Trends in the Global LED Market - verani.net.br€¦ · Trends in the Global LED Market An Upstream...
Transcript of Trends in the Global LED Market - verani.net.br€¦ · Trends in the Global LED Market An Upstream...
Trends in the Global LED MarketAn Upstream Perspective
Falk Meissner
Chief Strategy Officer, Lumileds
March 2017
Tremendous Development of the LED Industry
TODAY
India to switch all its streetlights to LED in 2 yearsClean Technica
Daimler announces Digital Light, headlamp in HD qualityAutomobile-Production
Apple just released what it says is best camera ever on a smartphoneCNBC
TCL showcased world’s first QD on LED chip TVCES
TOMORROW
Japan’s vertical farming, feeding the world in the 21 centuryCNN
Autonomous vehicles could reduce traffic accidents by 90%McKinsey
4K UHD TV sales forecast to exceed 330M by 2019IHS
Our fingerprints, eyes and faces will replace passwordsEngadget
YESTERDAY
“Our diodes are already in use on computer panels,
freeing the man who used to look for burned-out bulbs
among all those hundreds of winking lights.
That’s a good market.
But let’s look at markets to come.
How about…
a flat head-light as wide as your car,
To evenly light the road?
Or an inch-deep color TV set?
Or a wrist watch without a dial, that shows the time in
numbers at the instant you push a button?
That’s part of the future we see in crystal chips.”The Wall Street Journal, 1971
Nevertheless, The Recent Slow-Down Reset LED Market Growth Expectations
Packaged LED market size in USD billion
Note: “Other” includes Signage, Automotive Interior, Projectors…Source: IHS, Strategies Unlimited, Lumileds global market model
2012 – 2014: Double-digit growth
• Driven by Illumination and Display
2015 - 2016: Market reset
• Rapid ASP erosion and shift to (lower cost) Mid-Power LED
• Performance improvements change system architecture and lower LED count
• Overcapacity, subsidies, China slow-down…
2017 – 2020 Mid-single-digit growth
• Continued LED penetration
• New applications
• Market consolidation
12.213.8
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2012 2013 2014 2015 2016 2017 2018 2019 2020
Illumination Display & Mobile Auto Exterior UV IR Other
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Illumination Display & Mobile Auto Exterior UV IR Other
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LEDMarket
Average analysts’ forecast
!?
Slow Starts and Bearish Predictions are Nothing New During Technology Transitions
YESTERDAY
“The automobile is only a novelty…”
President of the Michigan Savings Bank advising Horace Rackham (Henry Ford's lawyer) not to invest in the Ford Motor Company, 1903
TODAY
“World vehicle population tops 1B units”
Sources: Forbes, USA Today, New York Times, Gartner
“Cellular telephony: just a niche market…”
McKinsey predicted for AT&T in 1980 that the market for cellphones in the US would amount to only 900,000 subscribers in 2000
“Nearly 1.5B smartphones sold in 2016”
• Increasing performance, higher reliability enabling everyday use
• Lower cost triggering mass adoption
• New form factors and functions more suited to the application
• New consumer behaviors and new applications expanding the market opportunity
• New ecosystems: infrastructure, suppliers, channels, support, standards & regulations, financial tools
• Consolidation of the industry
KEY SUCCESS FACTORS
The Cycles of Technology Transition are also Driving the LED MarketReplacement of old
technologyDisruptive Performance, lower cost,
miniaturization, new form factorsNew ecosystems enabling new
applications and markets
Automotive • ADAS/Autonomous• Digital head light• Connected• Biometrics
Mobile • Biometrics, AR, VR• Connected • High-Gamut Display• Camera picture quality
Display • Smart Home• HDR 4K• Ultra-slim, Curved• High Gamut Color
Illumination • Smart & Data Driven• Application specific• Quality of light• Integrated solutions
Conversion to LED – Not Done Yet!
85% of installed luminaires still based on conventional technology in 2020
Strategies Unlimited
3 Billion extra city dwellers by 2050United Nations
x2 number of lights in the average British home in the last decadeEPR Retail News
85%
15%
LED Adoption is Driving Growth in Automotive
101 Million light vehicles produced globally in 2020IHS
75% of global cars to have conventional lighting by 2025Internal model
<1% penetration of global cars with Laser or HD Digital Headlight in 2016Internal model
75%
25%
Technology & Performance Advances Enable New Auto ApplicationsAdvanced headlighting, dynamic beam functionality
Front and rear lighting signature design
Laser headlighting
ADAS and Autonomous Driving
New Light Functions are Emerging Through Spectra Engineering and Control
Stadium HD-TV broadcasting, TLCI, multi usage and show effects
Horticulture
Human-centric
Biological, emotional, health or wellbeing benefits
Vertical inner-city farming, faster growth, higher quality plants
Sources: LEDs Magazine, Ephesus
Technology Innovation and Performance Improvements Create Attractive Segments
QD LED
IR LED
UV LED
High Gamut Displays, High-CRI Illumination…
Curing, Counterfeit detection, Disinfection, Purification…
Biometrics, Night vision, Wearables, Proximity sensing, ADAS …
Sources: YouMobile, CNET, TCL
Continued Drive to Miniaturization and Higher Levels of IntegrationHave Been Seen Before in the Semiconductor Industry
Pack
age
Den
sity
@
sh
rin
kin
g p
in p
itch
DIP (2.54mm)
PLCC(1.27mm)
QFP(1.0mm)
PGA (2.54mm)
BGA (0.4mm)
QFN (0.5mm)TSOP (1.27mm) Package On Package
3D Stacked
Semiconductor Industry
LED portfolio and package development
Flu
x &
Lev
el o
f In
tegr
atio
n
at s
hri
nki
ng
LED
siz
e
LUXEON I/III/V LUXEON K2 LUXEON Rebel LUXEON M, T, MZ, EZ CSP, MP/LP CoB, DoB, Connectivity
Development of the Digital Ecosystem Requires both: LED Performance Improvements and Integration of Digital Value-Add
ElectronicsTunability, Driver on Board, sensing, control
OpticsSecondary optical assembly integration, environment protection
Spectra engineering & controlVisual preferences, non-visual responses
The LED Lighting Ecosystem is Evolving with Companies Becoming More Focused within the Value Chain
Vertically Integrated
LED components
Lighting solutions
Light engine integrators
Digital Lighting is Building on new Capabilities and Extended Ecosystems, Disrupting the Industry Structure
Lighting solutions
Light engine integrators
Semiconductor Players
Service & Infrastructure
providersBig data
System integrators
Distributors or Direct
(Lighting) Systems, Data,
Services
The Semiconductor Industry, an Example for ConsolidationSemiconductor market,Market share of Top 10 as % of total market size Recent M&A’s among Tier 1 players
48% 47%
10% 12%
16% 15%
4%5%
7%4%
4%
2015
3%3%
4%
2012
3%3%
3%3%
4%
Others Others
May2015
$37B
June2015
$17B
March 2015
$12B
October 2016
$39B
Sources: IHS, Forbes
Date Deal valueBuyer Acquired
Healthier market dynamics… … is expected to balance supply and demand
Declining LED subsidies, China’s focus moving to compound semiconductor
Reduced capacity expansion since 2012
Combined MOCVD shipment of Veeco and Aixtron (in units)
Sources: Bloomberg, IHS
0
50
100
150
200
250
Q1’14 Q1’15 Q1’16Q1’13Q1’11Q1’10 Q1’12Q1’09
0
50
100
150
200
250
300
350
20202015
LED supplyLED demand
Trillion sq. mils of LED
Surplus>20%
2015
<5%
2020
The LED Industry Shows Indicators for Consolidation and More Rational Market Behavior
The LED Industry Shows Indicators for Consolidation and More Rational Market Behavior
Sources: Company financial reports
Declining performance of Top 7 Chinese players …. … forces more rational market behavior
0
1
2
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1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Measure of Liquidity
Quick Ratio =𝐿𝑖𝑞𝑢𝑖𝑑 𝑎𝑠𝑠𝑒𝑡𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
LEDinside, May 2016
LEDinside, August 2016
LEDinside, December 2016
Despite some Transactions, the LED Industry Remains Fragmented
¹Deal value not disclosed, based on estimates from LEDnews.org and China’s Securities DailySources: Strategies Unlimited, company websites
Packaged LED market,Market share of Top 7 as % of total market size Recent M&A’s
43%49%
6%5%
10%8%
17% 15%
5%6%
6%6%
8%8%
2012
4%
2015
4%
OthersOthers
Date Deal value
July2015
$130M¹
Buyer(s) Acquired
August2014
$83M(13% stake)
July2014
~$435M(share swap)
June2013
<$30M¹
Blocked by CFIUS
Trends in the LED industry - An Upstream Perspective
The LED transition is still at its beginning … global megatrends and low penetration rates drive long-term growth
The LED market is bifurcating … lower cost and commoditization trigger mass adoption, while …
Innovation and performance improvements enable fast growing and profitable LED segments
Miniaturization, application specific LEDs, and connectivity … drive new form factors, customization, higher levels of integration, and create new sources of value-add
The ecosystem of digital lighting is forming … driving growth in new applications and markets, while disrupting the value chain
Consolidation is expected … but not yet happening