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.

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