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© carabiner dreamstime.com Analysis | August 29, 2013

Mid-power LED prices drop by 1.7% in 3Q13 as shortage eases

Mid-power LED shortages eased in 3Q13, due to increasing LED suppliers.
High-power LED prices dropped in 3Q as outdoor lighting demands and construction bidding projects fell below market expectations in 2Q, and impacts from advances of mid-power LEDs , such as 5630 package (PKG) and 3030 PKG, is to threat the high-powered LED market share.

Both uncertainty surrounding China’s new energy-saving appliance subsidies and high inventory levels in distribution channels have caused the LED price for TV application to drop. However, LED for mobile applications have a positive 3Q outlook due to increasing smartphone shipments and with the introduction of two in one package.

LED demand for smartphone applications rises, so the price slightly fall by 3-6% in 3Q13

Smartphone shipments have soared. Driven by on average bigger smartphone panel sizes and higher resolutions, LED usage volume for smartphone applications have grown. By taking into consideration energy-saving and slimmer designs, LED manufacturers released 0.6 mm side view LED (two-in-one, side view package type), with a voltage lower than 6V, and average brightness of 15 lm. A design that is not only energy efficient, but avoids adding any burdens to mechanical design. Average Selling Price (ASP) for 0.6t LED dropped by 6% to US$ 0.15.

Uncertain new Chinese energy-saving subsidies causes LED asp for direct-type TV to plunge by 8%

Distributors were conservative in their inventory stockpile for China’s National Day Week due to uncertain China’s new energy-saving subsidies . In addition, distributors have 1-2 months worth of inventory. These factors have caused LED price for TV application to slide by 6%-9%.

The 7020 PKG (single chip) and 7020 PKG (two-in-one) ASP plunged the most this quarter by 9% because of improved yield rates and increasing LED volume usage. Supplies of 4020 PKG and 7030 PKG remained stable and prices dropped by 6% in 3Q13.

Affected by the end of China’s energy-saving home appliance subsidy program, TV manufacturers have shifted focus from energy-efficiency to costs when it comes to direct-type LED TV segment. Starting from 3Q, direct-type LED TVs have used LEDs with high current drives above 400mA as LED backlight sources. LED asp for direct-type TV fell by 8% in 3Q13.

Prices of 5630 PKG mid-power LED downs by 1.7% in July as shortage eases

Overall, mid-power LED shortages have eased in July, and agents have sufficient inventory supply causing prices to fall slightly by 1.7%. Samsung’s second generation 5630 PKG prices continued to show a minor decrease this month, while prices for first generation 5630 PKG remained stable. The prices of other 5630 LEDs remained flat, but there is still room for price cuts.

Global sales of backlight products were lower than expected during second half of 2013. Annual shipment for notebook and monitor applications showed a decline, while corresponding LED products, for instance 0.8t side view PKG and 4014 PKG ASP fell by 5%-8% during 3Q. Price drops for 3020/3014 PKG were limited to 1% because of its longer product cycle and maturation. LED prices for TV application declined by 6-9%.

The price fall was aggravated by TV manufacturers lowered 2013 shipment volumes, due to the termination of Chinese government's subsidies. Prices for mid/high power LEDs began to decline this quarter. With the exception of warm white LED products, other LED products no longer have supply shortages. Under the pressure of releasing 2Q13 financial reports in June, some manufacturers have lowered prices.

However, manufacturers’ new products are still in the sampling or promotion phase, or in the process of replacing old products. Consequently, obvious price competitions are expected to occur in 3Q13.

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