Thestar: By TEE LIN SAY | Mar 20, 2010
linsay@thestar.com.my
WITH the advancement of technology and energy conservation in a greener world, it is no surprise that light emitting diodes (LED) applications are hot in demand.
LED, which is used in general lighting, automobiles and television saves 70% more energy compared to a normal cold cathode fluorescent lamp (CCFL) and is gaining popularity although its high cost is the stumbling block.
Last year, the increasing demand for energy efficient television (TV) sets with vivid picture quality saw LED orders taking the market by surprise. This was mainly seen in the LED-BLU (back-light unit) shipments for LCD TVs and notebooks.
Growth in LED applications caught the entire supply-chain by surprise, with catalytic Samsung Electronics making a splash by introducing its LED TV marketing campaign during the 2009 Consumer Electronics Show. This innovation by Samsung rocked the LED world and helped sustain stable TV set margins despite higher panel prices.
Suddenly, there was an adoption into LED notebooks and other applications such as signages and lighting. This sudden increase in demand saw lead times increasing from the normal 4 to 6 months to 8 to 10 months in the second quarter of 2009. This momentum is likely continue in 2010, with UBS Research forecasting LED TV shipments to grow from 3.3 million units in 2009 to 28.7 million in 2010.
However, UBS remains cautious about 2011 as continued LED chip supply growth will likely overwhelm demand growth. For 2010, Macquarie Research expects the focus on LED TV to be on edge lighting technologies and thinness.
At recent trade shows, leading companies showcased two edge technologies as well as TV sets that were less than 5mm thick. “LED TV shipments are expected to reach as high as 30 million units in 2010 after 3 million to 4 million in 2009,” said Macquarie.
It also foresees the price gap between LED TVs and normal liquid-crystal display televisions (LCD) TVs to narrow to less than 20% especially with greater component supply. Meanwhile, UBS believes that the tight supply of chips should ease from the first quarter of 2010 and it expects overcapacity to remain under control until the fourth quarter of 2010. The research house belives growth in the LED segment, driven by TV is achievable as a similar rapid transition occurred when LCD TVs switched from 720p to 1,080p resolution.
The penetration rate of 1,080p resolution TVs increased from 4% in 2006 to 27% in 2008. Furthermore, the issues of energy savings and better picture quality will also help this transition. Meanwhile, the second-fastest growth segment is lighting, which might have greater potential for longer-term growth compared with LED TV.
Will LEDs be viable?
Integrated circuit player, Globetronics Technology Bhd which derives 15% of its revenue from LED, is involved in processing wafers into LED dies for some of the multinationals in the country. Globetronics group chief financial controller Ng Kok Choon sees demand for LED increasing. “LED is commercially viable, but in terms of producing the applications, there is still a gap. Currently the industry players are putting in a lot of effort to decrease unit cost and increase the brightness of the LED.
This is because the brighter an LED the fewer LED required to produce the product.
“We have been seeing a certain element of conversion, and this is due to LED’s popularity as a green technology, which results in less energy,” said Ng.
Focus Dynamics Technologies Bhd chief executive officer Kee Twuan Tee feels that LED for commercial use will probably become fully viable over the next 5 years. “As energy bills make up 5% to 7% of most company’s operating expenses, more emphasis will be given to energy conservation,” says Kee.
Focus specialises in energy efficiency products as well as LED lighting for kitchen cabinets. Its clients include Signature Kitchen and Aino Kitchen. Meanwhile, D&O Ventures Bhd’s is involved in the packaging, assembly and testing of LEDs that are used mainly in automotives, general lighting, and display panels. Most of its products are exported to Europe, the United States, China, South Korea and Japan.
“We think the industry is going to grow strongly over the next few years due to a recovery in the global economy and advent of new LED applications such as the conversion of the TV market from cold cathode fluorescent lamps to LED TVs as well as the conversion of conventional lighting to LED lighting,” says D&O Ventures director Yeow See Yuen.
“Hence we will be increasing our capacity to ride on this new wave of demand which will see more LED-led applications coming onstream,” he adds. Yeow says that technological advances and growing volumes will eventually see the mass adoption of LED products, which will see LED applications becoming more commercially viable.
D&O has a packaging plant in Malacca and a module plant in China. It intends to set up a second panckaging plant in Laos which is expected to be operational by the second half of 2010.
Other tech players involved in LED are DSEM Technology Sdn Bhd, Pentamaster Corp Bhd, and Elsoft Research. They provide support for major MNCs involved in the LED business, such as Nichia, Cree, Osram, Lumileds and Avago.h
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