Demand for key raw material set to double as LED market booms

Global demand for precursor, which is used to manufacture LEDs, is set to double by 2016 thanks to an increase in global shipments for MOCVD equipment in Asia.


Global demand for precursor, a material used in manufacturing of light-emitting diodes (LEDs), is set to more than double from 2012 to 2016, as the market for LED lighting booms, according to a new report entitled “Precursor for LED MOCVD–Market and Industry Analysis,” from Displaybank, now part of IHS.

The market for precursor used in the metal-organic chemical vapor deposition (MOCVD) manufacturing process for making LEDs will rise to 69 tons in 2016, up a notable 114% from 32 tons in 2012.

“The boom in the precursor market reflects the rising operating rate of MOCVD as the LED lighting market grows,” said Richard Son, senior LED analyst at IHS.

Precursor is a core material that ensures the optimal light efficiency for each LED epi layer. It is used in the MOCVD process, which is the most important process in manufacturing LED chips. Major precursors include trimethylgallium (TMGa), trimethylindium (TMIn), trimethyl aluminum (TMA), triethylgallium (TEGa) and C2Mg2. Among these, TMGa is the most widely used and commands about 94% of total demand.

Global shipments of MOCVD equipment are on the rise, with shipments expected to climb by 17% in 2013.

The largest buyers of MOCVD equipment—South Korea, Taiwan and China—account for about 80% of the global demand of precursors. China, which is generating the highest growth in installation of MOCVD equipment among the three countries, is expected to make up 45% of the global demand of precursors in 2016.

In the nascent stage of the LED market, Dow Chemical Co. was the unrivaled leader in the precursor market. However, with the recent growth in precursor demand, new players have been investing in R&D and manufacturing facilities while aggressively breaking into the market with low prices for similar-quality product. Such developments will intensify competition further among precursor makers.

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