Date Announced: 30 Nov 2010 Austin, Texas – IMS Research’s latest Quarterly LED Supply and Demand Report reveals that while China was the #4 region for LED production in Q3’10 with a 13% share of 2” equivalent wafer capacity, by Q4’11, it will become the #1 region with its capacity share reaching 32% in Q1’12.According to IMS Research SVP Ross Young, “China’s impressive share gains are a result of a multi-pronged stimulus program which incentivizes companies to manufacture LEDs in China by subsidizing the costs of the most critical tool in the manufacturing process, metal organic chemical vapor deposition (MOCVD), by up to $1.8M per tool while also offering lower tax rates, accelerated depreciation, free land and growing domestic demand.”The share gains have already started with China the #1 region for MOCVD installations for the first time in Q3’10 with a 32% share, up from 18% in Q2’10. China is forecasted to lead in MOCVD installations for at least the next 5 quarters, accounting for 64% of 2011 MOCVD installations. China’s surge in LED capacity is coming at a convenient time for LED toolmakers as Korean and Taiwan LED manufacturers are slowing their capacity expansion plans as LED market conditions have temporarily deteriorated on slower than expected LED TV sales. At the same time, some Taiwan and Korean suppliers are shifting their capacity expansion plans to China in order to take advantage of the stimulus program. In fact, while 10 of the top 20 LED manufacturers in Q1’12 will have production in China, six of these companies will be headquartered outside of China.Other highlights of the report include:• The Q3’10 merchant MOCVD GaN LED market reached a record high of 230 tools. Revenue growth outpaced unit growth, up 22% Q/Q and 250% Y/Y to $489M.• Aixtron remained the market leader with a 54% share, down from 55%, with Veeco’s share rising from 42% to 44%. On a revenue basis, Veeco’s share rose from 44% to 48% supported by the transition to its K465i tool which was the industry’s top selling model in Q3’10.• Aixtron and Veeco’s tool shipments are now reconciled with their financials back to Q1’09 revealing their ASPs each quarter.• LG Innotek installed the most tools in Q3’10 followed by Forepi and Huga. LG is expected to overtake Samsung LED in wafer capacity in Q4’10 with Samsung reclaiming the top spot in Q2’11. In Q3’10, LG led in 2” and 6” capacity with Samsung leading at 4”. • On an area basis, 2” remained dominant in Q3’10 with a 77% share and should continue to maintain a dominant share over the forecast period with the China stimulus program designed around 2” tools.• LED backlighting revenues are expected to peak in 2013 with notebook and mobile phones peaking in 2010.• IMS Research surveyed LED manufacturers on their planned tool purchases over the next 5 quarters which are revealed in this report. Sanan is expected to install the most tools over the next 5 quarters and has already paid deposits on over 80 systems. 7 different companies are expected to install at least 50 tools over this period with more than 1000 merchant tools installed between Q4’10 and Q4’11.• Based on current visibility, 2011 MOCVD shipments and revenues are expected to slightly exceed 2010 results which are expected to be up 245% and 250% respectively.About IMS ResearchIMS Research is a leading supplier of market research and consultancy services on a wide range of global electronics markets. The company headquarters is in Wellingborough, UK with offices in Austin, Seoul, Shanghai and Taipei. IMS Research regularly publishes detailed research on the LED, lighting and display markets, among others.
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