LED shortages are pushing backlight prices up...

The cost of LED backlights were projected to drop sharply this year, and with it the premiums consumers pay for LED-lit LCD-TVs, monitors, and notebook PCs. But the amount of those drops may be moderated by increasing prices for LEDs caused by high demand.

LED backlight prices may rise by 5-10% as shortages in chips and epitaxial wafers take hold, report Siu Han and Yvonne Yu in Digitimes, citing sources at LED packaging houses.

Some TV vendors are expecting the rapidly growing LED-lit LCD-TV market to account for as much as 25% of the total LCD-TV market in 2010, and even the pessimists say that share won’t be less than 15%. The penetration rate in 2009 was less than 3%, according to DisplaySearch, which projects the penetration in 2013 will be 40%.

Sales of LED-lit LCD-TVs could exceed 35M sets in 2010, but that estimate depends on the LED premium for 40-inch-plus screen sizes from over 100% in 2009 to less than 70% this year. That could be jeopardized if LED prices stay high.

The pessimists also note that several chip-makers have plans to bring new manufacturing capacity on line in the third quarter, which may convert the supply situation from shortage to surplus and depress prices late in the year. Looking at the other side of that coin, falling LED prices would be good for sales of LED-lit sets.

But the increases in production are focused mostly on the high-end LEDs intended for TV backlighting. Low-cost to mid-range LEDs may be largely unaffected, the sources said. Such LEDs are used for notebook and monitor panels, where the LED price premium is much less: only about 17% at 22-24 inches, according to DisplaySearch’s Paul Gagnon.

A significant percentage of the 180M LCD-TVs that are likely to be sold worldwide in 2010 have small screens, and a growing percentage of those small-screen TVs use monitor panels. (That is, panels that use TN LCDs and simpler optical stacks rather than IPS or PVA LCDs.)

The logic that drove panel makers to begin pushing the 16:9 aspect ratio down the throats of notebook and monitor makers a few years ago is now even more obvious than it was then. If, for example, a 22-inch TV panel can be essentially the same as a 22-inch monitor panel, there are fewer combinations of sizes and production processes to worry about. And if you can even use the same LED backlight unit, things get simpler at the module level, too.

The LED boom will have its ups and downs, but the overall growth is long-term. At the moment, it’s being driven mostly by the display industry, but that volume will be dwarfed by the growth of LEDs in architectural, specialty, and general lighting. Solid-state lighting (SSL) is in its infancy, but it’s going to be an immense market. We will need a lot more wafers, chips and packaged LEDs before we’re done. If we don’t keep up, the current LED shortage will look like a minor blip. Which it is.

Special thanks for this article:

Ken Werner
Senior Analyst and Editor - Insight Media