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
ZESTRON Academy Launches 2024 Advanced Packaging & Power Electronics Webinar Series
05/01/2024 | ZESTRONZESTRON, the leading global provider of high-precision cleaning products, services, and training solutions in the electronics manufacturing and semiconductor industries, proudly announces the launch of its highly anticipated webinar series on Advanced Packaging & Power Electronics, a webinar series on the latest innovations, cleaning, and corrosion challenges.
The New Industry: Will the Growth Continue?
04/30/2024 | I-Connect007 Editorial TeamHow sustainable are the primary financial models in the United States regarding PCB fabrication shops? In this interview with economic experts Shawn DuBravac and Tom Kastner, we explore what’s happening with U.S. printed circuit board shops in today’s market, how consolidation affects the industry, and what can be done.
TTM’s High Tech Expansion and Industry Innovation
04/30/2024 | Marcy LaRont, PCB007 MagazineTom Edman has been the CEO of TTM Technologies since 2014 and has an extensive background in electronics and manufacturing. TTM is a leading global manufacturer of technology solutions, including mission systems, RF component and RF microwave microelectronics assemblies, and quick turn and advanced technology printed circuit boards.
U.S. Companies Invest Heavily in Robots
04/30/2024 | IFRManufacturing companies in the United States have invested heavily in more automation: total installations of industrial robots rose by 12% and reached 44,303 units in 2023. Number one adopter is the car industry followed by the electrical and electronics sector.
USPAE to Springboard U.S. Technology Forward
04/30/2024 | Marcy LaRont, PCB007 MagazineThe U.S. Partnership for Assured Electronics (USPAE) was launched as a nonprofit subsidiary of IPC in 2020, specifically to manage the DoD relationship and access to funding, and to develop a cooperative facility to develop UHDI capabilities in the U.S., not only for the defense sector, but for the whole of the U.S. electronics industry. It is a tall order, but industry veteran Joe O'Neil believes it will happen. Having been tasked with making the UHDI Capable Cooperative Production Facility (UCCPF) a reality, he provides an update on this important project for U.S. electronics manufacturing.