LED Lighting Market 5 Year Growth Rate Of 30% Per Annum Creates Green Stock Winners: Specific Picks Identified In An Exclusive Interview With Best On The Street Analyst From Lazard Capital Markets
February 28, 2011 - The Wall Street Transcript has just published Alternative Energy Report offering a timely review of the Semiconductors sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
Daniel L. Amir is a Managing Director and Senior Research Analyst covering semiconductor device companies with a focus on memory, consumer and communications at Lazard Capital Markets. Previously, he was at WR Hambrecht + Co as a Senior Research Analyst heading the firm's semiconductor research practice. Mr. Amir was recognized by Zacks Research as "Best on the Street" in 2006.
Before WR Hambrecht, he worked in semiconductor research and corporate finance as an Associate at Bear Stearns, Hotovec Pomeranz and JPMorgan H&Q. Mr. Amir is frequently quoted in Bloomberg, Reuters, Dow Jones, AP and other media outlets. He began his career as a Commander in the Israeli Air Force and also worked in the Israel Department of Treasury. He holds an MBA in finance from the Anderson School of Business at UCLA, and an M.A. in international relations, and a B.A. in economics and international relations from the Hebrew University of Jerusalem.
TWST: In your opinion, what will be the most significant factors contributing to LED adoption in the next couple of years and what level of growth do you anticipate in 2011?
Mr. Amir: The market is divided into two. One is the backlighting display market, where LED goes into lighting up displays. The most known factor is TVs. Currently, mobile phones have full adoption already, but now we're seeing TVs and computer monitors essentially moving to LED adoption for lighting up screens. On the TV side we're around 30% adoption right now. It's moving to about 50% in 2011. So it's going to be a big growth year still, and there is a lot of room for growth in next couple of years.
The bigger market by far eventually will be the general lighting market. It is actually LEDs replacing fluorescent and incandescent lighting in consumer, commercial, residential applications. Today, that size of the market on the LED side is around, we think, somewhere in the $4 billion to $5 billion range, and the size of the lighting market is around $90 billion. So we are still only at a 4%, 5% penetration rate. And we think that that's kind of growth at about a CAGR of 30% for the next five years.
TWST: In a recent report, you that emphasized that understanding the supply and demand situation is critical in the LED space. Would you tell us what you're currently observing as far as supply and demand and how you expect those trends to play out in 2011?
Mr. Amir: Currently, what we're seeing is that there have been a lot of investments on the supply side in 2010 with close to 900 tools being installed in the LED market and many new players coming into the market as well in terms of manufacturing, especially coming out of China. What we've seen is that here in the first quarter, there are some pockets of oversupply right now. We have been in a suboptimal supply situation in the TV market for now a couple of quarters in which there's inventory, and that has negatively impacted the LED display side of the equation. In the LED general lighting side, the demand still remains quite robust. However, the TV side has negatively impacted that side as prices have come down in the 2H10, and this has led to oversupply in general lighting as well. We're seeing a little more price declines, and it's been somewhat reflected in both Cree (CREE) and SemiLED's (LEDS) results in the past couple of weeks.
TWST: Other than supply and demand dynamics, what other risks should investors be cognizant of when investing in this space?
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