Sunday, June 13, 2010

How to capture this business opportunity of LED Market 2009-2012?

Since 1995 the LED market has been demonstrating amazing double digital annual growth rates through the year 2004. The worldwide market totals over 5.8 billion US$ in 2005, in which the high-brightness HB LEDs take more than 15% of market share. The increase by now has been largely driven by the wide utilization of mobile devices such as mobile phones and smart phone during the last few years. The main applications included keypad and display backlighting for these devices. Due to the disruptive technology has been using in the past three years with smaller chip with higher Lumens per watt, we did not see much growth in the equipment demand on Side view LED. The Korean, Japanese and Taiwanese LED maker has almost zero demand on bonding equipment. That was partly due Mobile phone is not growing much at all, and at the same time the capacity for side view comes to a saturated state. They just do not need extra back end Bonding Equipment.
Although the growth of the mobile phone market has shown signs of deceleration. Other new applications of LEDs will provide new highlights for the market expansion in the next 5-10 years. The major foci of the industry will be the utilization of LEDs in the Back light for LCD TV, monitor, Note Book and net book, general illumination and the automotive lighting.

HP LED Market
The breakthrough in white LED products and Ultra high brightness (UHB) LEDs, which produces more than 20 lumen per watt (the light output of normal 100-watt incandescent lamps), make the utilization of LEDs in the general lighting and automotive lighting visible. As the UHB LEDs are approaching to the output level of 80 lumen per watt, which is the output of standard fluorescent lights, they will by and by replace the fluorescent bulbs in households, offices and other places around the world in the future, because they are energy saving, less pollution, have better light quality and have a 2.5X lifetime than fluorescents. Up to 2015, the market segment of general illumination is expected to reach US$ 5.5 billion worldwide.

Back Light Unit demand
From my estimation that from the small bass number of 3% of LCD TV Back light market, there will be about 30% market for LCD TV using Back light unit in 2010 and there will be likely 60% of LVCDTV using LED Back light in 2011. That is a huge growth for the LED demand in this hot market. The HB LEDs are currently a $5 billion niche market comparison to $250 Million Semiconductors we used to say “IC” market. The backlight unit sectors will exhibit the fastest growth in the HB LED market with an overall compound annual growth rate (CAGR) of ,more than 40%, led by the LCD TV Sector exhibiting a CAGR of 280% between 2008-2012.

Packaged LED cost Breakdown
The Diagram show the Cost Structure of the LED manufacturing, they consists of backend process like Laser Substrate removal, Chip separation, Chip Sorting through wafer mapping, Die bonding, Curing, Wire bonding, Phosphor application, curing, Lens Moulding by Compression Mould. Singualtion, Testing, binning and taping. Laser marking. This will take up 60% of the Total cost of the package LED.As far as MOCVD, front End such as die probing, sawing, film mounting, Substrate of the LED, MOCVD takes up about 8 percents of a packaged LED. With such fast growing LED market demand, MOCVD equipment like Veeco Instruments would have to produce 208 tools in 2009 up to 420 tools in 2011. This consensus forecast of 420 Tools represents a market of over $1 billion base on an ASP of $2.5 Million for one MOCVD.

Price, Lumens and Output
For a higher adoption of LED in various application, the key factor if price. So if one can product a low cost and yet powerful LED, he will win the maker.What a good question is who can have the major control of the Back end Process which is contributing 60% of the Cost of the LED… beside he could get a constant good supply of LED say from Nichia, Epistar or Cree…

Position your LED market
That is a important question to someone who runs the LED, to make a standard LED package as others people are doing? To start an unique process!? Or to follow the Big Player utilizing the low cost structure of your factory to squeeze a dime more out of the LED!?

Equipment Delivery
I think 95% of the package in China are alike, and they way of manufacturing are more or less the same only bigger company has a better equipment price and delivery negotiation with the major equipment suppliers. There is a seen trend s that the large corporation will be using his power to issue a letter of intent or a Blanket order for a few hundred machines to be delivered over the months of 2011.

The Smaller companies may have less room for them to get a better price, delivery will be poor too. I the past year equipment delivery varies in the range of 8-12 weeks, now we can get a delivery quote of 20-24 weeks of courser all depend on how good your relationship with the supplier and how strong your buying power is!?

Equipment Suppliers
In the past there is no on keep an eye on the LED business as they were used to be smaller than the “IC” business. Now as you can see LED is more 20X larger than the ICs’ so there is a lot of equipment supplier going into this market, people start to spin off from one big company for set-up his company to get the order. Naturally this is a technology world a bigger firm definitely has a better technology than those smaller company. However, the truth is copy cats in China it is as much as the Copy rats… that just do not care how the support and reliability is. So long there is similar performance of output accuracy; they will just lower down the price say less 30% to get the order. Since copy is almost free in design… their R & D cost is almost Zero. But the poor customers will not be too stupid now to buy after a while the reliability of their equipment, or even the LED it built would have a big issue. Gold is Gold…. The trend is that those big companies will buy from the world renown equipment supplier for their Equipment and the smaller one who refer to the big one to follow… as once they know their :LED products would prone to be rejected by their end customer . They will just kill themselves by the poor LED Quality.

Critical Process
A few years back, a 15 years IC wire bonder engineers told me that there is no high technology at all to make a straight up neck lopping wire on a VLED (Vertical LED) lamp at all. All kind of bonding equipment would more or less do the same job well! Later when he got his hands on the Machine in or to optimize a proper looping height of 25 mil high with wire sway allowable of +/-1 mil. He finally gave up and told me that was even harder to perform an IC bonding with more than 1,000 wires per chip. I use wire bonding stage as to tell that bonding equipment can product better LED.

Packaging of a LED
There are numerous ways to package a LED, no matter what power level.
PLCC base, Ceramic base, MCPCB etc, LED like 1mmx1mm or small down to 6 mil x 6 mil, going for Silver Epoxy as the traditional way, or Flux Eutectic, Flip Chip or the latest way to package using Direct Eutectic for UHB LED application. The cost structure of the LED should well be understood for your packaging. If that is a general back light application, There is no need to go for Eutectic, High density matrix type of PLCC would be best for the machine utilization.

In case you go for K2 type of HB LED manufacturing, traditional type of K2 Leadframe has only 20 units on a strip is not good enough as it would seriously jardpodize the Throughput at all processes. Some of the latest leadframe design has 140 units, that would improve the throughput of the UPH at least 2X at die bonding, and silicone lens moulding stage.

LED cost breakdown
This is a typical cost breakdown of a 1 watt LED with 1mm x1mm LED chip on ceramic Substrate with Dome lens on top of it.
The chip itself accounts for almost 80% of the total material cost of the whole LEDs. So if you package in such a way the chip yield could be 1% higher, than you can easily save up to $50,000.00 for a monthly output of 100 millions package LED with an assumption of $0.50 for each of the chip. So if you can package it in such a way with Higher output at various stage, the yield loss could be say 1% lower or Testing cost 10% lower by using a more cost effective testing equipment than your competitors,. There are a lot of process points that you can work on, when you calculate the overall saving per month, that can be millions of dollars. 

Equipment Selection
The trick is there are too many factors such as material variation and bonder parameters set-up plus the Software capability of the Bonder, all these will contribute on how good the Looping looks likes… Well to a jelly bean LED marker, there might not be having much difference. But of your final product will be ultimately be use insider An Audi, Toyota, Panasonic or Samsung LCD TV. That will be a different story.
Questions will be asked… hey what is the best back End equipment to be considered for me. I think you can verify the statement: “No.1 is the best?”… If that is a true statement, that you should consider follow top major players; Nichia, Osram, Cree, Lumileds, Avago, Everlight, Liteon for their equipment selection.

Technology takes it all
The U.S. DOE’s Solid Stats Lighting Manufacturing Roadmap Targets a factor of Two improvement in Cost-of-Ownership for Manufacturing equipment every five Years. From this basic rules apply, who can fall into this category with their major company who can meet this COO Road Map? That will be your designated list of major suppliers for your LED manufacturing.

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