Within three to four years, disinfection applications will reinvigorate the UV LED market.
OVER 10 YEARS OF DEVELOPMENT, UV LEDS’ MARKET SHARE HAS TREBLED
Today, Yole Développement has now been following the UV LED industry for 10 years! In this decade the technology, market and industry has evolved, totally changing the UV LED landscape. This has allowed the technology to take more market share from other UV illumination technology. From representing 8% of the market in 2008, UV LEDs are expected to reach 25% in 2018.
In 2008, UV LED was still considered an emerging technology and industry, trying to make its way into promising applications such as UV curing and counterfeit detection. Then, the LED industry only had eyes for the booming display applications, and was preparing for the rise of general lighting, considered to be the killer application for visible LEDs. But the reality was quite different! Asian players have entered and created overcapacity and strong price pressure, which has transformed what could have been a ‘blue ocean’ market into a bloodbath. That had a direct impact on the UV LED industry, which has at the same time seen many market entrants. From around 10 players in 2008, there are now over 65 players in 2018. Since 2010, several visible LED players have turned to UV LEDs, seeking new growth drivers and higher profit margins.
The UVA LED market was the first to witness this industrial evolution, experiencing strong price reductions that have further accelerated the technology’s penetration. But rapidly the dream has turned into a nightmare. After several years of double-digit growth, UV curing application revenues, which represent more than 80% of the UV LED market, have started to decline due to commoditization and a highly competitive environment. In the short-to-mid term, only players that can innovate will be able to maintain a profitable business in this area.
The UVB/UVC LED market has been less negatively impacted by the flood of new entrants. With UVB/UVC LED technology being much more difficult to access than UVA LED, barriers to entry are much higher. Additionally, UVB/UVC LEDs still suffer from low performance, so entry of new players has helped boost device development. But despite devices being good enough today at a performance and cost level, the UVB/UVC market is slow moving. UV LED systems require extended development to fully benefit from the technology, which is taking more time than expected.
In the short term, the UV LED industry will experience a slow-down phase as the UV curing market starts to plateau and the UV disinfection market’s boom will be delayed. In this context, we expect the UV LED market to reach $320M in 2020, from $160M in 2017, and then boom, driven by UVC applications, to reach $1B in 2023.
The report presents a comprehensive review of all UV applications including in-depth analysis of UV curing and UV disinfection. It highlights the UV LED working principle, market structure, UV LED market drivers and associated challenges, recent trends, new applications created by UV LEDs, UV LED market
size, broken down by application, and much more.
THE RECENT DEVELOPMENT OF UV LEDS IS OPENING THE WAY TO NEW AND HIGH-POWER APPLICATIONS
For 10 years, UV LED performance has drastically increased from very low output power devices to a level that now allows the technology to replace UV lamps in several applications.
UVA LED chip makers have multiplied the External Quantum Efficiency (EQE) of their products by five to six in 10 years, and are now reaching 50-60%. In addition, increased competition has triggered big price reductions. This has allowed UV LEDs to be widely used in UV curing applications, such as electronic
adhesive or inkjet printing. The next step will consist of accessing more complex applications like wood coating, flexography printing, and medical adhesives. However, most of the efforts here will be focused on system development rather than only improving UV LED performance.
In the UVB/UVC range, EQE has also improved, but is still below 10% for most commercial devices, and each additional 1% seems harder and harder. But this has not put a brake on investment and development of the industry, which has found alternatives to continue improving device power output from 10mW in 2014 to 100mW in 2017 at 280nm. This evolution has already enabled the integration of UV LEDs into small water reactors for point-of-use applications. However, for mid-high power applications, industry will have to develop strong know-how at the reactor level to design efficient systems and compensate for UVC LEDs’ low EQE. These developments will take time and further delay take-off of related markets, but could also trigger applications with high flow rates, up to 2,000m3/day. This represents an important acceleration in an industry which five years from now could access applications that we previously thought they would only access by 2025. In this field, some companies have already developed demonstrators, opening the prospect that UVC LEDs will not just be limited to niche and low power UVC applications.
This acceleration is further emphasized by recent announcements of some UV LED manufacturers such as LG to target 150-200mW packages by 2018/2019. This combination of price reduction and performance increase will also enable the integration of UV LEDs into totally new applications. In this domain the
consumer market, with the integration of LEDs into white goods like steam ovens or even coffee machines, could be a strong growth driver in the future.
The report presents a detailed analysis of UV LED performance, price and application roadmap. This report is also a comprehensive overview of UV LED device manufacturing, describing UV LED structures, current challenges and key research directions.
BUSINESS MODEL AND STRATEGY EVOLUTION: MORE COLLABORATIONS AND ACQUISITIONS TO COME
A large part of the visible LED industry has turned to UV LEDs. However, strategies put in place differ between players, depending on wavelengths targeted. Several players still focus on device manufacturing, whereas others are vertically integrating towards modules and systems. For example, in UVA LEDs,
Ushio produces UVA LED chips, packages and also now curing modules, which are supplied to printer manufacturers or end-users. In UVC, Nikkiso was initially a UVC LED manufacturer, but has moved to module and system level by acquiring AquiSense Technologies in 2016.
In addition to UV LED players, some new entrants are also trying to make their way into the industry, and mostly at the module or system level, which represents the sweet spot in terms of business opportunities. The only missing companies are the traditional UVC system suppliers, which seem still to be in “wait and see” mode.
With continuous UV LED price decreases, especially for UVC, several strategic collaborations and acquisitions have occurred recently. In the short-tomid term, we expect further acquisitions as smaller players struggle to compete on price. Those players might represent targets or opportunities for others to vertically integrate or enter the UVC LED business.
The report presents a detailed overview of the UV LED industry, including: main players by wavelength range - UVA, UVB or UVC - their positioning in the value chain, and recent trends. The report gives an overview of key challenges in system manufacturing, with a focus on UV curing and water disinfection applications.
OBJECTIVES OF THE REPORT
- Review the global UV LED industry from substrate to system and provide insights into the modification of the value and supply chains following the penetration of this disruptive technology
- Understand the current status of UV LED manufacturing and analyze the performance and price roadmap
- Analyze the UV curing and UV disinfection industry, their different applications and associated characteristics
- Analyze new UV LED applications based on their added value compared to traditional technologies
- Analyze the UV LED intellectual property landscape