LED market saturation forces manufacturers to look for new applications
（Resource: BizLED Bureau）
LED manufacturers had an especially tough year in 2015. Demand in LED backlight and lighting markets has been lower than expected, which caused average selling prices (ASP) of LED chips andLED packages to decrease more than expected. This trend was observed during the second half of 2015, when LED chip and package prices sharply plunged and was as low as the material costs.
So, many companies started looking for new applications areas to come out of the loss and maintain their profit. Some of these new application areas are:
Flip-chip LEDs for TV backlights
Earlier, few manufacturers used to highlight their flip-chip LEDs as major products due to low yield rates,production costs and several technology challenges. Then in 2014, many Taiwanese and South Korean manufacturers begin to invest in the R&D of this technology. Gradually these flip-chip products have become more efficient and profitable as their quality improved and costs went down. South Korean LED manufacturers started to apply these LEDs in TV backlight. These branded TV vendors have also significantly raised their usage of flip-chip LEDs as the source of LED backlight.
According to a report, LED manufacturers will continue promoting flip-chip and the even smaller chip scale package (CSP) LEDs in the TV backlight market. So, the penetration of flip-chip technology in this application is projected to go beyond 50% by 2017.
LED lighting replacement products
LED lighting replacement products like LED bulbs and LED tubes are becoming more standardized and have been promoted by many branded lighting companies. Hence, LED bulb prices around the globe are getting cheaper.
So, lighting companies will continue to find cost-cutting solutions in the year ahead. They will be measuring the cost of LEDs to lower the price of an entire LED lighting product apart from lowering the costs of driver and other components. Bringing costs down help lower product prices, which in turn expand sales and market share. The LED lighting replacement products maybe widely adopted in the next few years.
Innovative or special lighting applications
Due to the fierce LED pricing competition in the white LED market, manufacturers are looking for innovative or special lighting applications to increase the profit. Some of the applications that have drawn attention of manufacturers are related to non-visible light spectrum, such as ultraviolet (UV) andinfrared (IR) LEDs.
Compared with lighting or backlight applications, the non-visible light applications are very limited in their market sizes. UV and IR LED markets have a very high technology barrier and production is very customized. LED manufacturers, supplying to these application markets, will have to work closely with solution providers/system manufacturers whereas non-visible light LEDs will have much higher gross margins than white LEDs.
Though UV LEDs currently has exposure and is its largest application markets, manufacturers are paying attention to other applications such as disinfection as well. Developing LEDs of UV-C wavelength, which suits disinfection, requires manufacturers to overcome an exceptionally challenging barrier. Though the UV-C market has fewer players, the number of active entrants is expected to increase.
IR LEDs have a huge range of applications. They are used in remote controls or security / surveillance solutions and in image sensors, motion sensors, position detection sensors, proximity sensors, biometric recognition systems and photoplethysmography sensors.
IR LEDs will also find value-added applications in handheld devices like information security and health management. In a nutshell, the IR LED market is highly profitable and has lots of scope for growth due to diverse uses of technology.