Jed Dorsheimer, senior asset analyst at Canaccord Adams, discusses the LED market cycle. The first cycle, which started in the first few years of this century, was driven mainly by mobile handsets. The LEDs were used to illuminate the keyboard, then backlit as a color screen for mobile phones. The dramatic growth in LED manufacturing caused overcapacity in 2004-2005. However, in this cycle led to improve LED performance and price decline, in turn, created the second cycle of the LED, which is used as medium-sized notebooks and large-size TV LED backlighting. Based on the rapid growth of the (flat-panel) TV market, Dorsheimer said the LED industry will experience significant capacity deficiencies, and the LED chip gap will reach 70-100 billion by 2012. Need to re-invest hundreds of MOCVD capacity, and sapphire substrate should also be adequate supply. According to the development trend, Dorsheimer believes that the future will lead to 30% of the LED overcapacity, the need for "one to two years of the digestion cycle"; 2014-2016 capacity will not be much growth. History will repeat itself, as falling LED prices and performance improvements will help the industry advance to the next cycle, but the driving force is lighting.