UV LED market analysis

According to YOLE statistics, in 2017, the traditional UV lamp market was close to 42.5 million sets/set, with a market share of 708 million US dollars. The market share of UV LEDs has tripled in the past decade. With the continuous development of UV LED technology, it will open the way for new high-power applications, and will also bring more business models and strategic evolution.

 

First, the ultraviolet wavelength and application

 

There are three different UV wavelengths: UVA/UVB/UVC. There are specific applications for each UV wavelength type. Each application can also be defined as a function of the optical power output and the desired wavelength.

 

 

Source: YOLE

 

UVA (315~400nm): Long-wave ultraviolet light, also known as "black light", represents the main ultraviolet light in the sun and is responsible for skin tanning. UVA is generally not harmful and can be used to treat certain skin conditions. Mostly used for UV curing, anti-counterfeiting detection, photocatalytic purification, skin tanning and so on.

 

UVB (280~315nm): It is a small part of the sun but dangerous. Most solar UVB is absorbed by the reduced atmospheric ozone layer. Prolonged exposure may be harmful to the human eye and skin, but it is beneficial for the production of vitamin D and the treatment of severe skin diseases. Mostly used in medical phototherapy.

 

UVC (200~280nm): Also known as short-wave UV or deep ultraviolet, unintentional overexposure can cause transient redness and eye irritation, but it does not cause skin cancer or cataracts. It is mostly used for the purification of air, water and surface.

 

Second, the UV lamp market performance

 

According to YOLE statistics, in 2017, the traditional UV lamp market was close to 42.5 million sets/set, with a market share of 708 million US dollars. The growth rate is 5.4%, and the compound annual growth rate is expected to be 4.7% from 17 to 2023.

 

 

Source: YOLE

 

Among them, UVA for UVA application, UVB for medical phototherapy/UVC disinfection/purification (municipal and industrial grade), analytical instruments, etc. are all applications with a large market share, accounting for 460 million US dollars in market share. In terms of power, the increase in power is the biggest challenge. UVA's tanning, UV irradiation, UVC disinfection/purification (residential and commercial use points/entry points) are applications with a small market share, accounting for 248 million US dollars in market share. For this part of the application, price is the biggest factor.

 

In addition to UV curing, UV lighting, purification / disinfection (medium and low power) and invisible light, most of the other applications are in the market with smaller and smaller scale. Most traditional UV lamp applications still maintain a reasonable growth rate. UV LEDs have not yet had a strong impact on the market.

 

Third, the UV LED market application

 

Currently, UV LEDs are mostly used in the UVA market, and UVB / UV applications are still in their infancy.

 

As of the second quarter of 2018, all applications for UV-based systems have begun to commercialize. According to YOLE's forecast of UV, the annual growth rate of the LED market (2018-2023) is 41%! From $242 million in $2018 to $1.339 billion in $2,023. Source: YOLE

 

1, UVA main application

 

1.1 UV curing

 

The UV curing market in UVA applications has firmly occupied the leading position in the UV LED market from the beginning. UV curing has the advantages of instant drying, improved ink and coating performance, environmentally friendly, high productivity, and elimination of infrared wavelengths than infrared curing and thermal curing, but inks and coatings may be more expensive, higher initial equipment costs, and traditions. Compared to inks, UV inks can behave differently and process integration can sometimes be difficult. However, a large number of manufacturers in Taiwan and mainland China have recently entered the UVA LED industry, which has brought a lot of price pressure to the industry, thus limiting the growth of the UVA LED industry. On the other hand, this competition is also seen in the UVB/UVC LED industry. But the benefit is that the price of the device ($/mW) meets the requirements of earlier adapters faster than expected, enabling a true purification/disinfection market application to begin at 2020/2021. By 2021, related incomes have even surpassed the UV curing market.

 

1.2 UV curing system development roadmap

 

2010-2013 Only standard modules for arc lamps are available for replacement

 

2013-2015 began to customize according to customer needs

 

2015-present In order to make better use of the advantages of LED technology, according to the actual needs of customers (process, ink, speed, substrate, etc.), the customization is becoming more and more customized with the advancement of technology.

 

 

 

 

Source: YOLE

 

2, UVB / UVC main application

 

2.1 disinfection / purification system

 

Ultraviolet water disinfection is increasingly used in a variety of applications, and the technology is chemical-free and can effectively inactivate pathogens; and because mercury lamps are easy to replace, maintenance costs are low. UVC LED technology has other advantages, such as: 1, no mercury: UV LED does not contain harmful substances. 2, small footprint: due to the small size of high-power LED, the footprint is much smaller than the traditional UV system. 3, instant on / off: no need to warm up time to turn the system on or off, thus extending the life of the LED. 4. No temperature effect: LEDs do not transfer heat to the water, thus limiting water fouling and ensuring constant UV output.

 

The main difference between mercury lamps and UV LEDs is that their light emission profiles have a direct impact on the design of the reactor. Due to the geometry of conventional UV lamps, a cylindrical design is required. The UVC LED lamp is a point source illumination mode, so a cylindrical reactor is not required. In contrast to conventional UV lamps, UV LED lamps can emit different wavelengths (eg 255, 265, 275 nm...).

 

2.2 Disinfection / purification system market analysis

 

Globally, major players involved in traditional UV disinfection/purification systems have not developed any systems based on UV LEDs. There are many reasons for this: 1. The price and performance of UVC LEDs are comparable to traditional UV lamps. As of the second quarter of 2018, UVC LEDs cost about $1/mW, while conventional UV lamps cost $1.5/w. 2. System development based on UV LED requires new expertise and substantial investment. Oliver LAWAL (CEO of Aqui Sense Technologies) unveiled in an interview that his company's compact PearlAqua product (the first mass-produced UV-C LED water disinfection system) was developed over eight years of research and development, over $5 million The result of investing and hundreds of hours of user interaction work. 3. System development based on UV LED will directly affect the main business of major manufacturers. System/equipment business and UV lamp business (ie replacement market). The UV disinfection/purification industry is similar to the UV curing industry a few years ago: no traditional vendor will risk developing a more costly technology (ie R&D, resources, marketing) and get less payment... ...at least "until they have no choice" (just like in the UV curing industry).

 

Therefore, developers of UV LED systems for water disinfection/purification applications in the short term will come from new manufacturers.

 

Fourth, the UV LED market analysis

 

1. The market share of UV LEDs has tripled

 

In this decade, technology, market and industrial development have completely changed the market prospects of the UV LED, enabling UV LED technology to gain more market share from other UV lighting technologies, from 2008 to 8% of the market share, UV LED is expected to reach 25% market share in 2018.

 

In 2008, UV LEDs are still considered an emerging technology and industry that attempts to enter promising applications such as UV curing and anti-counterfeiting. Then, the LED industry only took a fancy to the booming display applications, and considered that general lighting is the most advantageous application area for visible LEDs, considering preparing for the rise of general lighting. But the reality is completely different! Asian manufacturers have entered and created excess capacity and strong price pressure, which has turned the market that could have become a "blue ocean" into a bloody wash. This has had a direct impact on the UV LED industry. In 2008, there were about 10 vendors, and now there are more than 65 vendors in 2018. Since 2010, some visible LED manufacturers have turned to the UV LED market in search of new growth drivers and higher profit margins.

 

The UVA LED market is the first market to witness this industrial development, experiencing a strong price decline, further accelerating the penetration of technology. But soon the dream has become a nightmare. After several years of double-digit growth, the UV curing application revenue, representing more than 80% of the UV LED market, began to decline due to the commoditization and fierce competition. In the short to medium term, only companies that can innovate can remain profitable in this area.

 

The UVB / UVC LED market has less impact on new entrants. This is because UVB / UVC LED technology is more difficult to access than UVA LEDs, so the entry threshold is much higher. In addition, the application of UVB / UVC LEDs is still not high, so the entry of new manufacturers helps to promote equipment development. Although the equipment is good enough at the performance and cost level, the progress of the UVB/UVC market is slowly moving. Ultraviolet LED systems require extensive development to fully benefit from this technology, which takes more time than expected.

 

In the short term, the UV LED industry will go through a slow phase as the UV curing market begins to stabilize and the boom in the UV disinfection market will be delayed. In this context, we expect the UV LED market to reach $320 million by 2020, from $160 million in 2017, followed by the proliferation of UVC applications, to $1 billion by 2023.

 

2. The continuous development of UV LEDs opens the way for new high-power applications

 

In the past ten years, the performance of UV LEDs has been continuously improved, gradually replacing traditional UV lamps from the very low power output devices of the past to some application fields.

 

Manufacturers of UVA LED chips have increased their external quantum efficiency (EQE) by five to six times in 10 years and have now reached 50-60%. In addition, increased competition has led to a sharp drop in prices. This makes UV LEDs possible for a wide range of UV curing applications such as electronic adhesives or inkjet printing. The next step will include more complex applications such as wood coatings, flexographic printing and medical adhesives. However, much of the work here will focus on system development. It's not just about improving the performance of UV LEDs.

 

EQE has also improved in the UVB / UVC range, but is still below 10% for most commercial devices, and it seems increasingly difficult to increase by 1%. But this does not restrict the investment and development of the manufacturing industry.

 

This acceleration is further highlighted by recent announcements by some UV LED manufacturers, such as the LG 2018/2019 package target of 150 to 200 MW. This combination of price reduction and performance improvements will also enable UV LEDs to be integrated into new applications. As LEDs are integrated into the consumer market for white products, such as large ovens and even coffee machines, it may be a strong driver of growth in the future.

 

3. Business model and strategic evolution: more cooperation and acquisitions are coming soon

 

A large part of the visible light LED industry has turned to ultraviolet LEDs. However, depending on the target wavelength, the strategy developed will vary from manufacturer to manufacturer. Some vendors still focus on device manufacturing, while others vertically integrate modules and systems. For example, in UVA LEDs, Ushio is responsible for the production of UVALED chips, packaging, and curing modules are also available to printer manufacturers or end users. In UVC, Nikkiso was originally a UVC LED manufacturer, but in 2016 it has moved to the module and system level through the acquisition of Aqui Sense Technologies.

 

In addition to UV LED manufacturers, some new entrants are also trying to enter the industry, mainly at the module or system level, which represents the best point in business opportunities. The only company missing is the traditional UVC system supplier, which still seems to be in a “wait and see” mode.