"High Lights from the Heartland" 8-29-10

A little humor: A couple was celebrating their golden wedding anniversary. Their domestic tranquility had long been the talk of the town. A local newspaper reporter was inquiring as to the secret of their long and happy marriage. "Well, it dates back to our honeymoon," explained the husband. "We visited the Grand Canyon and took a trip down to the bottom of the canyon by pack mule. We hadn't gone too far when my wife's mule stumbled." "My wife quietly said 'That's once.' We proceeded a little farther when the mule stumbled again. Once more my wife quietly said, 'That's twice.' We hadn't gone a half-mile when the mule stumbled a third time. My wife took a pistol from her purse and shot him." "I started to protest over her treatment of the mule when she looked at me and quietly said 'That's once.'"

News & observations on the LED / Solid State Lighting markets:
Per the two items below from LEDinsider, what a difference 20 days makes! We went from not enough capacity to a potential glut of LEDs for LCD TV backlighting applications! The really bad news is that there are hundreds of MOCVD lines still in the production queues at Veeco, Aixtron and others that will just add to the glut as they are delivered and brought on line (or ultimately moth balled) in Asia. The last time something like this happened in Asia, it was 2000 - 2001 and the hot end product were cell phones with blue and then white backlit screens. When that crash happened, the cost per white LED went from ~$0.20 each to less than ~$0.05, a 75% decrease.

Meanwhile, Cree is at capacity on its illumination grade LED products and they do not see their new 150 mm wafer lines starting up until mid 2011. Apparently it is easier to tool up an MOCVD line that can handle 6 inch wafers, much less so to actually grow production grade 6 inch crystals. However, Cree, like most illumination grade LED manufacturers, use proprietary packages for their devices, which is good for them... but customers using proprietary packaged parts will continue to see lead times stretching out and there will be a potential for product pricing to either flatten or go up slightly in the near term. The good news for Cree is that the glut of low current / small die LEDs used for direct LCD backlighting should not accelerate a downward price spiral at their current customers in the illumination markets... unless these small die are used in larger arrays, then all bets on the cost per lumen for new lamp and fixture designs are off. Why new just new designs? Proprietary LEDs require proprietary optics and circuit board layouts, etc. No design engineer wants to go back to an existing design if they do not have to. That puts new designs with multi-die arrays into play.

News:
Panel manufacturers worrying about LED backlit TV demand: 05 Aug 2010 - Panel manufacturers are worried that there's an inventory overflow compared to the current demand for LED backlit TVs. Korean panel vendors in particular have been saving LED stocks from the end of last year, while Taiwanese manufacturers have adopted huge quantities of LED backlight products - particularly AU Optronics, which has created a short supply for its Lextar plant. The current panel and set inventory is still set at over four weeks, which is leading to a decline in CCFL panel prices - this is forcing manufacturers to take a conservative attitude towards LED backlit products. A report from LEDinside (http://www.pcb007.com/pages/zone.cgi?a=70555&artpg=1) asks whether this will affect the penetration rate of these products, though it's too early to tell just yet. Samsung will be taking an aggressive shipment target for its LED-backlit TVs this year, also actively preparing stocks and materials since the end of last year. Retail prices for LED backlit TVs are still on the high end, which is making end user market sales lower than forecasted for the first half of 2010 leading to excess inventory. However Samsung's product "pull-in" began slowing at the beginning of Q1, and the giant has started to adjust inventory levels. Gaining orders outside of Korean firms will be crucial for Taiwan's LED industry to achieve sales targets, suggests the report. That said, following Samsung's dive into the market last year, other TV brands are beginning to actively put LED-backlit TVs into their portfolios but big names such as Sharp and Sony are still lagging and behind schedule. http://www.techeye.net/business/panel-manufacturers-worrying-about-led-backlit-tv-demand#comments
LEDinside: Limited LED Price Decline in Q3 under Continuous Demand for Large-size Backlight Application: 07/15/2010 - LEDinside, a research division of Trendforce Corp., has made the latest price trend report, pointing out that the LED price for backlight application remained stable in Q2 due to a robust demand and shortage of upstream materials. It predicts that there should be limited pressure to lower the price in Q3 as the supply of LED materials gradually stabilizes and large-size backlight application demand continues. However, high power LEDs for lighting application are expected to receive higher pressure to cut prices than LEDs for backlight application since major manufacturers are expanding their production. LEDinside says that although the LED price drops by 5%-10% every quarter, it is not the same in Q2 this year. Because of high season demand as well as ongoing expansion of large-size panel applications such as the LED backlit TV, the LED backlight application tightened the supply and caused a strain on the existing tight supply of upstream materials like the sapphire substrate, MO gas, further enlarging the supply-demand gap.