LEDinside: Affected by Inventory Adjustment, LED Price Quotation of 1Q11 Continues to Decrease, and the extent of the price decrease in 2Q11 is expected to shrink. 

Based on the survey of LEDinside, the LED research division under TrendForce, LEDinside indicated that the speed of LED market demand recovery in the first quarter of 2011 is slower than expected. Affected by inventory adjustment of the large-sized panel display market and the LED lighting market, LED manufacturers are facing the pressure of price reduction. 

The extents of the LED price decrease for the large-sized panel display application vary as well. The largest decrease is the price for LED backlit TV which has dropped by 10%~15%. However, the LED specification development for the NB and monitor applications has become mature, and the price has plummeted to the bottom in the past two years. Therefore, the price merely decreased by 3%~5%, and the extent of decrease is limited. Besides, due to relatively stable demand for the mobile backlight products, the price is much more stable with a slight decrease of 3%, compared with products of other specifications. As for high power LED lighting applications, affected by inventory adjustment, the price has dropped dramatically, and average price has fallen by 15%~20%.

Numerous Players in the TV Backlight Market to Raise Price Competition

Due to the weak TV sales in 1Q11, high TV-related material inventory and high TV inventory, the speed of LED market demand recovery is slower than expected. Moreover, many LED manufacturers have increased their capacities to raise the TV backlight market share since 2010. Therefore, the 5630 price faces a much fiercer competition. Moreover, with TV vendors’ LED TV price promotion, the 5630 price has decreased by 10%~15% in 1Q11.

Since the second and the third quarters are traditionally peak seasons of the LED industry, and every TV vendor has gradually increased purchase orders since March to avoid LED shortage which occurred in the first quarter of 2010. The extent of the decrease in LED price of 2Q11 is expected to narrow.

Relatively Stable LED Price Quotation for the NB / Tablet PC Applications

In addition, the LED specification development for the NB, monitor, and mobile applications has become mature. Plus, the LED penetration rate for these applications has still remained the same and shipment is relatively stable. Moreover, the price has plummeted to the bottom in 2009 and 2010. Therefore, the 3020/3014/0.8t prices have merely decreased by 3%~5%, and the extent of decrease is limited.

In terms of emerging tablet PC application, because Tablet PC needs to adopt low voltage LED specification, which few manufacturers get involved in, the LED price is relatively stable.

Due to Improved LED Specification and Inventory Adjustment, the LED Price for the Lighting Application has Sharply Dropped. 

Currently, most LED lighting market demand is from scattered orders for commercial and indoor lighting applications. Since there are no large-scaled subsidies, the high power LED price has sharply dropped. Besides, the LED specifications made by international lighting manufacturers have continued to improve, and the capacities for the lighting market demand have greatly increased since last year. Hence, most manufacturers are forced to launch price promotion to gain the LED lighting market share.

According to LEDinside’s survey, the price of high power LED in 1Q11 has decreased by 15%~20%, and a strategic price promotion was specifically offered to major clients. In terms of the outlook of 2Q11, the price reduction pressure still exists. However, the inventory adjustment has lasted for half a year, the extent of the price decrease is expected to narrow.

Perspective from LEDinside

In terms of the outlook of next three quarters of 2011, profit margin of LED backlight products is believed to remain small in 2011 and the current market price quotes could go down further. The LED purchase orders have increased since March and the extent of the price decrease is expected to narrow. Moreover, many LED manufacturers increased their capacities in the latter half of the year and LED material cost is expected to reduce. Therefore, it is estimated that some backlight products will experience even fiercer price competition in the third quarter of 2011.

As for the high power LED lighting market, LED penetration rate of the lighting market is expected to increase due to improved specification and vertical integration business model. However, in the short term, there is no obvious subsidy policy launched, and the reconstruction demand from Japan might appear later in the second half of 2011. It is hard to see a stable decrease in the high power LED price in the short term.

As for the LED chip price quotation, the extent of decrease for different specifications varies. The average price in the first quarter of 2011 has dropped by 15%~20%, but the price of small-sized chips has decreased by over 30%.

In terms of LED package component, there are different magnitudes of decrease in the LED backlight price quotations as well. The largest decrease is the price for LED backlit TV which has dropped by 10%~15%. However, the LED specification development for the NB and monitor applications has become mature, and the price has plummeted to the bottom in the past two years. Therefore, the price merely decreased by 3%~5%, and the extent of decrease is limited. Besides, due to relatively stable demand for the mobile backlight products, the price is much more stable with a slight decrease of 3%, compared with products of other specifications. As for high power LED lighting applications, affected by inventory adjustment, the price has dropped dramatically, and average price has fallen by 15%~20%.