Growing LED Sector Dragged Down by Industry Leaders

The light-emitting diode (LED) market has grown in recent years due to the rise in sales of consumer electronics products such as mobile phones and television screens. In addition LEDs are on the verge of overtaking both incandescent and fluorescent light bulbs in terms of use as governments, businesses and consumers seek to curb emissions. The rise in LED popularity has led to an overcrowded industry and a sudden surge in government-backed Chinese LED makers has eaten into the market shares held by the likes of Cree and Veeco Instruments. The Bedford Report examines the outlook for companies in the semiconductor equipment and materials industry and provides research reports on Cree, Inc.

Last week, LED heavyweight Cree pulled itself and many other notable names in the industry down after it warned that revenue for its fiscal third quarter will be well short of previous forecasts. "It has taken longer to work through customer inventories than previously anticipated and pricing was lower than the company had previously forecast," Cree said. Cree claims that LED component demand has improved post the Chinese New Year, but that revenue is below previous targets.

Reflecting on the industry in general, Cree CEO Chuck Swoboda believes the huge increase in chip production to service LED backlighting applications in recent years has put pressure on the rest of the market. Weak demand in backlighting has meant that lots of spare LED chips are now available for other applications.