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Will constraints in the LED supply chain introduce new competitors for Aixtron and Veeco?

by Asif Anwar | 2月 04, 2010

As Seoul Semiconductor targets the US market with a 100 lm/W LED (which effectively incorporates a rectifier within the device) aimed at general lighting applications, and Cree reports breaking the 200 lm/W barrier with a laboratory demonstration, demand for highly efficient GaN-based emitters is at an all-time high. A major reason for that is rooted in Seoul’s own backyard: Samsung is largely responsible for a recent ramp of chip production required to service its own LED-backlit TVs, while Seoul is a key supplier to LG Display for the same application. The major LED consumers are finding ways to cut down the number of chips needed in key applications (for example, the 2.6mm-thick 42-inch TV that LG Display showed off at January’s Consumer Electronics Show required only 264 LEDs in its ultra-thin backlight), but it is clear that the rapid success of LED backlights in TVs, coupled with rising interest in general lighting applications, is placing the LED supply chain under some strain. Orders for the MOCVD equipment required to make LED epiwafers are through the roof, and the industry appears to have entered a sustained period of capacity-constrained supply, potentially limiting overall LED market growth. Responding to the ramping needs of LED makers, Veeco has just launched a new, higher-yielding version of its K465 tool, while Aixtron is investing up to $40M in a research facility to develop next-generation deposition equipment. The current strong cycle of demand for LEDs looks like a precursor for a much larger one in the future that will be focused on general lighting. Seoul begins mass production of its 100 lm/W LEDs  in the current quarter, but by the time the lighting market really takes off for the likes of Osram, Cree and the rest, the LED industry’s supply chain may look a little different. While the leading merchant MOCVD tool suppliers Aixtron and Veeco are scaling up efforts to service that demand, the unprecedented market pull for LEDs appears set to bring additional competition. That comes in the form of another Korean firm: Jusung Engineering. In mid-January, Jusung installed a “beta” MOCVD tool at Epivalley, also in Korea, and clearly senses an opportunity to muscle in on Aixtron and Veeco territory with its high-capacity (124x2-inch) tool. Applied Materials appears to have similar plans and we may see the market landscape for tool suppliers change significantly over the next few years. For more on this topic, see TV Backlights and their Impact on the LED Industry
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