LED backlit displays ratchet up demand on LED market

An increased demand for LED backlit displays has started to eat into an LED surplus that was built up when a glut of new suppliers entered the market.

Research body, DisplaySearch has reported that demand from LCD backlights will continue to dominate LED demand until 2013, when it will reach its peak. The findings were published in the according to the NPD DisplaySearch Quarterly LED Supply/Demand Market Forecast Report.

LED makers suffered in 2011 when an initial growth in demand from LCD TV backlights reversed as sales slumped and efficiency improvements meant less chips were needed per backlight.

The demand for LEDs in LCD backlights did grow slightly, largely fuelled by tablet PCs LCD monitors. Modest growth was also seen in the lighting industry.

However, many new LED suppliers entered industry resulting in "a significant over-supply" throughout 2011.

"LEDs have been in surplus since the end of 2010, setting the stage for a decrease in LED prices and margins," said Steven Sher, analyst for NPD DisplaySearch. "As a result of this surplus situation, there has been almost no investment in LED applications, nor any significant capacity increases in 2012. This is resulting in a halving of the supply/demand glut from 2011 to 2012."

But, with low-cost direct LED backlight designs for LCD displays growing in popularity, demand is expected to continue to increase into 2013.

DisplaySearch also predicts that by 2014, lighting will become the dominant source of demand for LEDs.