Expects Risks of Oversupply to Continue in Global LED Industry for 2019; Niche Applications Would Provide New Growth Momentum

- Dec 13, 2018-

LED companies have been keeping low stocking due to the sluggish demand in the end markets in 2018 and impacts of the China-US trade war, Looking ahead to 2019, the overall industry still has risks of oversupply, but demands for niche applications, including fine-pitch LED digital display, Mini LED backlight, UV-C LED, automotive lighting and high-efficiency lighting LED, have a positive outlook and may drive the market growth in the future.

After the recent G20 summit, China and the U.S. have announced to halt new trade tariffs for 90 days, which were originally planned to take effect on January 1, 2019. For the LED industry, it is still uncertain whether the tariffs would be 25% or 10%, which may significantly influence manufacturers’ purchase plans and relocation of factories. However, as the trade war looms, LED manufacturers have to postpone their schedules of decision making. With all these uncertainties, the supply chain tends to wait and see how the situation plays out after three months. So the pending circumstance may slow down demands further.

Fine-pitch LED digital display

the revenue of fine-pitch display-used LED will grow by 31% YoY in 2018, with the increasing demand for LED displays from the rental market, retail industry and conference rooms, etc. Compared with other applications, fine-pitch LED displays have higher profit margins, and the fine-pitch technology would also enable more new applications. In addition, the falling prices of LED chips have made LED displays more cost-effective than other alternatives in the commercial sector. Therefore, many LCD panel manufacturers and branded display manufacturers would try to develop fine-pitch LED displays, including Epistar, San’an Optoelectronics, HC Semitek, Everlight, NationStar, Harvatek and Kinglight, etc. Driver IC makers like Macroblock and Chipone would also benefit from the development of fine-pitch LED displays.

Mini LED backlighting

Coupled with direct type LED backlight and local dimming, mini LED backlighting can be introduced into LCD display to enhance the contrast and brightness of LCD display. Mini LED applications can provide customers with an extra choice other than OLED displays. Taking 27-inch desktop gaming monitor as an example, it uses around 4,000~12,000 LEDs, providing better performance and visual experience for users in combination with multi-area independent backlight control. However, current mini LED applications are only found in premium models due to the high technical costs. Mini LED backlight technology is expected to be widely applied to other kinds of displays, if the costs are cut down and breakthroughs are made in the process of mass transfer, which will significantly boost the demand for chips in the LED industry. LEDinside notes that, companies with a solid foundation in backlight segment or in-house panel supply, such as Epistar, Lextar, Epileds, AOT and REFOND, etc., would be more likely to make the most of business opportunities related to Mini LED.