Promote the development of LED general market factors

The LED general lighting market in 2014 remained stable overall. But under this great stability, there are still hidden undercurrents and variables. Therefore, the entire industry should not only make big strides in 2014 but also make careful decisions.

General lighting demand will continue to maintain strong growth

In the long run, the use of LEDs in the general lighting market will continue to rise, so LED demand will remain strong for a long time. It is expected that the demand for high-brightness LEDs will increase by 32% year-on-year in 2014 and will increase by 19% year-on-year in 2015. Among the subdivided industries, the strongest growth will be universal lighting, and we expect the area of ​​demand in this area to increase by 71% year-on-year. Therefore, we expect global general lighting LED will account for 43% of total demand in 2014, which is higher than 33% in 2013.

It is expected that the demand for TV/laptop/display backlight modules (BLU) will decline by 2%/16%/8% in 2014. However, we expect the demand for tablet backlighting modules will increase by 32% year-on-year. In general, we expect that the total demand area of ​​backlight modules will increase by 11% year-on-year.

According to a number of major lighting companies (including NVC, Op, Fozhao, Mulinsen, Zhejiang Sunshine, AcuityBrands, Philips, Osram and Zumtobel), LED lighting product sales revenue accounted for about 30% of total lighting revenue in the fourth quarter of 13 years. Revenue from LED-related sales also rose between 40% and 100% year-on-year. UBS analyst Fredric Stahl said that Philips LED lighting revenue increased by 48% in the fourth quarter of 2013. OSRAM said sales of LED lighting increased by 28% year-on-year in the fourth quarter of 13 years, accounting for 33% of total revenue, which was higher than 26% of the same period in 12 years. OSRAM recently announced that it will split the lighting business into two divisions, one focusing on traditional lighting and the other on LED lighting. Osram said at analyst day activities that the shipments of LED Classic products in the first quarter of 14 years were up 160% year-on-year.

Lin Linliang, general manager of Lin Linsen's domestic marketing, told reporters that in April this year, Mulinsen completed sales for the entire year.

Analyst Winnie Clark said that AcuityBrands reported that LED sales have more than doubled in the same period of last year. UBS analyst Stephen Chin said that during the same period, Cree's LED lighting revenue increased 42% year-on-year, and LED bulb terminal sales were up and down.

Several factors that promote the development of LED general lighting market

We believe that LED lighting demand will continue to grow strongly in 2014. The main driving factors are:

Consumers' energy-saving and environmental awareness have increased, and they have become more interested in LEDs. Today, not to mention urban consumers, even rural consumers, most of them know the benefits of LEDs and start using LEDs to varying degrees. Therefore, the popularity of LED has greatly improved.

The decline in the price of LED products has enabled consumers to quickly increase their buying enthusiasm, and no longer hesitates because of price. In the last two years, LED light source products have dropped by 300%, and they have quickly narrowed their distance from the market.

The relevant government departments strongly support that financial subsidies and other policy support have accelerated the market incubation.

The vigorous promotion of the media has made LED products increasingly popular. Experts, associations, and the media have extensively promoted and promoted LED to women and children.

In addition to residential lighting needs, the analysis believes that outdoor lighting and commercial lighting will continue to grow steadily, driven by government projects and incentives.

Light bulb prices continue to fall

The survey shows that the price of LED bulbs continued to fall in 2014, mainly due to cost reductions and promotion of lighting companies' promotion plans. Lighting companies and retail channels will also expand their market share through the use of newer, lower-priced LED bulbs. For example, after Cree passed the "Energy Star" certification, Philips also launched the "Energy Star" certification of products that enable consumers to buy Philips LED bulbs can receive subsidies. We expect the demand for LED bulbs to grow steadily after the retail price of an LED bulb equivalent to 60 watts (700-900 lumens) of an ordinary bulb falls below $10. However, the bulb will not become the mainstream product in urban home improvement.

Product quality has been continuously improved and design has been improved. From the exhibition, the quality of products continues to improve, and the number of omnidirectional light bulbs is increasing. Our survey also showed that the cost of LED light sources dropped to about 40-45% of total operating costs. Heat-emitting materials have also changed. With the improvement of LED energy efficiency, the industry uses more plastic materials to reduce heat generation.

It is estimated that the mainstream brightness of LED chips in 2014 will be around 120-140 lm/W. We still expect that the plastic leaded chip carrier (PLCC) type package (ie 5630) will become the mainstream product for the replacement of residents' light bulbs. However, we also expect that more and more chip-on-board (COB) chips will be used in the design of high-power LED bulbs, such as street lamps and downlights.

Feedback on the use of ceramic substrates is positive as well as negative because the cost is still higher than traditional leadframe-type packaging, including the recently popular epoxy molding compound (EMC). Our survey shows that leadframe packages (including EMC) can still dominate the low-power LED chip market (less than 1 watt), while ceramic substrates will still be favored in the high-power market (more than 3 watts). In the next few years, more intense competition is expected between LED wafer substrate materials in the power range of 1 watt to 3 watts.

There is an increase in the number of comments on the development of flip chip (FC) and package-free chips (PFC) that are expected to become next-generation chip designs. The advantage of flip-chip or package-free chip is that the improvement of the structure can help increase the light emitting angle of the chip. In addition, due to the elimination of the use of the lead frame in the packaging process, the light emitted by the chip will not be blocked, so that the luminance efficiency can be improved.

A survey of a number of chip makers showed that they will develop a flip-chip or package-free chip layout. Epistar's recent investment in ADI's photovoltaics may be a strategic move for Epistar to lay out its packaging capabilities for high-power LED chips. Therefore, we believe that once LED companies (either chip manufacturers or packaging manufacturers) decide to increase capital expenditures for new equipment, the growth of flip-chip and package-free chips will increase. This is also expected to further reduce the cost of LED chips.

From simple lighting products to integrated lighting system

In Taipei Lighting Fair, the focus has shifted to several important topics, such as home smart lighting applications. Several companies (such as Delta Electronics and Everlight Electronics) demonstrated the concept of smart lighting. For example, the lighting industry introduced a user interface called Digital Addressable Lighting Interface (DALI), which incorporates environmental sensors and some data transmission technologies (such as Power Line Communication (PLC) and ZigBee) to determine the room Whether there are people and the brightness of the ambient light, it is decided whether or not the lights should be turned on and the brightness level to be turned on.

There are several advantages to using LEDs in smart lighting systems. First of all, LED is one of the most energy-efficient lighting products, which is in line with the main purpose of energy saving of intelligent lighting systems. Second, by producing dimmable, even adjustable color and temperature LED bulbs, is an easier way to meet different uses in rooms or spaces. Finally, in certain fields (such as the medical industry that requires a certain color and light wave length, and the agriculture that needs to stimulate growth, development and avoid pests), LED is superior to traditional lighting technology.

Intelligent lighting systems increase the use of LEDs. We believe this will be another driving force for LEDs to achieve long-term growth in the general lighting field beyond the current demand for replacement of existing light bulbs.

MOCVD orders are expected to begin to recover in 2014.

Our survey of Veeco Instruments and Aixtron and other MOCVD manufacturers showed that since the LED chip makers may still be evaluating the full-year demand to determine the expansion plan, the order growth in 1Q14 is still relatively slow. However, UBS analyst Stephen Chin (covering Veeco) said that Veeco's orders are expected to recover strongly from the second quarter of 14 years. According to announcements from major chip makers worldwide, they expect to purchase 350-400 MOCVDs in 2014. We estimate that chip makers in mainland China will account for 65% of the announced MOCVD purchases in 2014, and Taiwan's LED chip makers will account for 16%.

According to the current capacity expansion plan, we expect that Mainland China will account for 23% of the global expected total production capacity in 2014 (20% in 2013), and Taiwan and South Korean chip makers will account for 36% and 15% respectively (almost equal to 2013) Japanese chip makers are expected to account for 16% (18% in 2013).

New production capacity may take longer

One point to emphasize is that the actual time for new MOCVD equipment to achieve output may be 2-3 quarters later than the time for placing orders (assuming that equipment delivery takes 3-4 months and batch production preparation takes 2-3 months. ). In addition, our survey of some key peripheral equipment manufacturers shows that cutting and sorting machines may take longer to deliver. Therefore, we believe there may be downside risks to our current forecast of 18% growth in production capacity in 2014.

The LED industry faces multiple risks, including end-user demand fluctuations (especially fluctuations in the general lighting market penetration rate), LED chip production expansion discipline may lead to potential oversupply risks, and the resulting average selling price and profitability pressure .