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Heavy competition in 2017 may force LED makers to find niche markets

Heavy competition in 2017 may force LED makers to find niche markets
Fine-pitch LED displays

By BizLED Bureau

Dec 13, 2016: The LED industry players would face tremendous pressure in 2017, due to high competition in the industry, predicts TrendForce’s division LEDinside report.

The report speculates that in order to maintain growth margins, LED players would need to penetrate more profitable and niche markets like IR LEDs, fine-pitch LED displays, UV LEDs, etc.

“Since the general state of the LED lighting market remains weak, LED suppliers are actively developing strategies to transform their businesses and accelerate their entries into the blue ocean niche markets,” says Roger Chu, research director of LEDinside.

The global LED market grew at 3.4% annually to reach US$14.8 billion in 2016, says the report.

Reasons for price hike

The report pointed out that the hike in prices for hard commodities like alluminum and copper in 2016 have also led to significant price increase for LED lighting products. LED lighting manufacturers have increased their prices as an impact of the increase in material costs, said Chu.

Forecast for 2017

In 2017, the value of the global LED market will increase by 4% from that in 2016, and reach will US$15.4 billion, forecasts LEDinside.

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“The estimated growth in the global LED market value for 2016 is marginal, but the LED industry has undergone some major changes,” said

“The increase in demand for fine-pitch LED displays has lead to tightening of chip supply. Consequently, some chip and package products have witnessed price rise for the first time in five years,” Chu added.

Sectors that would do well

Fine-pitch LED displays will be a highly contested application market in 2017, says the report. Many traditional LED display makers have already shifted much of their efforts towards fine-pitch LED displays in 2016, as buyers demand better quality images from these products. “LED display makers’ focus on fine-pitch LED displays has resulted in a several-fold increase in LED usage volume,” said Chu. “And many Chinese LED package suppliers have undertaken capacity expansion just to capture a share of this market,” he added.

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However, this would raise competition, and hence price rise. To avoid this price war, manufacturers would need to improve their products’ features and specifications, and make LED packages more compact.

With improvement in efficiency, UV-C LEDs market would open up new opportunities as it will find more applications in 2017. The sterilization and purification features of deep UV would be useful in many application areas like air purification, home appliances, water treatment, etc.

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However, with high demand, UV-C LEDs will face some challenges as well. Currently, UV-C LED chips are quite expensive and have low external quantum efficiency. Earlier, UV-C LEDs applications were mainly found in research institutions. Now LED suppliers have started seeing the importance of UV-C LED products, and investing in developing its applications. As a result, the industry’s contribution will speed up the growth of UV-C LED market in the coming years.

IR LED components will also see more applications aread coming up in 2017. IR LED is a matured technology, and inexpensive solutions can be developed with it, for example, Iris recognition sensors and motion sensors for virtual reality devices, are leading to emerging applications areas, that may lead to lucrative business opportunities for IR LED suppliers.

Micro-LED displays have very lucrative business opportunities coming up as early as 2017. Micro-LED display technology even has the potential to overtake OLED in the future. Major companies in various industries have already started investing in this technology, which would lead to an emerging market on its own. These companies are trying to find the right trade-off between pixel volume and pixel density so that they can start mass production as early as possible. So, devices with micro-LED displays may hit the market in 2017.

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