With continual supply shortages, third-quarter prices for metalorganic gases, key materials of LED chip production, have risen by 100%, putting pressure on LED chipmakers to improve yield rates to maintain gross margins.
Some LED chipmakers reportedly are planning to shutdown older equipment producing low-brightness LED chips and utilizing the limited materials on more advanced equipment manufacturing high-power LED chips that are more profitable.
According to Taiwan-based LED chipmaker Tekcore, manufacturers with yields less than 60% will likely incur losses with both metalorganic gases and sapphire substrates in tight supply. Companies that focus on producing less profitable LEDs of less than 2,000mcd, which is the minimum brightness for most LED-backlit LCD TVs, will have a tough time in the near future as well, Tekcore added.
Metalorganic gases and sapphire substrates account for about 20% of LED chip production costs, and the percentage will like rise going into the second half of 2010.
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