LED Market Update

LED Market Update

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Description: IMS Research and its LED Coverage. LED Market Overview. LED Supply Trends and Forecast.

LED Demand Forecast. Supply/Demand Outlook. While most of the light sockets are in residential, fluorescent accounts for the highest share of lumens, meaning fluorescent represents the largest LED market.

However, with its high efficiencies, excellent distribution and low cost, LED penetration will take longer.

 
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Contents:
LED Market Update
Ross Young
SVP, Displays, LEDs and Lighting
IMS Research
ross.young@imsresearch-usa.com
www.ledmarketresearch.com
www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

Outline


IMS Research and its LED Coverage



LED Market Overview



LED Supply Trends and Forecast



LED Demand Forecast



Supply/Demand Outlook



Summary

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

3

Who Is IMS Research?





Founded in 1989 by former TI UK semiconductor executives
Reports, consulting and conferences
Coverage of all major electronics markets and components
>100 employees, 80 analysts.







Wellingborough, UK (HQ)
Austin, USA
Shanghai, China
Taipei, Taiwan
Seoul, Korea
Japan (Q1’11)

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

4

LED Coverage

Experienced and Committed to LEDs
• Covering the LED market since 1990.
• 7 analysts tracking LED supply, LED demand, backlighting and general
lighting in the UK, USA, China, Korea and Taiwan.
• Dedicated LED web site and blog at www.ledmarketresearch.com.
• Reports
• Current:









Quarterly LED Supply/Demand
Annual Packaged LEDs
Annual LED Driver ICs
Annual General Lighting

Coming Soon:







Quarterly LEDs in Lighting
Quarterly LED Shipments
Quarterly LED Pricing
Quarterly LED Lamp Database
Annual LED Producer Profile
Annual LED Technology
www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

5

LED Market Overview

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© Copyright 2010 IMS Research
Copyright IMS Research 2010

LED Market Summary
$10B






Packaged LEDs exceed $10B for the first time, rising 62% in 2010 to $10.5B.
Volumes reach 82B on a blended ASP of $0.13.

GaN LEDs Drive the Growth





GaN LEDs rose 76% and now account for 81% of the LED market.

LED TVs Proliferate



While only Samsung offered edge LED TVs in 2009, all TV brands offered them in 2010.
TVs become the #1 LED application, account for 32% of the GaN LED market.
• Positioned at the high end, LED TV inventories rise on slow sell-through, significant holiday
discounting move them through the channel.



All Segments Rise in ‘10 Except Mobile Phones





TVs and monitors enjoy fastest growth, but lighting, automotive and signage each enjoy
>20% growth. In GaN, lighting overtakes mobile phones to become the #2 market.
Signage
5%

$12.0

Other
5%

$US Billions

$10.0
$8.0
GaAs/GaP
$6.0

TVs
32%

Lighting
14%

AlInGaP
GaN

$4.0

Automotive
5%
Other BLUs
8%

$2.0
$2006

2007

2008

2009

NBs
11%

Mobile
Phones
13%

Monitors
7%

2010

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

7

LED Market Summary


Backlighting Market Dominates, Captive Suppliers Taking Share and LEDs
per Panel Declining Faster than Expected



LEDs per panel fell sharply from 2009 to 2010, >50%. Helping to reduce cost and accelerate
penetration, but creating a smaller market than expected.





Backlighting was 71% of the 2010 LED market and will be increasingly dominated by
affiliates of top 5 panel suppliers.

Captive backlighting LED suppliers also shifting their focus to the lighting market.

Flood of New Entrants and Existing Players All Expanding LED Capacity



China MOCVD stimulus plan creates many new entrants and incentivizes Taiwan and Korean
manufacturers to build capacity in China. China leads in MOCVD installs for first time in
Q3’10 and should lead throughout 2011.





~25 new entrants in 2010/2011 so far. ~75 LED manufacturers now in production.

Ramped, unyielded wafer capacity expected to rise 53% in ‘10, 71% in ‘11 on an area basis.

Future LED Growth Dependent on Lighting Volumes Offsetting Saturation
in Backlighting and Growing Pricing Pressure


With incandescent lamps being banned globally and CFLs unpopular, creates a
large opportunity for LEDs, particularly in the residential and hospitality markets.



Fluorescent market will be far more challenging. Need significant improvements in
efficiencies, light distribution and glare reduction in addition to costs.
www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

8

Top LED Suppliers
2007
Nichia
Osram
Lumileds
Seoul Semi.
Citizen
Everlight
Stanley Elec.
Kingbright
Avago
Toshiba
Other
Total

2008
24.0%
10.5%
6.5%
5.0%
5.0%
4.5%
3.5%
3.5%
3.5%
3.5%
30.5%
100.0%

Nichia
Osram
Lumileds
Seoul Semi.
Everlight
Citizen
Cree
Stanley Elec.
Kingbright
Avago
Other
Total

2009
19.0%
11.0%
7.0%
5.5%
4.0%
4.0%
4.0%
4.0%
3.0%
3.0%
35.5%
100.0%

Nichia
Osram
Samsung LED
Lumileds
Cree
Seoul Semi.
Everlight
Stanley Elec.
Lite-ON
Citizen
Other
Total

2010
16.0%
10.0%
6.5%
6.0%
5.5%
5.5%
4.5%
4.5%
3.5%
3.0%
35.0%
100.0%

Nichia
15.0%
Samsung LED
10.5%
Osram
9.0%
Seoul Semi.
7.5%
Cree
6.0%
Lumileds
5.5%
LG Innotek
4.5%
Everlight
4.0%
Stanley Elec.
3.5%
Sharp
3.5%
Other
31.0%
Total
100.0%

18.0%

16.0%
14.0%

2" Equiv. GaN LED Wafer Capacity

Rank
1
2
3
4
5
6
7
8
9
10

Samsung LED
LG IT

12.0%

Epistar
Genesis Photonics

10.0%

Nichia
Seoul Opto

8.0%

Lextar
Huga

6.0%

Forepi
Sanan

4.0%

2.0%
0.0%
Q1'09

Q2'09

Q3'09

Q4'09

Q1'10

Q2'10

www.imsresearch.com

Q3'10

Q4'10

© Copyright 2010 IMS Research
Copyright IMS Research 2010

9

LED Supply Trends

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

10

MOCVD Market Has Exploded


Number of merchant MOCVD tools shipped has risen for 6 consecutive quarters,
reaching 230 units in Q3’10. Expecting 245% Y/Y growth in 2010 to ~ 790 units with
2011 flat.



Merchant MOCVD revenues expected to be up 250% in 2010 to $1.7B with 2011 flat.

Merchant MOCVD Shipments

250

200

150

100

50

0
Q1'09

Q2'09

Q3'09

Q4'09

www.imsresearch.com

Q1'10

Q2'10

Q3'10

© Copyright 2010 IMS Research
Copyright IMS Research 2010

11

MOCVD Suppliers Enjoying the Benefits

Operating margins have risen for 5 consecutive quarters at both Aixtron
and Veeco and are over 30% with net margins over 25%.
50%
40%
Operating Margins



30%
20%
10%
0%
-10%
-20%
-30%
Q2'09

Q3'09

Q4'09
Aixtron

Q1'10

Q2'10

Q3'10

Veeco

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

12

China’s MOCVD Stimulus Program


Ministry of Science and Technology (MOST) Promotes LED Manufacturing




Administered by local governments. May include:
• MOCVD subsidy (up to $1.8M/tool).
• Lower corporate tax rates (15%)
• Accelerated depreciation
• Free land

13 Industrial Bases Chosen, Other Cities Follow
Dalian, Dongguan, Hangzhou, Nanchang, Ningbo, Shanghai, Shenzhen, Shijiazhuang, Tianjin,
Wuhan, Xiamen, Xi’An, Yangzhou
• Other local governments provide incentives as well including Wuhu.




MOCVD Subsidy
Subsidies range from $1.2M to $1.8M per tool/reactor depending on if it is being used for
red/yellow (AlInGaP) or blue (GaN).
• Subsidy plan is designed around 2” wafers as reactors must be able to accommodate at least
31 wafers each.
• In total, $1.6B is expected to be spent, resulting in ~1080 tools in new demand for MOCVD
suppliers.




Overheating


With non-MOST cities also participating, many more MOCVD tools expected than originally
planned. Some cities may end the program early, manufacturers trying to pull in orders.
www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

13

MOCVD Market Moving from Korea to China


China shipments also include JVs with Korean and Taiwan manufacturers.



Korean manufacturers not expected to invest significantly in 2011 after large 2009 –
2010 investments.
70%
60%

Install Share

50%
40%
30%
20%
10%
0%
Q2'09

Q3'09

China

Q4'09
Europe

Q1'10

Q2'10

Japan

Q3'10
Korea

www.imsresearch.com

Q4'10

Q1'11

Taiwan

Q2'11

Q3'11

USA

© Copyright 2010 IMS Research
Copyright IMS Research 2010

14

GaN LED Wafer Size Forecast




Because China’s MOCVD stimulus plan is designed around 2” wafers, 2” wafers will
continue to dominate in the near term.
As a result. 2” sapphire supply is tighter than other sizes, prices rose >50% in 2010.
6” gaining interest for lighting market due to larger die sizes.
100%
90%
80%

Area Share by Wafer Size



70%
60%
50%
40%
30%
20%
10%
0%
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12
2"

3"

4"

www.imsresearch.com

6"

© Copyright 2010 IMS Research
Copyright IMS Research 2010

15

What About LEDs on Silicon?


Yields are biggest concern due to:
GaNSi formation
• Thermal coefficient of expansion mismatch









High tensile strain and excessive cracking

Prevent GaNSi formation




Si ~ 2.0x106 /ºC
GaN ~ 5.9x106 /ºC

AlN buffer between the GaN and silicon can minimize GaNSi formation, but must prevent
holes in the AlN.

Minimize compressive strain and tensile stress
Compressive strain and tensile stress created throughout the GaN formation process. Due to
CTE differences, creates significant cracking in the n-GaN layer.
• Any techniques to reduce compressive strain early in growth or to reduce tensile stress are
helpful - Larger islands, patterned interlayers (SiNx or SiOx) to create islands, additional layers of AlN, etc.




Critical to get enough compressive strain into the structure to minimize defects and
then to cool down without cracking. No companies have a MP worthy solution yet.
AlN
Si

3D GaN Initiation
3D islands form with hydrostatic
compressive force in the crystal
due to surface tension effects:
GaN starts out being
compressively strained.

Coalescence and 2D growth

In second stage of film growth, the
islands coalesce, and conditions
are changed to promote 2D growth.
As the gaps between the islands “zip”
together, some amount of tensile
strain is introduced.

n-GaN:Si + MQW + p-GaN:Mg
GaN starts with dislocation
density of around 1x1010/cm2,
but decreases to about 1x109
after less than 2um of growth.
To drop to 3x108/cm2 (limit for
GaN LEDs), takes about
another 2 to 3um of growth.
This growth adds more tensile ©
strain to the layer.

www.imsresearch.com

Cool down
Because Silicon CTE is less
than CTE of GaN layers, more
tensile
stress is added to the system,
potentially exceeding the
cracking limit of the GaN layer

Copyright 2010 IMS Research
Copyright IMS Research 2010

16

GaN LED Device Structures
Mfg.

Application

Lateral
Contact

Taiwan
China
Small
Korea
Some
Japanese

a) Indicator lamps
b) Keypad BLU
c) Mobile phone
BLU
d) Automotive
interior
e) Monitor/TV

a) Lowest manufacturing cost
b) Highest yield
c) Low IP barriers

a) Relatively poor
extraction of light
b) High resistance due
to current crowding
c) Poor usage of
epitaxial area /
wafer

Flip Chip

US
Taiwan
Japan
Korea

a) TV BLU
b) Monitor BLU
c) Incandescent
lighting
replacements
(MR-16, etc.)

a) Higher utilization of epitaxial
area / wafer
b) Lower contact resistance with
reflective metal p-contact
c) Higher light extraction
d) Lower pkg. costs with metal
bump instead of wire bonding

a) Higher IP barrier

Thin Film
Flip Chip

US
Europe
Japan
Korea

a) High-brightness
SSL applications
(A-type bulbs,
etc.)
b) TV BLU

a) Same as TFFC
b) Even higher light extraction
c) Best integration with
phosphors

a) Limited access to IP
for laser lift off
b) Phosphor
integration IP is
tightly controlled by
major suppliers

Vertical LED
with Metal
Carrier

Taiwan
US
Europe
Japan

a) High-brightness
SSL lighting
with large chip
area
b) Automotive
headlamp /
DTRL

a) Highest utilization of epitaxial
area/wafer.
b) Metal carrier and vertical
structure are best for pulling
heat out.
c) Able to operate at highest
current density, less droop.
Best integration with
phosphors

a) Very high IP barrier
b) Metal carrier w/ LLO
can be low yield
c) Best for use with
1mm and larger
chips

Device
Structure

Cross-Section

www.imsresearch.com

Advantages

Challenges

© Copyright 2010 IMS Research
Copyright IMS Research 2010

17

Improving LED Performance

More light out

Less electrical
power
Forward
Voltage

Contact
Resistance

Internal
Quantum
Efficiency

Impact

Difficulty

X

Patterned sapphire substrates

Extraction
Efficiency

High

Easy

Improved QW design

X

X

Med

Hard

Improved epitaxy

X

X

Med

Hard

p-Contact layout

X

X

Med

Hard

p-Contact design

X

X

High

Hard

Substrate removal

X

High

Hard

Texturing extraction surface

X

High

Med

High

Hard

Reducing thermal resistance

X

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

18

Yields and Bin Rates


LED yields are significantly lower than CMOS yields.





The primary cause is the long MOCVD process which must also be very precise.






Volume weighted averages for yields*bin rates are believed to be in the 40s while top tier yields are in the
high 70s depending on the application.
Die are binned based on their performance, primarily for wavelength (color), brightness, Vf and If.
This 5+ hour process must deposit as many as 100 separate layers each of which must have optimized
thickness, purity and crystallinity. Temperatures can also vary by as much as >500°C.
The slightest variations in temperature or gas flow can significantly impact wavelength or other parameters,
resulting in defective or lower quality die.
Keys to successful growth are:
– Low crystalline defects by the time the n-GaN:Si layer is completed
– Low contamination of the active region
– Limited localized stress and strain variations across the wafer
– Precise control of the QW structure composition, thickness and transitions from doped
to un-doped regions

This also means significant room to boost capacity and lower costs as yields improve.
AlGaNcap (MOCVD)
p-GaN:Mg device layer(MOCVD)
Quantum well structure (MOCVD)
n-GaN:Si device layer (MOCVD)
n-GaN:Si defect reduction (MOCVD)
Low Temp GaN buffer (MOCVD)

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

19

Yielded/Binned GaN LED Supply Growth

Yielded and binned die capacity is expected to rise 370-440% from Q1’09 – Q1’12 depending
on the die size.
• Assuming no equipment installed after Q4’11, still show 40-60% supply growth as new
investments ramp and yields and bin rates improve, particularly in China.


120

100

Billions of LEDs

80

60

40

20

0
Q1'09

Q1'10
250 x 550

Q1'11
240 x 600

Q1'12

Q1'13

508 x 508

www.imsresearch.com

Q1'14
600 x 1200

Q1'15
1016 x 1016

© Copyright 2010 IMS Research
Copyright IMS Research 2010

20

LED Demand

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

21

LED BLU Penetration






The 3 dominant large-area markets are each 200M units+, which attracted
significant investment in LED capacity.
NBs – LEDs taking share due to improved form factor, lower power, thinner and
lighter. Little if any cost penalty today.
TVs – LEDs taking share on thinner form factor and lower power. LEDs with
dimming enable significantly better black levels and higher contrast. Faster
switching also benefits higher refresh rates and 3D.
Monitors – Lower power and form factor are biggest selling points. Small cost
difference.
100%
500
450

80%

400

Millions of Panels

LED BLU Penetration

90%

70%
60%
50%
40%
30%

350
300
250
200
150
100

20%

50

10%

0

0%

2009

2009

2010
NBs

2011
Monitors

2012

2013

2014

2010

2011
NBs

2012

Monitors

2013

2014

2015

TVs

TVs

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

22

Quarterly LED Penetration and LED Consumption*
Millions of LEDs
AUO
CMI
CPT
HannStar
LG Display
Samsung
Total

Q1'10 Q2'10 Q3'10 Q4'10 2010
543
773
970
915
3201
323
473
708
788
2293
42
80
144
164
431
94
127
104
84
409
1073 1608 1438 1703 5822
682
1272 1605 2092 5651
2757 4334 4969 5746 17806

NB LED Panel Penetration

100%
90%
80%
70%
60%
50%
Q1'10

Q2'10

Q3'10

Samsung

HannStar

CPT

Total

LED Monitor Panel Penetration

60%

60%

LED TV Panel Penetration

AUO

CMI
70%

LG

Q4'10

50%
40%
30%
20%
10%

50%
40%
30%
20%
10%
0%

0%
Q1'10
Samsung

LG

Q2'10
AUO

Q3'10
CPT

CMI

*Q4’10 is preliminary.

Q1'10

Q4'10
Sharp

Total

Samsung

www.imsresearch.com

LG

Q2'10
AUO

CPT

Q3'10
CMI

Q4'10
HannStar

Avg.

© Copyright 2010 IMS Research
Copyright IMS Research 2010

23

Feature Creep Slows Down the LED TV Market



Penetration could have been even higher, but LED TVs have been priced as step-up
models on top of other step-up models (higher refresh).
LED premiums were too high and sell-through was slower than expected. Significant
discounts this holiday season. In 2011, look for refresh/LED premiums to fall.
$2,500

$2,000

$1,500

$1,000

$500

$0
42" 1080p
PDP
9/23 Pricing

50" 1080p
PDP

40" 60 Hz

$679

$899

$679

40" 120Hz,
40" 120Hz
Edge LED
$899

$1,099

40" 240Hz, 40" 240Hz,
Edge 3D
Direct 3D
LED
LED
$1,599

$1,999

*BestBuy.com pricing using Samsung models except 42” 1080p from Panasonic. 40” 240Hz,
direct 3D pricing is projected.

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

24

LEDs per Panel Falls Rapidly





The number of LEDs per panel has fallen by over 50% at a given panel size and by
nearly 50% on a volume weighted average basis over the past year.
This is a result of improvements in lightguide distribution efficiency, panel
transmissivity and LED and package efficiencies. A fixed die size of 20x40 mil is
assumed.
This is accelerating penetration, but creating a smaller than expected market than
expected.

LEDs per Panel

32"
40"
46"
Lightbars
Avg. LEDs/Panel

2H'09
216
288
350
4-6
242

1H'10
160
224
256
4
191

www.imsresearch.com

2H'10
100
130
170
2
124

© Copyright 2010 IMS Research
Copyright IMS Research 2010

25

Quarterly LED Supply/Demand Growth

Demand growth slowed significantly in 2H’10 on the reduction in LEDs per panel,
while supply surged leading to reduced utilization and double-digit price
reductions.
70%
60%
50%

Q/Q Growth



40%
30%
20%
10%
0%

20x20 mil binned supply
BLU Demand

Q2'10
17%
57%

Q3'10
19%
15%

www.imsresearch.com

Q4'10
21%
16%

© Copyright 2010 IMS Research
Copyright IMS Research 2010

Can LEDs Per Panel Increase? 3D May Be the Answer


26

In either 3D approach, there is a significant loss of brightness due to glasses and
the 3D multiplexing approaches.

Polarized Glasses 3D

Active Shutter Glasses 3D

60% Loss in Brightness

80% Loss in Brightness

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

27

Limitations of Edge BLUs



With edge reducing the # of LEDs, LED efficiency and current will need to
continue to rise to meet 3D brightness requirements.
However, as current density increases, HB LEDs suffer from droop, limiting
efficiency and brightness. As a result, more edge LEDs or a direct solution will
be required…

Source: Samsung LED

www.imsresearch.com

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Copyright IMS Research 2010

28

Advantages of Direct – 2D (Local) Dimming



Order of magnitude increase in contrast for certain scenes and lower power.
But more expensive with 3-5X more LEDs and results in a thicker TV.

Source: LG Display

www.imsresearch.com

© Copyright 2010 IMS Research
Copyright IMS Research 2010

29

Direct vs. Edge LED Forecast



If direct LED TV panel penetration can reach 14%, it can account for nearly ½ of
the total number of LEDs consumed in TVs.
Direct LEDs should gain share on:
Lower LED prices
Improvements in form factor
Stricter power consumption requirements
Drive for differentiation
Delivering the best front of screen performance possible. Becomes top of the line set.







100%

100%

80%

LED Die Share

Panel Share

80%

60%

40%

40%

20%

20%

0%

60%

0%
2008

Edge
Edge+2D Dimming
Direct
100%

2009
91%
9%

2010
95%
2%
4%

2011
91%
4%
5%

2012
88%
6%
6%

2013
84%
8%
8%

2014
78%
12%
10%

2015
71%
16%
14%

Edge
Edge+2D Dimming
Direct

www.imsresearch.com

2009
75%
0%
25%

2010
80%
2%
17%

2011
72%
5%
23%

2012
64%
7%
29%

2013
57%
9%
35%

2014
48%
11%
41%

© Copyright 2010 IMS Research
Copyright IMS Research 2010

2015
38%
13%
49%

30

LEDs in General Lighting
Advantages
•Most

Disadvantages

energy efficient lighting solution.
•Can reduce power consumption for general lighting
by 33% (DoE), saving over $30B/yr.
•Incandescent lamps going away
•Long lifetimes, 50K hours to 70% lumens.
•Are inherently rugged, no filament to break.
•Start instantly
•Infinitely dimmable and controllable.
•No mercury, lead or heavy metals.
•Are directional, no wasted light.
•No cold starting issues.

•Most

expensive solution. 25X higher than
fluorescent, 8X higher than CFLs in retail.
•Not only is the LED costly, but passive cooling costs
are high and an LED driver IC is required.
•Hard to manufacture large die with high efficiency,
high CRI, low CCT (warm white).
•Point source, not well suited to broad distribution
required for replacing fluorescent tubes. Must manage
glare.
•Efficiency losses in luminaire can eliminate efficiency
advantage over fluorescent.

www.imsresearch.com
Source: Cree

© Copyright 2010 IMS Research
Copyright IMS Research 2010

31

Incandescent Lamp Phase-out by Country

Country

2010

2011

2012

2013

2014

United States

100 W

75 W

40 - 60 W

Canada

100 W

75 W

40 - 60 W

Mexico

100 W
Banned

75 W

40 - 60 W

Cuba

Banned

Argentina
European Union

100 W

United Kingdom 100 & 75 W

75 W

60 W

60 W

15-40 W

15-40W
Banned
Banned

South Korea

Banned

Japan

Banned
Banned

Philippines
Malaysia
Australia

100 W

75 W

60 W

40 W

Banned

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© Copyright 2010 IMS Research
Copyright IMS Research 2010

32

LEDs vs. Fluorescent




Fluorescent tubes produce batwing and lambertion distribution of light while LEDs just
produce Lambertion.
Batwing reduces glare in long direction of tubes and improves uniformity.
LEDs plots below show either spotlight/cave feeling or a glare intensive feeling.

G
l
a
r
e
50º Cutoff

Even distribution of light:
Batwing distribution
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33

US Market Opportunity


While most of the light sockets are in residential, fluorescent accounts for the
highest share of lumens, meaning fluorescent represents the largest LED market.
However, with its high efficiencies, excellent distribution and low cost, LED
penetration will take longer.



Currently, LEDs enjoying the most success in segments which CFLs can’t serve,
MR16 and MR22 spotlights, which have too small of a form factor for CFLs.

5,000

7,000

Billions of Lumens

Millions of Sockets

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000

6,000
5,000
4,000
3,000
2,000
1,000

500
0

0
Incandescent

CFL

Fluorescent

Residential
Office
Warehouse & Storage
Retail

HID

Halogen

Hospitality
Manufacturing/Industrial
Healthcare

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Incandescent

CFL

Fluorescent

Residential
Office
Warehouse & Storage
Retail

HID

Halogen

Hospitality
Manufacturing/Industrial
Healthcare

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34

Total GaN LED Market (Units)




LED units are expected to grow at a 30% CAGR with TVs and lighting growing at >2X
that rate.
Cumulative 2015 LED penetration into general lighting projected to be >30%.
TVs and lighting expected to account for a 58% share of the market, up from 30% in
2010.
120

100

80

Billions of LEDs



60

40

20

0
2009
TVs

Lighting

2010
NBs

2011

Mobile Phones

2012
Monitors

2013

Other BLUs

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Signage

2014

2015

Automotive

Other

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35

Lighting to Overtake TVs in 2015


19% CAGR forecast to $13.3B in 2015. Continuous growth forecasted as lighting
market growth compensates for 2014 and 2015 declines in backlighting.



Banning incandescent bulbs, lower LED costs/prices and promoting LED’s efficiency
advantages will help drive the LED lighting market. Fluorescent will an unknown.



TVs and monitors to peak in 2013. Notebooks peaked in 2010, mobile phones/flash
peaked in 2009.

$15.0

$6.0
$12.7

$5.0

$12.0

$13.0

$13.3

2013

2014

2015

$11.3

$4.0

$US Billions

$US Billions

$10.5

$3.0
$2.0

$8.4

$9.0

$6.0

$4.8

$1.0
$3.0

$0.0
2009

2010

2011

2012

2013

2014

TVs

Monitors

Mobile Phones

NBs

Other BLUs
Signage

$0.0

Automotive

Lighting

2015

Other

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2009

2010

2011

2012

GaN LED Revenues

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36

GaN LED Supply vs. Demand




Despite a strong demand outlook, we are showing a large LED oversupply largely
due to a 2011 supply bubble being created by the China MOCVD stimulus.
We are showing enough supply after 2011 MOCVD installs and yield improvements
to comfortably meet demand through 2015.
This should result in significant pricing pressure and possible consolidation.
250

200

Billions of Die



150

100

50

0
2009

2010
Demand

2011
2012
2013
Weighted Binned Die Supply

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2014
Surplus

2015

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37

Summary


Huge Growth in 2010




Bright Demand Outlook




30% CAGR unit growth, 19% CAGR revenue growth through 2015 on full
penetration in all backlight markets, from 2014) and increased penetration into
lighting.

Supply Outpacing Demand in 2011 and 2012





LEDs for backlighting rise 98%, LED market rises 62% to over $10B.

Supply expected to grow 50% faster than demand in both 2011 and 2012
fueled by China’s expiring MOCVD stimulus program.
Enough capacity in place after 2011 to meet demand through 2015.

Rising Pricing Pressure Will Help General Lighting Market



LED prices have already come under significant pricing pressure after the
market turned in Q3’10 and this should continue for some time.
It will inevitably boost all LED volumes and is forecasted to lead to continuous
revenue growth through 2015 as lighting growth offsets eventual BLU
saturation, but margins will continue to fall and consolidation is likely.
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