The high-brightness LED chip market is projected to reach US$8.25 billion in 2010 and up to US$12.6 billion in 2011, according to Digitimes Research analyst Jessie Lin. With LED chipmakers from South Korea, Taiwan, and China aggressively ramping up MOCVD capacity, production value will rise substantially in the coming years.

High-brightness LED chip shipments will increase by a CAGR of 28.6% in 2009-2013, and LED lighting applications, in particular, will grow at a compounded 97.4% pace over the same period versus only 62.6% for LED-backlit LCD monitors.

The strong growth in high-brightness LED chip usage has also stimulated demand for MOCVD equipment. With the China government's generous incentives to develop the country's LED industry, MOCVD machine orders in China during the second half of 2010 exceeded those of South Korea and Taiwan.

China will represent 60% of the three countries' MOCVD equipment procurement in 2011, and South Korea's share will drop to 15% since orders are projected to fall by 50% from 2010.

Orders for sapphire substrates exceeded capacity by 40% in 2010 largely due to conservative expansion plans by major sapphire ingot suppliers Rubicon and Monocrystal. With strong demand from LED chip makers, the sapphire ingot makers have increased efforts to ramp up capacity. South Korea-based STC's monthly capacity in 2011 will surpass that of Rubicon. Global sapphire ingot capacity in 2011 will nearly double that of 2010.

Source: Digitimes Research, compiled by Digitimes, January 2011