THIS MATERIAL IS A MARKETING COMMUNICATION.
Video: LED Market: Recent Developments and Trends
Hi, my name is Edward Chan. I am an investment analyst here at Mirae Asset.
Today we will give a brief introduction to the light-emitting diode (LED) industry and go through the current competitive landscape.
LED Technology Overview
Light-emitting diode (LED) is made from semiconductor materials. The recombination of electrons and electron holes in a semiconductor produces light. Based on the semiconductor material used and the amount of doping, an LED will emit a colored light at a particular spectral wavelength. The advantages of LEDs include high energy efficiency, small size, short response time, high reliability, and long lifetime etc.
The improvement of LED technology can be summarised with Haitz law, which states that in every decade, the cost per lumen (unit of useful light emitted) falls by a factor of 10, while the amount of light generated per LED package increases by a factor of 20, for a given wavelength of light. This means lighting efficiency has been improving rapidly, and cost has also been dropping significantly.
Main applications of LEDs include display backlight, display, and lighting. The improvement in LED technology and reduction in cost enables technology penetration to increase in the respective application verticals. Innovation in miniaturisation of LED chips such as mini LED and micro-LED will drive the industry forward in the next decade.
The two main ways to adopt LED in display are to use it as a backlight or as part of the display. The majority of Liquid Crystal Display (LCD), for example, use LED as backlight. This is one of the earliest applications of LED. Evolution of this technology is to use mini LED as the backlight. By increasing the density of the backlight, LCD can achieve similar performance to OLED (Organic light-emitting diode) as the adjustment of brightness is possible down to local level (traditional backlight simply provides uniform brightness), which creates higher contrast/dynamic range. Given the significant price gap between LCD and OLED, display with mini LED fills the gap in between. Apple is currently the main driver of mini LED backlight adoption. The company is launching a number of product which adopts mini LED backlight this year.
Companies also build displays with LED directly. Currently, LED is mainly used for outdoor displays and large indoor displays where resolution requirement is relatively low. However, with the development of mini LED and micro-LED technology, companies are building higher resolution display with LED chips directly.
LEDs are used in various lighting applications, including auto, home, industrial, infrastructure and more. The energy efficiency, stability and long lifetime of LEDs present a clear advantage over conventional lighting technologies.
China becomes a dominant supplier in LED chips globally
The LED industry used to be dominated by Japanese, Korean, and Taiwanese companies. In 2005, China only accounted for around 2% of global LED chip capacity. It all changed in 2009 when the Chinese government began to provide high subsidies (around 60%) for the purchase of MOCVD (Metal-Organic Chemical Vapour Deposition) (key manufacturing equipment for LED chip) by LED chip manufacturers. The rapid growth of the domestic industry has put significant pressure on its foreign competitors in terms of price and margin. The price of LED chips dropped over 90% from 2010 to 2020.1 The market share of Chinese companies in LED chips climbed to 58% in 2017 from 2% in 2005.2
We estimate mainland China now has over 70% of global LED chip capacity. Sanan optoelectronics has the largest LED chip capacity globally at around 35%-40%.3 Epistar has around 15% of global capacity, followed by HC SemiTek and Aucksun.4
Staying Ahead with Mirae Asset’s Latest Insights
1 CICC, 2020
2 Qianzhan Research, 2018
3 Mirae estimates, 2021
4 Mirae estimates, 2021
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.