July 24, 2014…LEDs are quickly replacing older, less durable and energy-efficient lighting technologies worldwide. Market research company, Frost & Sullivan says that because chemicals and materials are required at all stages of the LED fixture’s manufacturing process, chemical companies will be an important factor in the future success of the LED industry.
Frost & Sullivan predicts that revenue growth in chemicals demand will be ahead of growth in the LED industry itself. The company projects that the LED materials market, which had revenues of $5.01 billion in 2013, will increase to $11.71 billion in 2018. Frost & Sullivan examined applications for chemicals through chip fabrication, packaging, module construction, and fixture assembly.
The company points out that historically, demand for LEDs in applications including display backlighting has driven growth in chemicals demand for LED applications. However, Frost & Sullivan says that this market is now relatively mature, and the company predicts that the demand from the general lighting sector will dominate future growth. According to the company, of the four tiers of the value chain involved in manufacturing LEDs, the greatest need for chemicals will come from the final stage, assembling the fixture.
“While prices of LEDs are falling at all stages of the value chain, price pressure is particularly strong in the packaging stage,” noted Frost & Sullivan Performance Materials Industry Principal Brian Balmer. “As a result, chemical companies that offer innovative products enabling cost savings for LED manufacturers will be well-positioned to succeed.”
The company indicated that unlike traditional lighting, LED light sources do not have to be designed around a replaceable bulb. For this reason, the company expects that innovative designs and material options will create opportunities that did not exist with previous lighting technologies.
“Chemical companies, therefore, need to partner with fixture manufacturers to help them understand how chemicals and materials can be used to design the LED fixtures of the future,” said Balmer.
While, the company says that the packaging tier has some of the greatest requirements for innovation from chemical companies, this tier is reportedly under the greatest pressure to reduce prices
Frost & Sullivan noted in a summary of their recent report, “While some market segments, especially phosphors, have large barriers to entry, others offer opportunities for new entrants to the market.” Further, the company says that more an more lighting OEMs are looking to produce their own chemicals in-house to be more competitive.
In the chip stage, CVD precursors have the majority of the material market value. The majority of the package material market value is in phosphors. The largest portion of the module material market is for thermal interface materials. In the fixture stage, plastics for secondary optics are the largest part of the material market.