Jed Dorsheimer, a senior asset analyst from Canaccord Adams, discussed the cycle of the LED market. The first round of the cycle began in the first few years of this century. It was mainly driven by mobile handheld devices. LEDs were used to illuminate the keyboard, and then as the backlight of the mobile phone’s color screen. The substantial increase in LED manufacturing has resulted in overcapacity during 2004-2005. However, this cycle promoted the improvement of LED performance and the decline of prices, which in turn created the second round of LED cycle, that is, as the LED backlight source for medium-sized notebooks and large-sized TVs.
Based on the rapid growth of the (flat-panel) TV market, Dorsheimer said that the LED industry will experience significant capacity shortages, and the LED chip gap will reach 70-100 billion by 2012. It is necessary to invest a few hundred more MOCVD production capacity, and the sapphire substrate should also be adequately supplied. Dorsheimer believes that in accordance with the development trend, 30% of the LED overcapacity will be caused in the future, requiring a “one to two-year digestion cycle”; there will be no significant increase in production capacity between 2014 and 2016. History will repeat itself. Due to the decline in LED prices and the increase in performance, it will help the industry advance to the next cycle. However, the driving factor is lighting.
