Monday, September 6, 2010

LED Backlight Market 4Q10

LED TV Sales
With the current weakening LED TV demand trend along with a seasonal Europe is impacting its growth prospects for the 3rd and forth quarters. The Korean LED makers are suffers utmost, some their production equipment is idling and immediately recall or halt their subcons on LED manufacturing. The next Impact would be Taiwan, they have to on hold their expansion for LED Back light unit production., few of them even reduce the working days. Japan and China is still able to maintain the production volume. Sony continues to perform especially in Europe that actually gained 7 percent of market share. Europe and Latin America exceed the forecast by 22% and 31% respectively. Whereas North America market was poor with 14% below our expectation.
PDP and Plasma
PDP came back from death, increase from 6.3% to 8% mainly the price is driving everything the LED premium of 60-70% is too high. Consumer TVs larger than 55" are looking for PDP which offers an attractive alternative to the LED backlit LCD TVs at the current price tag. Especially the larger LCD TV is usually the flagship and it would unquestionably go for the highest LED set-up configuration of say direct backlight regardless of cost. Plasma TV shipment growth has been accelerating, increasing from single-digit growth in Q4’09 to 47% Y/Y growth in Q2’10. Plasma offers a greater value-per-inch than comparable LCD sets, more vivid colour and better contrast. This gap widened in Q2’10.
Panel manufacturersIn June 2009 during the global economic melt period, six of China biggest TV manufacturer delegation came to Taiwan to sign a contract with CMI for panel, however these players are all fell in shipment by 20% QoQ. Hisense, TCL, Konka and Skyworth lost market share.

Only Changhong could market share as the only one. So AUO, CMI and LG Display are mostly in the down-cycle mode. According to Display Search it would be negative affected by these Chinese TV markers. However the 2Q10 global LCD TV shipment reached 41.8m unit which is higher than the forecast 40.2m. We foresee 2010 LCD shipment forecast 184m unchanged due to panel price is declining which forces TV brands to discount aggressively to maintain the market sales.

Notebook panel inventory correction

PC OEMs are reducing their notebook panel inventory, reducing the need for LED backlight units.


Estimates LED BLU penetration is 18 percent with respect to 3 percent last year which in fact is a pretty high growth In Q210. The LED TV share of was 21% in North America, 27% in Western Europe, 12% in China, and 7% in Latin America. Samsung retains his dragon-head position with 18.8% Global market share. Sony did well maintain the quarter with increasing market share from 9.2% to 12.1%. Mainly due to its aggressive marketing campaign and new product launches. LGE fell slightly to 12.3%, it is weak in Europe and Latin America.
LED over supply from 4Q10
We project demand to increase 62% in 2010 and 54% in 2011. We have to revise our supply growth assumption to 84% in 2011. We see an oversupply of 18% in 2011. We expect that by time 4Q10/1Q11 will be the point when supply and demand cross over, consequence is the drop of ASP.

LED Chip Supplier and Packager

The falling prices will pressures Epistar' sales and profit margin. Packagers like Everlight will face with similar pressure. Epistar and Everlight may have their orders affected earlier. The majority of the sales depend on outsourcing from Korea Samsung and LGE. The Korean manufacturer will keep production in house for high utilization and same time reducing outsourcing. Korean LED BLU maker has to go for more cost effective manufacturing equipment and new packaging method.

Price is King
Retail prices of LED-backlit TVs dropped to about 1.2 times as expensive as CCFL models in August, down from three times in end 2008 when LED-backlit models were first introduced into the China market. China's consumer electronics retailers Gome Electrical Appliances and Suning Appliance both saw LED-backlit TV sales at its stores in major cities rise to 40% of the total LCD revenues during the Labor Day holiday in May. China will start implementing the flat-panel TV energy efficiency standards on December 1, 2010, which will further drive the demand for LED-backlit TVs, as products that do not meet the standards will not be allowed to be displayed in shops.

LED LCD TV Market Prospectus
Growth in the LCD TV segment next year is expected to be surpassed by new technologies like LED backlighting and 3D. More 3D movie are pumping out from Hollywood into your home! Satellite TV provider DirecTV has launched a new satellite and one of the channels the new satellite broadcasts will be an all 3D channel. As new 3D content is available in America, more consumers will look to move to 3D capable TVs in 2010. Naturally a better Picture quality TV with LED Backlight technology will be the need for displaying 3D images! Steve Jobs has just announced his new Apple TV.. Thus to push further for more sales revenue soon from his products.

What are the LED TV Giants doing!?
General Lighting markets have a distinct set of market dynamics that are different from the LEDs used in display markets. Cree with lighting as major business focus indicates that general lighting demand continues to be strong and channel inventories are positive. When first LED TV was launched by Samsung in Mar 2009 with immediate success and a lot of followers to grasp the opportunity to produce the so called “LED TV”.

Now after more than one year, the use of the LED has been changed in order to reduce the cost of the LED light guide: 1) Reducing the number of LED by reducing the LED bars from 4 strips into two or even one. 2) reducing from typically 400 LEDs for edge light Back light unit to about 200 or less LED, 3) increasing the size of the LED chip. Though the light guide efficiency was increase fro 15% to 25%, even though, by doing so the total number of LED would be reduced for more than 40%! That is an equivalent a decline on packaging equipment.

On the other hand, iPad and Iphone4 are nominated the best two products in the year. They are using two top major LED players on the back light unit. These two world LED giants are not affected by this sudden slash of Backlight market. In face likely they are pumping up with momentum to increase their production capacity.

World Economy

The US economy is still like a veil of mist over the mountain as the Unemployment rate is still high as 9.5-9.6% which is the top of the do-list in Obama s’ desk. The Republican would ridicule Obama in the next presidential election. China has just surpassed Japan as the 2nd largest economy system. The huge domestic consumer market demand would continue support the LCD TV business. China became the world Richest Government, followed by Japan, Russia and Sandi Arabic. Now China has national reserve of National reserves: $2,454,300,000,000, 2. Japan National reserves: $1,019,000,000,000, 3. Russia National reserves: $458,020,000,000, these Countries would not feel hesitation in pouring money into the LED market as for future national energy preserve as a national security consideration.

European economy power Germany has his string economy growth, their Automobile export increases 12% in August. France unemployment rate drops for the first time in the past two years!

PIGGS, Portugal, Italy, Ireland, Greece and Spain, five countries in the Euro-zone that foolishly did what a lot of big-time spenders do, borrow way too much during good times and then run into problems repaying their debt. That, of course, raises the specter of debt defaults, the kind of news that rattles investors and pounds world markets even Asia. And why should Germans who pay themselves modest pensions and hold off retirement put their savings at risk to bail out the Club Med? Many have predicted that economic nationalism would one day tear apart the European Union. The hour may be at hand. But I am optimistic to see that the PIGGS debts will be resolved with some monetary adjustment and support from the economic giants in EU. These are good supporting reason for Market growth of LED.
Will LED BLU market resume in December!
The issue at hand is the sudden slowdown in the LED Back light unit and LED display markets – a one-quarter phenomenon? I would like to see this way, people will keep on spending money for better Product of quality and lesser power. LED TV has becoming a more or less standard as for Better TV in consumers mind, at least the TV Salesman would say so… and LED TV is the best matching couple with the latest 3D movie at home. Samsung and LG will have to push out more new products for more revenues for their last fiscal quarter to fill in the P/L sheet for their CFO!
All net books and more Monitors will come with LED BLU, Apple products are all LED-Back-lighted! China the Consumer locomotives will bring LED TV BLU alive… I can not tell exactly but I do believe that with 3 months time, after new packages method, new marketing campaign and re-position of their product portfolio with new price. We will see a lower cost LED TV from Samsung, LG, Sony, Toshiba or even Vizio will be displayed in the Shops with a much attractive price… You would not be hesitating to replace, buy one more for your study room and change for a bigger one for your living room.

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