Lowered LED prices and reduced demand for LED-backlit TVs will result in a slower growth rate for LED revenues this year compared with 2010.
The HB-LED market is expected to grow 9.8% year-on-year in 2011, reaching $12.3 billion in revenues, according to the latest market report by the leading firms following the LED market.
LED revenues grew by a remarkable 108% to $11.2 billion in 2010, propelled by applications in TV backlight units. However, expanding supply and a slowdown in overall TV demand in 2011 led to a drastic drop in LED prices, and a slower growth rate in total revenues. LED revenue is expected to peak in 2014 at $16.2B and then fall to $15.3 B in 2015. The dip in revenues will be temporary, as lighting will take over as the engine for growth after 2015.
Pricing: LED prices have plummeted 20-40%, except for certain specialized applications, such as headlamps. Weaker players or new entrants without much experience—like many from China who entered in during 2010—will exit the market. As LEDs become more like commodities, only strong players with deep pockets will survive the fluctuations, much like DRAM suppliers.
Lighting: Revenues of LEDs for lighting will see compound growth of 33% over the period. With LEDs being approximately 30% of the bill of materials, the recent drop in the prices may accelerate LED adoption. For example, a high quality, large volume 1W cool white packaged LED with delivery in September 2011 was quoted around $0.65.
Signage: The worldwide sign industry experienced explosive growth to $3.4B in 2010. The domestic Chinese market grew 54% to $1.9B and is expected to continue growing at 14% compounded annually through 2015. LED revenues for signs were $1.1B in 2010, growing to about $1.6B in 2015. About 83% of worldwide signs were manufactured in China, with that trend will continue toward Chinese manufacturing.
Mobile: The mobile appliance segment is the only one with negative growth through the period. Smartphone units will grow at 30% and tablet computers at 57%, compounded annually. However, most mobile appliances, such as feature phones and notebooks, have reached saturation, and falling prices will erode LED revenues by -4.1%, compounded annually.
Automotive: In the automotive segment, LED revenue reached $1.1B in 2010, propelled by strong growth in the China market. Expected growth for 2011 has been revised to 5%, due to cooling of the Chinese market and the effect of the Japanese tsunami on LED supply. Increased use of LEDs in daytime running lights and headlamps will fuel revenue growth for LEDs in exterior automotive lighting at 10%, compounded annually. Falling prices and saturation of LEDs in instrument panels—reaching 90% in 2015—will erode LED revenue for that segment by 2% over the period.