LED lighting ASPs are likely to decrease rapidly. The price of high power LEDs has been falling close to 50% in 2010-2011. The price is likely to fall another 5-10% in the third quarter.

There are currently 10 LED lighting brands in the Taiwan market, and another 3-5 brands will launch in the second half of 2011. The price of 6W LED light bulbs to replace a traditional 40W lights introduced by Everlight will decrease to NT$320-399 (US$11-13.71). The price of 10W LED light bulbs will fall around NT$599. Price competition has been fierce in North America with LG introducing two 7.5W LED light bulbs that only cost US$20.

Compared with traditional light bulbs, costs to produce LED light bulbs are higher. However, the life span and energy consumption characteristics make LED light bulbs more cost competitive.

Industry watchers estimate demand for LED lighting chips will show a 68% CAGR in the next five years. According to MOCVD equipment manufacturer Veeco, 28% of the capacity of MOCVD equipment shipped in 2010 was used for lighting. However, lighting capacity has been reaching 48% of the MOCVD equipment shipments in 2011, showing significant growth.