El Segundo, Calif. —LEDs used for backlights in large-sized LCDs are in tight supply, which is expected to last until the end of 2010, according to iSuppli Corp. Most impacted by the component shortage will be LCD-TV, mobile computer and desktop monitor makers.
iSuppli forecasts that shipments of large-sized LCD panels with LED backlights will reach 276.7 million units in 2010, up 134.9 percent from 117.8 million in 2009. In 2010, LED backlights will be used in 43.1 percent of all large-sized LCD panels, which are primarily used in LCD-TVs, mobile computers and desktop monitors.
iSuppli’s report, “LED Backlights Reshaping the Large LCD Industry,” also indicates that LED backlights are starting to see increasing use in electronic signage, industrial and medical applications.
LED backlight shipments will rise to 477.6 million units in 2011 and continue to expand to 817.9 million units in 2014. By then, LED backlights will have penetrated 87.7 percent of the total large-sized LCD market, according to iSuppli.
Use of LED backlighting is climbing due to its significant advantages compared to the older cold cathode fluorescent lamp (CCFL) technology, including slimmer design, reduced weight, lower power consumption and mercury-free attributes, said iSuppli.
iSuppli says this rapid rise in demand has resulted in supply constraints for LED backlights. “There have been mounting concerns in the industry about supply constraints for LEDs and light guide plates, two of the major components for LED backlights,” said Sweta Dash, senior director for LCD research at iSuppli,” in a statement. Changes in light guide design, constraints in raw materials and high expansion costs are limiting capacity.”
Dash said the other major constraint revolves around the challenges faced by metal oxide chemical vapor Deposition (MOCVD) reactors — the key equipment for making LED chips — to keep up with demand. As a result, tight supply of LED chips is expected until the end of the year.
However, Dash added that panel makers that have their own internal manufacturing of LEDs — such as Samsung — will have sufficient supply in 2010.
To address the availability constraints, LED suppliers are shifting production to 4-inch and 6-inch wafers and away from older 2-inch wafers, resulting in higher capacity of LEDs, said Dash. However, LED makers will need as long as one year to adjust to the change in production technology.
To offset the shortages, panel suppliers are expected to offer newer backlight designs that require fewer LEDs per panel. Most panel suppliers expect the number of LED chips per television panel to decline by 30 percent or more at the end of 2010 compared to one year earlier, according to iSuppli.
In addition, LCD panel suppliers also are becoming more vertically integrated in order to better control the LED backlight supply chain, and branded TV manufacturers are partnering with module manufacturers to gain their own backlight solutions and to achieve product differentiation, said iSuppli.
iSuppli expects the adoption of LED backlights in LCD-TVs to reach 18.4 percent in 2010, up from 3.0 percent in 2009. Adoption rates also will grow for notebook panels, rising to 88.0 percent this year, up from 62.6 percent in 2009. By 2012, LED backlights will be used by 100 percent of notebook panels.
The adoption rate for LED backlights for desktop PC monitors in 2010 will rise to 20.8 percent, up from 1.7 percent in 2009, according to the report.