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Light-emitting diode shortage likely this year

Research firm iSuppli predicts that 2010 will bring a sharp LED shortage due to a drastic increase in demand.

Demand for LEDs will increase at double-digit rates during the next few years, according to iSuppli. iSuppli

If you're looking to upgrade your TV to one that uses light-emitting diode technology, be prepared for a potential price hike.

According to electronic market research firm iSuppli, LEDs are facing a global supply shortage in 2010, and the year may end with a sharp under-supply of the in-demand devices unless production capacity ramps up.

The research firm's numbers show that total consumption of LEDs reached 63 billion units in 2009. That was close to the industry's total capacity of 75 billion units, indicating that many LED manufacturers were operating at nearly 100 percent utilization levels. In 2008, the total consumption of LEDs was just 57 billion units.

A LED TV from Samsung. CNET

Based on the growing demand during the last couple of years, iSuppli predicted that demand for LEDs in 2010 will be close to 80 billion units and will reach more than 100 billion units in 2011. This means that unless manufacturers significantly increase production, a sharp shortage will likely occur.

According to Sweta Dash, senior director for LCD research at iSuppli, the predicted 2010 shortage applies mostly to LEDs used for the backlighting of large-screen LCD TVs. Thanks to their super-slim form factors and improvements in picture quality, this type of TV has become increasingly popular.

Among products that utilize LEDs, TVs require the most LEDs per unit. Unlike notebooks, which typically use 50 LEDs, or monitors, which employ about 100 LEDs, LCD TVs on average consume anywhere from 300 to 500 LEDs per panel.

However, the widespread use of LEDs in other devices will also contribute to the shortage, iSuppli says. Apart from traditional products, such as TVs or computer monitors, LEDs have been used as the backlighting units for smaller LCDs in a large array of devices, including Netbooks, cell phones, portable navigation devices, digital photo frames, and digital cameras.

The general illumination market has also started looking to LEDs for residential, commercial, and industrial lighting applications. It's predicted that the use of LEDs in this new market will become mainstream during the next two years.

The good news is LED manufacturers are aware of the ongoing and increasing demand and are reportedly hard at work to ramp up their production. According to iSuppli, two major LED vendors, Aixtron of Germany and Veeco Instruments of the United States, are planning to double their production capacity by the fourth quarter of 2010 compared with the end of 2009. Other LED panel manufacturers also are aggressively developing their own internal LED sourcing to ensure continued supply of the devices.

However, the increase in production takes time, and it just might not catch up with the demand in the year ahead.