Low demand for consumer electronics LEDs, such as those Backlit units for LCD TVs, will be weak until at least till Q1 2012. It was clear that demand for nonlighting
LED applications continues to be tepid. Veeco indicated the utilization rates
for its MOCVD equipment in Korea and Taiwan was 60%, Rubicon indicated it will probably take until the end of the year to draw down excess levels of sapphire and LED wafers. This weakness for consumer electronics grade LEDs does have an impact on all LED pricing, even for higher performance lighting grade products.
The continued oversupply of LEDs in general will help to accelerate LED lighting adoption due to the suppressed LED pricing outlook.
We think the best place to invest will be as far downstream as possible in the LED-based lighting food chain. This is where we expect to see the highest revenue growth rates and most shelter from weakness in the broader LED sector should the macro outlook remain weak. We also believe a general rise in utility-based subsidies for LED-based lighting will occur over the next 18 months helping to accelerate adoption.
LED-based lighting demand growth remains strong in Spite of the weak macro
environment. The current equipment demand slow down is purely due to over-capacity in the past two years. Let’s wait for another 9-12 months, it will come into a higher level of production utilization and that would be time for next equipment Purchase.