Excerpts are in order:
In June, the previous quarter’s report lowered the annual GaN LED revenue growth forecast to just 4% to $8.7B on rapid 1H’11 ASP reductions from a rising surplus, slower LCD and LED panel growth and the lighting market not yet cost competitive. With growth slowing, margins shrinking, the oversupply worsening and credit in China tighter than expected, LED manufacturers have pushed out a significant number of installations in 2011 resulting in a surprisingly large MOCVD shipment downgrade.
IMS Research has lowered its 2011 GaN MOCVD forecast by 24% to 833 reactors, which still represents 4% growth over 2011 as shown below. Smaller capacity growth should slow down the LED oversupply and stabilize pricing which will benefit near term LED manufacturer profitability and eventually lead to more tool sales resulting in an upgrade to the 2012 outlook.
Q2’11 GaN (gallium nitride) MOCVD shipment results whose highlights included:
- Shipments were down Y/Y for the first time since at least 2008, falling 14% if Veeco’s MaxBright reactors were excluded as Veeco has not yet recognized revenues for this new tool in according with GAAP.
- Including MaxBright reactor shipments, installations were still down 2%.
- Excluding MaxBright shipments, China continued to dominate the market, accounting for 70% of installations with Korea and Taiwan at 11% each.
- Lextar was the top customer in Q2’11 and 9 of the top 10 customers had operations in China.
- Aixtron remained #1 in GaN MOCVD shipments, gaining 4 points of market share to 57% excluding MaxBright with Veeco losing 3 points to 41%. Including MaxBright reactors, Aixtron’s advantage slips to 49% vs. 48% for Veeco, the closest it has ever been between the two competitors.
- By region excluding MaxBright, Veeco led in China, USA and Europe while Aixtron led in Korea and Taiwan. Veeco’s K465i remained the industry’s most popular tool, but Aixtron’s CRIUS II and G5 each gained share and rose to the #2 and #3 positions.
- The 4” shipment share rose more than 50% while the 6” share more than doubled as companies move to larger wafer sizes to boost their output and lower their costs.
There's even more in the full release so check it out:
IMS Research Downgrades 2011 and Upgrades 2012 Quarterly GaN LED MOCVD Forecast – New LED Entrants and 2011 Delays Boost 2012 Outlook
Aside from how this will influence Veeco and Aixtron, one should bear in mind that Applied Materials is getting in to the reactor business. Folks that are interested in how they are doing on this front should tune in to their earnings report coming August 24. Surely someone will ask questions about their progress during the call.