LED capacity to increase in 2012

Capacity will rise 27 percent this year as new LED fabs open

01/16/2012

Buyers can expect light emitting diode (LED) manufacturers to increase capacity by 27 percent in 2012, although LED makers will cut spending on manufacturing equipment by 18 percent, according to trade association SEMI.

LED manufacturers in 2011 had boosted equipment spending 36 percent, enabling them to increase capacity to the equivalent of 2 million 4 inch wafers per month.

SEMI reported that the drop in equipment spending in 2012 follows several years of aggressive capacity expansion driven by high-brightness LEDs (HB-LED) used in TV backlighting applications. Spending was encouraged by lucrative government incentives and economic development funding in China.

There will be a 40 percent decline in metal organic chemical vapor deposition (MOCVD) purchases in 2012, which will reduce overall LED equipment spending for the first time in five years, according to SEMI.

Spending for non-MOCVD equipment, including lithography, etch, test and packaging equipment, will increase in 2012 as manufacturers optimize their production.

While HB-LED demand will continue to grow in solid-state lighting, HB-LEDs used in liquid crystal display (LCD) televisions – which represent about 40 percent of the HB-LED market – did not reach growth expectations in 2011, according to SEMI. Total television unit sales missed growth targets and the penetration of LED backlighting as part of total LCD-TV unit sales did not reach the levels that many experts predicted.

However, LEDs used in solid- state lighting, which total about $2.5 billion, will grow steadily and may exceed $30 billion by 2020, according to many estimates.

“LED manufacturing capacity and technology investments will vary year-over-year, but will correspond with the long-term demand driven by key applications,” said Tom Morrow, executive vice president, Emerging Markets Group at SEMI. “In LEDs, this will be primarily solid state lighting.”

He added that future equipment and capital spending will drive LED cost reduction through larger wafers, automation and dedicated equipment designed to improve to LED manufacturing yield and throughput.

Regional equipment spending shows China continuing to lead with an expected $719 million planned for 2012, followed by Taiwan at $321 million; Japan with $300 million; and Korea at $260 million, SEMI reported.

Taiwan will continue to lead in capacity at 25 percent of the world LED capacity, followed by China at 22 percent.

In 2011, SEMI reported 29 new fabs were built in 2011 and now forecasts 16 new fabs coming online next year.

Meanwhile, semiconductor manufacturers will reduce fab equipment spending by 11 percent in 2012, according to SEMI. Equipment spending will drop in the first half, but will rise in the second half. Still, for the year there will be a decline in spending, the trade group reported.

Total worldwide fab equipment spending will total $35 billion in 2012, down from $39.2 billion in 2011.

Korea is the only region expected to show growth in fab equipment spending in 2012, mainly due to Samsung's capital expenditure plans. Spending will increase in Korea by 38.6 percent. In the Americas, fab equipment spending will decline 31.1 percent, while equipment spending in Europe and the Mideast will drop 19.3 percent, according to SEMI.

Despite the overall decline in semiconductor equipment spending, 300 mm installed capacity is expected to grow at a steady pace in 2012. In 2011, installed capacity for 300 mm grew by about 13 percent compared to 2010. SEMI’s forecast anticipates a small slow down to about 11 percent in 2012, increasing to about 12 to 14 percent in 2013.