"The LED market is a complex but promising market," comments Pars Mukish, Business Unit Manager, LED, OLED and Sapphire at Yole Développement. In 2015, companies are not relying on more technical breakthroughs, except at the LED module level, where integration remains an important issue. "However, there is still overcapacity," cautions Mukish. "This is causing many changes in the supply chain, first at the chip level, then at the module/system level. The spin-off Royal Philips announced in July 2014 of its LED business, which grew from its acquisition of Lumileds in 2005, is one example."
The LED industry's complexity results from numerous technical issues, its many players and a multitude of lighting applications. Its promise comes thanks to especially large volume lighting opportunities, stresses Yole in its latest reports. Yole, the 'More than Moore' market research and strategy consulting company, foresees a global business reaching almost $516 million at the system level by 2016. (Source: LED in road and street lighting report, Jul. 2013, Yole Développement & Luxfit)
Today, LED technology's average penetration rate is from 10-20% depending on geographic area. Each country has its own policy and has set up different measures to help LED implementation. For example, in Japan, penetration has reached 30% thanks to government involvement.
Governmental measures are clearly welcome, as the technology is still considered expensive by the public. "Even though we saw a real breakthrough for LED technology from 2006 to 2014, upfront LED costs are still high compared to existing technologies," explains Mukish. "Today, the real growth is in external lighting applications where LED technology is partially implemented. Commercial and industrial lighting players are also considering LED technology but today implementation is still developing. In 2015, technical issues are different to previous years. They are mainly located at the LED module level. LED market leaders are therefore developing answers to packaging and integration needs. In the report entitled LED Packaging Technology and Market trends (Sept. 2014, Yole Développement), Yole has detailed the positive impact of advanced packaging technologies on LED manufacturing, especially LED packaging materials.