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Apr 10th, 2014
With an increased competition in the MOCVD industry, the leaders are still getting most of the equipment business in a recovering LED front-end equipment market, says Yole Développement
“Following the strong growth of the LED TV market in 2010, the MOCVD industry competition increases. But, today, we still do not see any impact on the market structure … The 3 leaders are still there for a long time.”, explains Pars Mukish, Senior Analyst, LED at Yole Développement. Yole Développement announces this week its new LED report dedicated to front-end equipment market. Under this report, Yole Développement’s analysts give a better understanding of the LED front-end manufacturing technical trends. They describe the supply chain and each related process steps. They also details key players and their positioning in this industry. LED Front-End Equipment Market report includes market metrics from 2014 to 2019 at both LED devices and material/equipment levels.
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LED epitaxy equipment market has always been of central interest to equipment manufacturers due to its high average selling price (ASP), strong profitability, and large market volume (compared to other equipment markets).

Since 2010, more than 20 players (mostly from Asia) have tried to enter the MOCVD reactor market but without real success: in 2013, these new suppliers represented only 3% of market share (only +2% compared to 2010)”, explains Pars Mukish, Yole Développement.

This situation arises for two main reasons:
  • New entrants have missed the first 2 LED growth cycles (small display and large display applications) that have allowed leaders to build their expertise and know-how as well as their networks (sales office, training center…). Even big names, such as Applied Materials, did not achieve access to these markets.
  • Revenue collected during the 2010-2011 investment cycle (a total of more than $2 billion for MOCVD reactors, with > 90% going to Aixtron and Veeco) have allowed Veeco and Aixtron to slash ASP and initiate a price war to lever further market entry barriers.
The current LED front-end industry is largely driven by cost reduction (as technological evolutions are reaching their saturation point). The main strategy developed by a new MOCVD reactor supplier is to focus on decreasing cost of ownership through a new heating system, new gas flow design, and increased automation (…). However, even if this is the best and only strategy to adopt, we do not expect new entrants to have a big increase in future market share as the finances and expertise of the Big 2 far surpass any of their competitors.

At short term, only two types of suppliers (outside of the Big 3) will survive:
  • Suppliers that develop collaboration with some big LED manufacturers.
  • Chinese suppliers that are able to scrape together bits and pieces of the huge local market.

Under this report, Yole Développement presents a detailed analysis of the LED MOCVD reactor industry, detailing key players but also new entrants. It also highlights new strategies developed by these new entrants, future evolution of the industry …

More info on www.i-micronews.com, reports section.


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