LED Chip Prices See 3–5% Surge, Predicted to Boost Annual LED Chip Market Value to US$2.9 Billion
June 2, 2023 | TrendForceEstimated reading time: 2 minutes
TrendForce has reported a significant decline in global LED demand throughout 2022, resulting in a noticeable downturn in both LED lighting and video wall markets. The industry was faced with an LED chip surplus, which led to a continuous drop in prices throughout the year.
The combined impact of volume and price reduction resulted in a sharp 23% annual decrease in the market value of global LED chips in 2022, shrinking to just US$2.78 billion. Despite this challenging landscape, it is predicted that the LED industry will recover in 2023, primarily driven by a resurgence in the LED lighting market. The anticipated rebound could elevate the LED chip production value, with estimates placing it at US$2.92 billion for 2023.
LED Commercial lighting is expected to lead the comeback charge in the broader LED lighting market. From a supply chain perspective, the LED lighting industry hit a low point in 2018, leading to an exodus of several small and medium-sized enterprises. Moreover, some lighting LED chip manufacturers have been consistently transitioning into more profitable sectors such as display technology. This shift resulted in reduced supply and correspondingly lower inventory levels.
In response to these changes, several LED companies opted to increase their prices. The primary increase has been seen in the price of LED chips specifically used for lighting applications. The most significant price increase was observed for low-power light chips with an area of 300 mil2 or less, which saw a price rise of about 3–5%. In certain cases, the price hike for chips of unique sizes reached up to 10%.
TrendForce survey data indicated a growing trend among LED supply chain companies toward raising prices. This trend is anticipated to persist due to the high demand for LED chips. Many companies see this price adjustment as a means to mitigate losses and actively reduce orders with low-gross margins.
TrendForce analysis underscores that the majority of the world’s LED chip suppliers are based in China. In recent years, heightened industry competition has forced some companies to exit the LED chip market. At the same time, Chinese LED chip manufacturers have decreased their focus on the chip sector. Most of the suppliers who have remained in the market have reported consistent losses over an extended period.
In China, the recent price rise for low-power light chips is viewed as a short-term strategy to bolster profitability. Looking ahead, TrendForce predicts that by striking a balance between supply and demand, and increasing industry concentration, the LED industry will gradually return to a state of normalcy.
Suggested Items
Micross, Sital Announce Global Manufacturing & Distribution Partnership
05/07/2024 | Micross Components, Inc.Micross Components, Inc., a leading global provider of mission-critical microelectronic components and services for high-reliability aerospace, defense, space and industrial applications, is pleased to announce our exclusive partnership with Sital Technology (sitaltech.com), the leader in MIL-STD-1553 IP cores, specializing in integrated FPGA solutions.
Worldwide Silicon Wafer Shipments Dip 5% in Q1 2024
05/07/2024 | SEMIWorldwide silicon wafer shipments decreased 5.4% quarter-over-quarter to 2,834 million square inches in the first quarter of 2024, a 13.2% drop from the 3,265 million square inches recorded during the same quarter last year, the SEMI Silicon Manufacturers Group (SMG) reported in its quarterly analysis of the silicon wafer industry.
Nolan’s Notes: Coming to Terms With AI
05/07/2024 | Nolan Johnson -- Column: Nolan's NotesHow fast do things move in the world of data analytics? Here’s an example. We’ve been planning this issue on artificial intelligence for the past few months, and, in fact, I had already written this column about a month ago. Then I went to IPC APEX EXPO and upended it all. I originally had compared AI to drag racing in that (CPU) horsepower and new (data) vehicles have steadily delivered higher performance competition. That seemed pretty accurate given how generative AI models dominated the popular media with amazing results—and sometimes spectacular crashes.
May Issue of SMT007 Magazine: Coming to Terms With AI
05/06/2024 | I-Connect007 Editorial TeamIn the May 2024 issue of SMT007 Magazine, we examine the profound effect artificial intelligence and machine learning are having on manufacturing and business processes. We follow technology, innovation, and money as automation becomes the new key indicator of growth in our industry.
I-Connect007 Editor’s Choice: Five Must-Reads for the Week
05/03/2024 | Nolan Johnson, I-Connect007This week’s most important news is strategic—and telling. When one puts together the IPC industry reports, we simply have to include the recent conversation with Shawn DuBravac and Tom Kastner. On the design side, check out the latest “On The Line With…” podcast featuring Brad Griffin from Cadence Design Systems, discussing SI and PI in the realm of intelligent system design.