SAN JOSE, Calif. Needless to say, fewer semiconductor fabs are being built these days, and even the solar market has cooled a bit. So what's the next big thing for fabs? Try LEDs.
Rising LED demand for lighting apps and TVs has semiconductor titans like Samsung and TSMC jumping into the market, and is fueling sales growth for equipment makers from Aixtron to Veeco. An investment banking firm has just upgraded its forecast for Veeco, and Applied Materials Inc. is looking to enter the LED tool market.
Predictably, lead times for LED gear, such as metal-organic chemical-vapor (MOCVD) deposition systems, are already extending and "may bring uncertainty to capacity expansion plans," Clark Tseng, an analyst with SEMI Taiwan, states in a new report.
On the bright side, the LED market entry of chip giants such as Samsung Electronics Co. Ltd. and foundry leader Taiwan Semiconductor Manufacturing Co. "is good news for the consumer," said Dean Freeman, an analyst with Gartner Inc.
"Although the LED industry has existed for many years, LEDs are in their infancy as a commodity product; as a result, costs are extremely high. The high costs are due to inefficiencies in the process, small scale and a lack of industry standards," Freeman said. "With two of the leading semiconductor manufacturers now bringing their size and manufacturing science to the LED market, it is likely LED pricing will begin to decline, thus making lighting and other LED products more affordable for the consumer and potentially accelerating adoption."
"LED expansion and new facility projects have mushroomed all over the world," SEMI's Tseng said. "Even in the downturn of 2009, the SEMI opto/LED fab database recorded seven new LED fabs coming online. And we expect to see at least five new opto/LED fabs in 2010 and six more in 2011, respectively. Most of these new projects are located in China and Taiwan. There will be new lines coming from Japan, India and Russia as well."
SEMI tracks 91 LED fabs and 89 opto-related plants worlwide. Its database shows Japan as having the largest number of opto/LED fabs. The regions with the most LED fabs are Taiwan (40 percent), Japan (23 percent) and China (22 percent), according to SEMI.
"With all these new LED investments emerging, leading player Nichia [of Japan] is poised to maintain its leadership in LED industry," Tseng said. "Nichia announced plans to quadruple their LED production with the setup of its new fab, which is currently under construction and is expected to come on stream in early 2012."
In South Korea, Samsung is the one to watch. Samsung LED reportedly "plans further expansion by installing an additional 50 MOCVD tools, which would bring its total to an estimated 150 MOCVD tools by yearend," Tseng said. "The strong internal demand for LED-backlit modules is propelling their fastest-ever LED capacity buildup plan."