Supply chain shortage is a thorny problem for LED

Since Samsung Electronics launched the edge-lit LED (light-emitting diode) TV in 2009, LED TV has solved the previous problems of high prices and high specifications, and attracted consumers with more reasonable prices, thin designs, power saving and environmental awareness. At the same time, this has also made many TV brands, panel manufacturers and backlight suppliers begin to believe that LED TV has a bright future.

However, just as everyone was rushing into it, many problems in the LED TV supply chain were exposed. Especially when the technology was not yet fully mature, many LED backlight panel solutions emerged, making the entire supply chain more complicated.

LED is imperative to replace CCFL

Our research found that the first stage of global flat-panel TV growth has been from 2004 to date, when flat-panel TVs (LCD and plasma) replaced traditional CRT (color tube) TVs. The increase in LCD panel production capacity, the rapid evolution of technology, and the rapid reduction in overall material and manufacturing costs are the main drivers of the rapid popularization of flat-panel TVs.

In 2004, the shipment of LCD (liquid crystal) TVs was less than 10 million units, but in 2008 it had grown to 100 million units (exceeding traditional color tube TVs), and in 2009 it reached 145 million units. CRT TVs have existed for half a century, but were overtaken by LCD TVs in less than five years, which shows the amazing explosive power of the panel industry. With the application of LED technology to panels, we believe that the second stage of global flat-panel TV growth will be the transition from cold cathode tube (CCFL) LCD TVs to LED backlit LCD TVs. As for the third wave of growth, we believe it will be the popularization of three-dimensional TVs (3D TVs), but 3D TVs are still in the early stages of development and market exploration, and their growth momentum lags far behind that of LED TVs. With both software and hardware immature, it remains to be seen whether 3D TVs can be fully popularized.

In 2009, the global shipment of LED backlight LCD TVs reached 3.6 million units, which can be said to be the first year of LED TVs. However, if we look at the shipment volume, last year, 145 million LCD TVs were sold worldwide, and LED backlight TVs accounted for only 4%, which is a very low penetration rate. However, in 2010, as various brands launched LED products one after another, LED backlight panel technology and terminal TV mass production developed rapidly, and it is expected that the penetration rate in 2010 will be close to 30%. We believe that by 2012, LED backlight LCD TVs will surpass cold cathode backlight LCD TVs.

LED backlight technology is not perfect

The evolution from CCFL backlight LCD TV to LED backlight LCD TV is inevitable, both in terms of technology and market development. After all, consumers have higher and higher requirements for vision, and manufacturers' technology research and development and production capabilities are also constantly improving. LED backlight has many advantages, but the current LED backlight LCD TV technology is not perfect.

From the perspective of advantages, LED has the following advantages.

First, thinness. Currently, LEDs are mainly edge-lit. In other words, LEDs are packaged and combined into light bars (Light Bar) and installed on the side of the backlight or panel, thus reducing the space required for the backlight, thereby achieving lightweight and thinness.

Second, energy saving. LED does not require a large driving voltage and tube current like cold cathode tubes. Even direct-type LED backlights that use more LEDs save more energy than CCFL backlights.

Third, it can increase the average selling price of panels. For panel manufacturers, TFTLCD is a capital-intensive and high-tech intensive industry. They face the dilemma of declining average selling prices and price collapse when supply exceeds demand. Therefore, how to increase the added value of panels is very critical. LED backlight has added value such as thinness, lightness, power saving and compliance with environmental regulations, which can allow panel manufacturers to increase their average selling prices and accelerate investment recovery.

Fourth, product differentiation. For brand manufacturers, the competitive advantage of products is nothing more than the advantages of cost and differentiation. Cost competition is a bloody competition that depends on assembly efficiency and assembly scale. A slight lag will easily lead to losses. Therefore, we have seen that many international TV brands have begun to reduce their own production factories and outsource to larger and more professionally managed manufacturers (OEM/ODM). In terms of differentiation, LED can help LCD TV brands successfully shape their brand image.

Of course, LED TVs also have some disadvantages.

First, its cost is still much higher than that of traditional CCFL backlight, which requires continuous development of technology and expansion of production scale.

Second, the supply capacity of the LED backlight supply chain is not as mature as that of the traditional CCFL backlight, so it is very easy to have problems with connection and delivery.

Third, the brightness and uniformity of edge-lit LED backlights are not as good as traditional CCFL backlights, so technology developers must add a lot of optical materials and components, which increases the complexity of product design and supply chain.

Fourth, the edge-lit LED backlight cannot fully utilize the advantages of dynamic control of the brightness of LED point light sources. Since LED is a point light source, each LED chip installed in the backlight panel can be lit or extinguished individually, so it can adjust the brightness of the LED in the area of ​​the picture according to the different brightness requirements on the screen, making the dark part darker and the bright part brighter. The biggest advantage of this dynamic control of brightness is that it greatly improves the contrast of the panel. Direct-lit LED backlight technology can achieve dynamic control of brightness because the LEDs are evenly distributed on the surface of the backlight panel. However, the LCD display backlight panel with an edge-lit architecture cannot achieve dynamic control of brightness.

Supply chain challenges

DisplaySearch found that the current supply of LED TV backlight panels is not smooth, many new LED backlight LCD TV models have been delayed, and panel manufacturers have even increased the price difference between LED and CCFL backlight. Since April 2010, major LED panel suppliers such as Samsung, LG Display, Sharp, AUO and Shinchimei have requested to increase the price of LED backlight.