and offering a plethora of products to take advantage of LED-backlit LCD TVs, including product differentiation, innovation, low power consumption and the potential to reap the benefits of higher revenue, adds iSuppli's Patel.

Additionally, says Young, OEMs are optimizing their designs to reduce costs, resulting in the use of fewer LEDs per panel. The weighted average number of edge-lit LEDs per panel fell by around 30 percent in both TVs and monitors from the second quarter to the third quarter.

“We found that the weakness in LEDs in the third quarter was more a result of the large reduction in LEDs per panel than the slowdown in LED TVs as LED panel shipments grew twice as fast as LED chip consumption from the second quarter to the third quarter,” says Young. “We are also seeing that financial analysts are significantly overstating the number of LEDs per TV panel in their models.”

The LED backlighting market is expected to rise 98 percent to $6 billion in 2010, according to IMS, accounting for 71 percent of the 2010 high brightness (HB) LED market, up from 63 percent in 2009. Lighting revenues are expected to overtake TV revenues in 2015 and become the single largest LED category.

It took much longer than expected for LCD prices to decline because yields dropped as screen sizes got bigger. Better technology might cause LED prices to erode more quickly than LCDs. That's good news for OEMs and consumers that have been putting off switching from more conventional lighting to LEDs because of high LED prices. If that's the case, everything—not just TVs—are going to look brighter in the next few years.

8 comments on “LED Supply and Demand Picture for 2011

  1. Backorder
    December 31, 2010

    It would be interesting to see how much impact LED TVs could make in bringing down the cost of LEDs in general. Could this initiate a land slide, lowering the threshold for several lighting vendors and general acceptability with the consumers?

  2. Clairvoyant
    December 31, 2010

    Good point. It will be interesting to see if there is an effect with LED TV's.

  3. Himanshugupta
    December 31, 2010

    i think that there will not be a hugh price change as companies will always add extra features in TVs to ask for higher prices for those features. It will be difficult to separate the lowering in cost due to LEDs.

  4. Clairvoyant
    December 31, 2010

    Correct, but we were talking about the lowering cost of LED's themselves.

  5. hwong
    December 31, 2010

    LEDs have come a long way. About 10 years ago, only red and yellow LEDs were prevalent. The white and blue required much more cost to produce. At that time, LEDs was only popular for car, traffic light and other lesser known technology. Nowadays it's become so much more widely used. I think that the future looks promising.

  6. Anna Young
    January 1, 2011

    A very interesting article!

    Science as we know it to date is taking us to the boundary of the unknown with its advances.

    Consumers are grateful but then for how long? With every new technological product on the market comes an expiry date. So far, it was plasma flat screens, followed by LCDs now LEDs which have two differences to it, which are Edge LED and RGB Dynamic. 

    By the time LEDs are perfected, science would have alreay brought a new innovation to the market, rendering the latter technology to history.

  7. saranyatil
    January 4, 2011

    exactly i do agree with you, consumers minds keep wavering like mercury so what ever happens they will expect some change and if there is reduction in price will not be going to make much of difference as u said.

  8. Barbara Jorgensen
    January 4, 2011

    When it comes to TVs, I definitely think price is the main consideration. It was a major leap when the industry went from CRTs to LCDs and at that point people were willing to pay for the vast improvements LCDs made. Everything else has been incremental since–panels are bigger, thinner, brighter, have more resolution etc., but you can buy a pretty basic LCD TV at a good price and still improve on your old set.

    I think the next leap–and it's still a long way off–will be OLED TV. Organic light-emitting diodes can be attached to extremely thin, flexible substrates. When they can make a TV that hangs on my wall like a poster, it'll be time to upgrade again.

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