Rodney Chan, DIGITIMES, Taipei [Wednesday 9 March 2011]
With LED chipmakers aggressively increasing capacity to meet fast growing demand from the LCD displays and general lighting markets, suppliers in the upstream are optimistic on outlook for 2011. The following is an interview with Digitimes Research analyst Jessie Lin, author of the recently published Special Report, "Survey of upstream LED component industry," during which she talked about the prospects and developments of the MOCVD and sapphire sectors.
Q: The LED market is growing fast. How is it affecting the upstream equipment suppliers?
A: LED chipmakers from South Korea, Taiwan and China are actively adding new equipment. Demand for MOCVD equipment is particularly strong from China, which is subsidizing its LED makers' MOCVD equipment purchases in line with the country's energy saving policy.
Global demand for MOCVD machinery was just 81 units in 2006, 116 units in 2007, and 192 units in 2008. But global shipments soared 277% annually in 2010 to 800 units, and are expected to increase to 900-1,000 units in 2011.
This means strong business for the world's two largest MOCVD equipment makers - Aixtron and Veeco, who together have 95% of the world's market. Both makers expect substantial growth in their revenues in 2011. South Korea is also eyeing the MOCVD market, planning to independently develop its MOCVD equipment.
Q: How about the material suppliers? Are they as optimistic as the MOCVD equipment makers?
A: Sapphire supply was tight in 2010 as suppliers were cautious about ramping capacity. But they are now more positive about demand for sapphire substrates in 2011, with the global top-seven suppliers of sapphire ingots expected to almost double their capacity this year.
There are also many newcomers from South Korea and China. The new suppliers in South Korea will mainly cater to the needs of Samsung and LG, while their China competitors will invest over CNY2 billion (US$304.55 million) in the business.
Q: How fast will sapphire ingot manufacturing capacity grow?
A: The total of the seven major sapphire ingot manufacturers' target capacities for 2011 is 5,038kmm/month, increasing by 87% from 2010's 2,700kmm/month.
While Rubicon was the biggest player in 2009 and the first half of 2010, Sapphire Technology Company (STC) increased its capacity to 600km/month in the second half of 2010, overtaking Rubicon's capacity of 550kmm/month. STC received support from the South Korean government, which will help the firm speed up the pace of its sapphire ingot capacity expansion in 2011 and beyond. STC's capacity expansion target for 2011 is 1,300kmm/month, far higher than Rubicon's target of 1,010kmm/month.
Monocrystal, which used to be number two, has set a capacity expansion goal of 1,000kmm/month for 2011, putting it in third place. ACME Electronics may move up to fourth place by expanding its capacity to 600kmm in 2011.
Digitimes Research analyst Jessie Lin