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Trends in Asia's LED chip manufacturing industry
Jessie Lin, DIGITIMES Research, Taipei [Thursday 13 September 2012]
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Asia is playing an ever more important role in upstream LED chip manufacturing. The region accounted for 80% of MOCVD demand in 2011 and will account for 90% in 2012, largely because Taiwan, Japan, South Korea and China are the major global centers for LED chip production. China will account for 68% of demand this year, although its LED chip makers still need to make major improvements to their technology; consequently, manufacturers in Taiwan, Japan and South Korea continue to have a competitive edge at present.
Abstract
MOCVD demand share by geographic region, 2011-2012

Asia is playing an ever more important role in upstream LED chip manufacturing. Digitimes Research projects that the region will account for 90% of global demand for MOCVD units in 2012, up ten percentage points on the share in the previous year. China accounts for 68% of this figure, although its LED chip makers still need to make major improvements to their technology; consequently, manufacturers in Taiwan, Japan and South Korea continue to have a competitive edge at present.

South Korean manufacturers are generally more competitive in terms of their LED industry chain than their counterparts in Japan and Taiwan, largely thanks to their all-in-one, integrated modes of production, with value added by strong brands in the case of Samsung in particular. However, in terms of LED chip manufacturing capabilities alone, Japanese manufacturers are the most competitive, followed by players in Taiwan, South Korea and China in that order.

Japanese manufacturers are projected to have the highest total output value of any Asian nation/region for their LED businesses in 2012 at US$3.6 billion with year-on-year growth of 17%; followed by South Korean firms with US$3.2 billion and growth of 49.6%, thanks to vertical integration and the fact that output value figures also include modules; and Taiwan-based players with US$1.69 billion, due to their focus on LED component production. However, if modules are removed from the output value equation, Taiwan-based manufacturers will in fact outperform their South Korean counterparts in 2012.

China-based manufacturers that have recently prospered are projected to increase output value by 30% year on year to US$1.42 billion in 2012 as their newly acquired MOCVD capacity comes online. However, most China-based manufacturers mainly produce medium and low power LEDs, and as such pose little threat to the global industry standing of other players in the Asia region at the current time.

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