Monday, February 21, 2011

Mind the export regulations and help LEOMA change them

It may be a flat economy, but export regulations still matter. Rocky Mountain Instrument and BAE Systems both found out the hard way last year. And meanwhile, the trade group LEOMA is pushing the U.S. government toward more relaxed regulations.

First, what happened to RMI--Rocky Mountain Instrument? In 2008 it had over $15 million in revenues and 150 employees (here's a photo for proof). But it was raided in 2007 for ITAR violations, filed for bankruptcy in 2009, and in June of last year, the Colorado-based company was slapped with a $1 million criminal fine. It pleaded guilty to selling ITAR-controlled prisms and data to such places as China, Russia, Turkey, and South Korea without a State Department license.

At the time of the raid, RMI waved off the accusations. Something about a disgruntled employee and that the investigation didn't involve RMI Lasers but rather a supplier. But RMI pleaded guilty in a plea deal in June. It's said that RMI cooperated throughout the investigation, and its web site is now very explicit about export regulations.

RMI certainly isn't alone. A recent violation by none other than BAE Systems led to a $400 million criminal fine. And in fact an article in Military and Aerospace Electronics points out some common mistakes that can get companies into some nasty trouble, such as:

* Misclassifying or changing classifications in the ITAR list
* Improper access to IT files for ITAR products
* Lack of licensing for non-citizens working on ITAR products
* Monitoring only hardware, while not complying on services as well

Entirely apart from this, the trade group LEOMA is working to steer the Commerce Department toward more reasonable restrictions. The administration wants to "build higher fences around fewer items" using a tiered system. The thing is, its proposed tiers include a lot of lasers that are already made and sold outside of the U.S. LEOMA wants to be sure that U.S. companies don't face unnecessary barriers to doing business for run-of-the-mill commercial applications.

It's tedious but important stuff. LEOMA is asking for support in its effort. Please contact Breck Hitz at to contribute.

Wednesday, February 16, 2011

New LED market data for SIL 2011

We have some new market numbers for the LED world: HB-LEDs passed into the double-digit billion dollar territory in 2010, while LED luminaires will reach $8.4 billion by 2014. These numbers will be discussed at the Strategies in Light event in Santa Clara next week.

The LEDs market number is up significantly from last year, due to the stronger than expected growth in LED backlights for LCD displays. And by the way, China is coming on strong in both the demand for and supply of LEDs.

In LED luminaires, the largest segment is in consumer portables: flashlights, worklamps, and so forth. The transition to LEDs in that segment is almost complete, which is very rapid for a new technology. The strongest growth in luminaires is in residential lighting, but starting from a small base.

What’s driving this? Heightened awareness of energy efficiency, phasing out incandescent bulbs, and fiscal stimuli certainly helped.

Oh and yes, China is now both the largest end market and the largest supplier of LED luminaires. Sound familiar?

SIL 2011 is next week and it looks like it will break attendance records once again. It’s going on Tuesday through Thursday at the Santa Clara Convention Center. The conference will feature 66 speakers spanning two main sessions, an investors forum, and workshops and tutorials. There will also be presentations in the Lighting Pavilion each day on the show floor.

Tuesday, February 8, 2011

How many MOCVD reactors is too many?

We took a look recently at the bubble in sales of MOCVD reactors for LED production. We set out to sort out who wins and who loses. It turned out more complicated than we first thought.

There have never been so many orders in the history of MOCVD. Just to give you an idea of the scale, in January there was a rumor that Golden Concord Holdings in Hong Kong wants to purchase 500 reactors as part of a new $2.5 billion investment in LEDs. Several companies have orders to buy over 100 reactors each. Aixtron and Veeco are working like crazy to deliver them.

But it’s too many. The figure below compares what we think the world needs to meet near-term LED production to what the world seems to be asking for. Since then, Barclays Capital raised its estimate of MOCVD shipments for 2011 to 900, from 800. While we may disagree about what actually may be delivered, much less what is actually brought into production, this much is sure: there is a big mismatch. Our question is: who wins and who loses?

I suggest that you read the full article in LEDs Magazine for the whole story. In the meantime, suffice it to say that there will be a lot of winners: end-users of LEDs, China, and the MOCVD reactor vendors, to name a few. Lower-tier LED suppliers may feel the most pressure. And yes, a few investors may get stuck with expensive paperweights.