Strong Demand Triggers Tight LED Supply

Raw materials for LEDs used as backlights in large liquidcrystal displays (LCDs) are in tight supply due to strong demand, according to iSuppli Corp. Another problem isconstraints on manufacturing capacity. As a result, panel suppliers areexpected to introduce backlight designs that require fewer LEDs per panel.

Shipments of large LCD panels with LED backlights areforecasted to reach 276.7 million units in 2010, up a 135 percent from 2009. In2010, LED backlights will be used in 43.1 percent of all large-sized LCDpanels, which mainly are used in LCD-TVs, mobile computers and desktopmonitors.

Engineers are also including LED backlights in moredesigns for electronic signage, industrial and medical applications.

LED backlighting has advantages compared to the olderCold Cathode Fluorescent Lamp (CCFL) technology, including slimmer design,reduced weight, lower power consumption and mercury-free attributes for agreener, more environmentally friendly solution.

iSuppli defines large-sized LCD panels as those having adiagonal dimension of 10 inches or more.

"There have been mounting concerns in the industry aboutsupply constraints for LEDs and light guide plates, two of the major componentsfor LED backlights," says Sweta Dash, senior director for LCD research atiSuppli. "Changes in light guide design, constraints in raw materials and highexpansion costs are limiting capacity."

Another major constraint is the inability of Metal OxideChemical Vapor Deposition (MOCVD) reactors to keep up with demand for LED chips.As a result, tight supply of LED chips is expected until the end of the year.

"By the second half of this year, a clear distinctionwill emerge between the ‘haves' and ‘have-nots', among the panel suppliers"Dash predicts. "Those panel makers that have their own internal manufacturingof LEDs will have sufficient supply in 2010, while those that don't willencounter constraints."

To address supply problems, LED suppliers are shiftingproduction to 4-inch and 6-inch wafers and away from older 2-inch wafers.However, LED makers will need as long as one year to adjust to the change inproduction technology.

Most panel suppliers expect the number of LED chips pertelevision panel to decline by 30 percent or more at the end of 2010 comparedto one year earlier.

The LED manufacturing process starts with the productionof a semiconductor wafer in a high-temperature, high-pressure chamber. The rawmaterials used are gallium, arsenic, and/or phosphor, which are purified andmixed together in the chamber. Gallium is usually produced as a byproduct ofbauxite production. Its supply has been affected by short-term bursts indemand, which last happened in 2007.

"Long term, gallium will be available with intermittentprice volatility," says Claire Mikolajczak, director, Metals and Chemicals,Indium Corp., a producer based in Singapore.