The tough environment faced by LED packagers necessitates new strategies.
LED PACKAGING: AN INDUSTRY FACING STRONG PRICE PRESSURE
Following the overcapacity caused by the recent LED TV crisis and the entry of Chinese players, industry consolidation was expected to decrease competition and stabilize price erosion. This eventually happened in China during 2014/2015, but with unforeseen effects on the overall industry. Indeed, several smaller players went bankrupt and many midsize players have since been acquired, leading to a situation where dozens of companies are having “going-out-of business” sales. This has triggered strong price decline and, naturally, other LED players had no choice but to match the price trend initiated by the Chinese industry. ASP for low and mid power LEDs declined 30% - 40% in the second half of 2015, and ASP for high power LEDs, though less affected, still declined 20% - 30%. Globally, 2015 was a rough year for the LED industry, with packaged LED revenue declining for the first time ever: from $15.1B in 2014 to $15B in 2015. This decrease was emphasized by lower-than-anticipated demand in the LED backlight and LED lighting markets. Moreover, strong evolution in currency exchange rates (due to the US dollar’s rise) contributed to many players’ declining revenue.
2016 has seen the industry begin recovering, and packaged LED ASPs have mostly stabilized for highly-commoditized stock keeping units (SKUs) like the low-power 2835 and mid-power 5630. Higher power grades for lighting applications are seeing increasing demand, but also stiffer competition, which likely will lead to a significant ASP drop as competition intensifies. Thus we expect the packaged LED market to show moderate growth in the coming years, reaching $18.5B in 2021 (CAGR 2016 - 2021: +3.4%).
NEW DEVELOPMENT/GROWTH RELAYS ARE REQUIRED FOR LED PACKAGERS TO SURVIVE
In this depressed environment, several players have decided to develop new strategies in order to differentiate from mainstream players and reap higher margin levels:
- Product diversification (level 1) - towards new package types: mostly chip on board (COB) LEDs, LED filaments, flip chip (FC) LEDs, and chip-scale package (CSP) LEDs.
- Application diversification - towards niche applications: automotive lighting, horticultural lighting, and others.
Other players are developing totally disruptive strategies for new growth relays:
- Product diversification (level 2) - towards nonvisible LEDs: UV LEDs and IR LEDs.
- Vertical integration - towards LED modules.
In this field, MicroLEDs are also a hot topic following Apple’s acquisition of Luxvue. A good example of these diversification trends is that the UV LED industry has seen its number of players double in the past three years. The associated market is still small compared to visible LED ($117M in 2015), but considerable growth is expected in the coming years (more than $1B in 2021).
This report offers a comprehensive survey of the LED packaging industry and market trends (worldwide + focus on China). It also details recent LED development (technology, industry, and market landscape); visible LED (COB, FC, CSP, filament, etc.); niche applications (automotive lighting); non-visible LED (UV LED); vertical integration (LED module); and new devices (MicroLED).
CHINESE SUBSIDIES HAVE STARTED BEARING FRUIT - LOCAL INDUSTRY IS RISING UP AND GRABBING MARKET SHARE FROM OTHER REGIONS
Having secured market positions in the backlit display market, Chinese LED package manufacturers are now skilled at imitating advanced foreign technology in order to increase their market share in the general lighting arena. China represents the main global manufacturing base for LED lighting products, with major OEMs/ODMs setting up factories in-country. This recent development surge in the LED lighting industry is driving the ongoing expansion of the local market and industry. In 2015, Chinese LED packagers, including MLS, Nationstar, and Honglitronic generated $2.9B in revenue, representing 19.3% of total LED market revenue.
This report represents a comprehensive overview of the Chinese LED packaging industry, with analysis of the global landscape (drivers, market shares...) and focus on the top- 30 players (revenue, capacity...).
LED PACKAGING - STILL A STRONG MARKET OPPORTUNITY FOR MATERIALS SUPPLIERS
With the general lighting market triggered, LED packaging requires materials in agreement with application requirements. Regarding packaging substrates, the high power density of devices induces the use of ceramic substrates, a market that will grow from nearly $684M in 2015 to $813M in 2021. Encapsulant/optic materials will follow the same trend (from nearly $400M in 2015 to $526M in 2021), driven mostly by the increased use of silicone material offering better reliability/lifetime than traditional epoxy material. Regarding the phosphor market, with major YAG IP expiring from 2017, market will face strong commoditization and price pressure. Consequently, market will only grow from nearly $339M in 2015 to $346M in 2021.
This report provides a comprehensive overview of all LED packaging aspects. Each step of the packaging process flow (including equipment and materials used) is described, along with associated trends (performance, price, emerging technologies, etc.). Associated technological breakthroughs are also discussed, a summary of key players is provided, and much more!
Objectives of the Report
This report serves to detail:
- LED industry and market status
- Process flows and technologies in LED packaging
- Recent LED packaging trends
- The importance of cost reduction in LED packaging
- Who is doing what
This report also provides market metrics at the LED material level