In 2011, LED supply exceeded demand by 30 percent due to poor LED TV sales and slow growth in LED lighting. However, this gap is closing in 2012 due to recovering backlight demand and increasing demand for lighting. DisplaySearch expects that the glut will be 19 percent in first quarter 2012 and will drop to 16 percent in second-quarter 2012.
Key players such as Samsung LED, LGIT and Lextar rapidly increased their capacity for metal organic chemical vapor deposition (MOCVD) in 2010, but found that they had overestimated market demand. In reaction to the oversupply, LED makers began to adjust utilisation rates in late 2011, and the average utilisation rate has dropped to 50 percent.