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LED Bulb Market Cycle
Dec 24, 2018

Jed Dorsheimer, senior asset analyst from Canaccord Adams, discussed the cycle of the LED market. The first cycle began in the first few years of the century, driven primarily by mobile handheld devices, which were used to illuminate the keyboard and then as a backlight for mobile phone color screens. The dramatic increase in LED manufacturing has resulted in overcapacity in 2004-2005. However, during this period, LED performance and price reduction were promoted, which in turn created the second cycle of LEDs, which is the LED backlight for medium-sized notebooks and large-size TVs. Based on the rapid growth of the (flat) TV market, Dorsheimer said that the LED industry will experience significant capacity shortages. By 2012, the LED chip gap will reach 700-100 billion. More than a few hundred MOCVD capacity needs to be invested, and the sapphire substrate should be supplied adequately. Dorsheimer believes that according to the development trend, the future will lead to 30% LED overcapacity, requiring a “one to two year digestion cycle”; capacity will not increase much in 2014-2016. History will repeat itself, as the decline in LED prices and performance improvements will help the industry advance to the next cycle, but the driving factor is lighting.