IMS Research shows that the GaN LED market grew only 1% in 2011

　　IMS Research shows that below-expected TV backlight LED penetration rates and overcapacity will keep nitride LED market growth at a minimum.

　　According to the latest IMS Research report, although the general lighting application market for LEDs is developing rapidly this year, demonstrating the feasibility of replacing traditional light sources, the overall nitride-based LED market is essentially flat compared to last year.

　　IMS Research shows that from 2012 onwards, growth of the GaN LED market will depend on general lighting applications. Chip sales for TV backlight packaging will peak in 2013 and will then become the mainstream trend for backlighting applications. The LED lighting market will continue to grow over the next five years and is expected to begin contracting in 2016.

LED market will gradually become saturated

　　According to IMS Research analyst Ross Young, LED manufacturing capacity has significantly increased since 2009, leading to a large oversupply of LED production this year. This has driven down LED prices and reduced revenue growth from volume increases. Statistics show that the GaN LED market was worth $8.7 billion in 2011, only a 1% increase over last year's figures.

　　LED prices have fallen significantly this year, with the average price across all LED application categories declining by 21%, although in some areas prices have dropped by as much as 44%. "Especially in the backlighting sector, prices for all LED backlight applications are expected to decline," Young noted, adding that LED TV applications have still not met previous expectations due to persistently high prices.

　　However, in lighting applications, high-quality LED chips are essential, and the price decline is not as significant. The lighting market is currently the fastest-growing application market for nitride LEDs, expected to rise 24% this year to $1.7 billion, representing 20% of the overall LED market (compared to 16% for lighting applications in the overall LED market in 2010).

　　However, LEDs still account for only a very small proportion of the overall lighting market, expected to be just 1% in 2011. This means that growth in general lighting applications will increasingly drive the broader LED market. As LED backlight technology matures, LED backlight applications will overtake LED lighting applications in 2014 and 2015, at which point all panel backlight applications will be saturated.

　　Regarding organicLED lighting applications, Young predicted that, although this technology has potential, it still more or less belongs to the category of niche technology. As the costs of chips and components decline rapidly and quality and efficiency continue to improve, the development momentum of inorganic LED technology will continue to remain strong.