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Jessie Lin, DIGITIMES Research, Taipei [Monday 27 June 2011]
Many LED firms showcased the latest products and technologies at Photonics Festival in Taiwan 2011 from June 14-16. Here are some observations of the development of the LED market. The brightness of LED lighting will increase 15-20% every year, and therefore LED firms are likely to increase brightness quality to 300lm/US$ in 2011, exceeding the standard set by the US Department of Energy. LED chips will decrease in size as brightness increases. The area of the LED chips used in lighting is relatively bigger than the chips used in backlight modules, and the industry expects the area to decrease by 20%. The LED industry has been anticipating revenues to peak in July-August as capacity utilization has been increasing in the second quarter. In particular, the growth in lighting has been outpacing the growth of backlight modules, due to firms' wish to increase revenues from lighting to make up for the shrinking sales in LED TV applications. The price drop of LED products in the third quarter will be narrower compared to the second quarter and the drop is anticipated at around 5-10%. In particular, the price of high-end LED products has been relatively steady. The price fall of low-end and mid-range LED chips will likely be larger since China-based Sanan Optoelectronics plans to sell these products in Taiwan in the second half of 2011. Although Taiwan-based makers will likely face pressure of price drop from China-based counterparts, the price of 2-inch sapphire substrates will show significant decrease in third quarter. The price will likely drop below US$20 as South Korea-based STC increases capacity. Other first-tier manufacturers will continue to quote above US$20. Overall, the price of sapphire substrates was close to US$30 in the beginning of 2011. If the price drops to US$20, the effect on the gross margin for LED firms will be positive.
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