Frost & Sullivan: Raw Materials in LED Production Provide Robust Opportunities for Chemical Companies

Research PREVIEW for the

Analysis of the Global LED Materials Market(NCFD-39)

Key Highlights

• Of the four primary value chain tiers associated with light-emitting diode (LED) lighting, the most additional value is created in the final stage, assembling the fixture.

• The packaging tier has some of the greatest requirements for innovative solutions from chemical companies. However, this tier is under the greatest amount of price pressure.

• The creation of a finished LED fixture requires a wide range of chemicals and materials, typically including the following:

• Eight chemical types designed for this specific purpose.

• Two to three types of general chemical for which there has not yet been any development of LED-specific grades.

• Frost & Sullivan forecasts that between 2013 and 2018 the market for LED materials will experience revenue growth at a CAGR of 18.5%.

• The leading suppliers of materials to the LED industry include Dow, Intematix, DuPont, and Sabic.

Source: Frost & Sullivan analysis.

Executive Summary — CEO’s Perspective

Source: Frost & Sullivan analysis.

2 Revenue growth in chemicals demand is forecast to be ahead of growth in the LED industry itself.

3The biggest market segment is fixture assembly chemicals, though many of these represent like-for-like replacements of materials used in traditional lighting.

4While some market segments, especially phosphors, have large barriers to entry, others offer opportunities for new market entrants.

5Lighting OEMs are increasingly looking to produce their own chemicals in-house, increasing market competitiveness.

1 All major chemical companies have a role to play in supplying raw materials to the LED industry.

Chemicals Demand Along the LED Value Chain

Source: Frost & Sullivan analysis.

Total LED Materials Market: Value Chain Analysis, Global, 2013

Note: *Chemical Vapour Deposition (CVD)

Key Takeaway: Chemicals represent the highest percentage of added value at the packaging stage, but fixture assembly provides the largest revenue opportunities for chemical companies.

Total value addition in LED fabrication

Chemicals & materials market within that tier of the production process

Value addition in US Dollar

Chip Package Module Fixture

CVD* precursors

Phosphors Thermal interface materials

Plastics for secondary optics

Example chemicals:

LEDs represent a total market, after assembly of the fixture, of $51.8 billion in 2013. This represents the sum total of value added through all tiers of the value chain.

The Full Analysis Features the Following Content

Section Slide Numbers

Executive Summary 4

Market Overview 9

Mega Trends and Industry Convergence Implications 19

Total LED Materials Market -

• Forecasts and Trends 24

• Market Share and Competitive Analysis 37

Chip Fabrication Chemicals Breakdown 44

Packaging Chemicals Breakdown 59

Module Construction Chemicals Breakdown 79

Fixture Assembly Chemicals Breakdown 91

The Last Word (Conclusions and Implications) 108

Appendix 111

Key Questions the Full Analysis Answers

Source: Frost & Sullivan analysis.

How do revenues in the LED value chain translate into added value per tier? How much of this added value is provided by products from the chemicals industry?

Will the industry rely on existing chemicals used in other related markets, or will there be significant development of products specifically for LED applications?

How are chemical companies reacting to the development of this high-growth application market?

Will falling prices of LEDs create challenges for suppliers of raw materials?

Are there areas of the market that are very competitive and others that are ripe for attention?

How rapidly is the LED market itself growing, and how will this translate into growth opportunities for suppliers of chemicals as raw materials?

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Interested in Full Access? Connect With Us

Ariel BrownAssociateCorporate Communications

(210) 247-2481

ariel.brown@frost.com

Research Authors

Dr. Brian BalmerIndustry Principal

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Leo DokosResearch Director

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