asian manufacturers spur low priced lighting era
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Asian Manufacturers Spur Low Priced Lighting Era
-2015 DOE SSL R&D Workshop-
Roger ChuDirector of LEDinside
28 Jan 2015
Asian Manufacturers Spur Low Priced Lighting Era
-2015 DOE SSL R&D Workshop-
Roger ChuDirector of LEDinside
28 Jan 2015
ALL RIGHTS RESERVED. REPRODUCTION PROHIBITED WITHOUT WRITTEN PERMISSION. 29 January 2015 | Page 2
TrendForce is a global provider of market intelligence about the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 410,000 subscribers. TrendForce serves clients throughout the technology and financial service industries.
TrendForce has established a reputation as an organization that offers insightful and accurate analyses of the high tech sector through five major research divisions:
DRAMeXchange focuses on memory, storage and the consumer electronics industry including PC DRAM,
Mobile DRAM, Server DRAM, NAND Flash, SSD and smartphone.
WitsView offers comprehensive coverage of the display industry from upstream components, midstream
panels/touch modules to downstream system integrators, brands and channels.
LEDinside covers all aspects of the LED supply chain from upstream equipment/materials, midstream
chip/packaging to the downstream backlight and lighting market.
EnergyTrend specializes in green energy research, such as solar energy, lithium batteries, energy
storage systems and xEVs.
Avanti is a research organization with a focus on consumer behavior in China.
Topology studies structural trends of technology industries in the Greater China Region and beyond,
focusing on semiconductors, photovoltaic technology, telecommunications, and IA.
About TrendForce
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Overview of LEDinside’s Business
Shenzhen
Shanghai
Taipei
Branches: Taipei ,Shenzhen,Shanghai
Staff: Around 250 Employees
Vertical Industry Service Provider
Market Research
Media
B2B
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Outline
1) Market Outlook & Perspective
-From LED to LED Lighting
2) LED Technology Development
- Trend to Cost Reduction
3) Emergence of Low Priced Lighting Era
- Rise of Asian Manufacturers
4) Conclusion
-Risks and Opportunities in the Mature Industry
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2014-2018 Global HB LED Market Forecast
• The global high brightness LED market size is projected to reach US $14.5 billion (YoY +8%) in 2014. LEDinside estimates
the LED market is expected to reach US $16.2 billion in 2018, and will grow at a CAGR of 3% from 2014-2018.
-
3,000
6,000
9,000
12,000
15,000
18,000
2013 2014 2015 2016 2017 2018
Other
Signs &Signal
Automotive
Lighting
Large displaybacklight
Mobileappliance
HB LED Market Forecast (2013~2018)
2014~2018 CAGR 3%
M USD
Lighting Keeps To Grow Up
ASP
Penetration
Market Scale
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12%
24%
34%
12%
12%
6%
11%
18%
39%
13%
12%
7%
11%
30%
29%
13%
11%
6%
Lighting
Backlight
2013
2014
2015
Lighting Market Demand on the Rise to Surpass the Demand
From Large Sized Backlight and Handheld Device Applications
Lighting Automotive
Signs & SignalOther
Mobile appliance Large display backlight
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LED Lighting Still at High Growth Phase in 2014~2018
• Observed from LED lighting market, the LED package market value for lighting applications will soar in 2014, especially
for replacement products. Followed by significant growth in industrial, commercial, and outdoor lighting markets.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2013 2014 2015 2016 2017 2018
LED Market Value- Lighting Application
Other
Outdoor
Retrofit
Retail& Hospitality
Office
Industry
Homes
Architectural
4,881
3,879
2014-2018 CAGR12%
7,729
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• Total LED lighting product shipment volume continues to grow substantially in 2014, especially, more and more lighting
brands aggressively promote LED bulbs and LED tubes.
43%
28%
8%
4%2%
1%
12%
0.5%1% 1%
2014
38%
25%
10%
5%2%
1%
15%
1% 2% 1%
2013
A-Lamp / Standard Bulb
Tube
PAR And RS
MR16
Candelabras & Decorative Lamp
Streetlighting
Downlighting
High Bay
Troffer
Paking Luminaires
2013~2014 Global LED Lighting Fixtures Demand Rapidly Growing
788 M Sets
1,368 M Sets
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0%
20%
40%
60%
80%
100%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
08' 09' 10' 11' 12' 13' 14' 15' 16' 17' 18'
Global LED Lighting Scale & Penetration Rate
26%
The Global LED Lighting Market Scale is Gradually Increasing
• LEDinside estimates the global LED lighting market scale will continue to grow, from a market size of US $4.5 billion in 2008
to US $36 billion in 2018. LED lighting market penetration rates are expected to reach 54%.
36 Bn
20 Bn
M USD
CAGR+18%
54%
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Outline
1) Market Outlook & Perspective
-From LED to LED Lighting
2) LED Technology Development
- Trend to Cost Reduction
3)Emergence of Low Priced Lighting Era
- Rise of Asian Manufacturers
4) Conclusion
-Risks and Opportunities in the Mature Industry
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Price Elasticity in Product Applications: lm/$
• Observations from lm/$ performance show, we can know how much lumens customers get from every dollar paid.
Lighting
Large size B/L
Small size B/L
lm
USD
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5630
2835
3014
3030
Different Requirements in Different Lighting Segments
High End
Middle End
Low End
RequirementsSolutions
Light Quality
Form Factor
Color Tunable
Efficiency
Reliability
Cost!Cost!Cost!
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Standard & Mid Power LEDs Become Mainstream in Lighting Market
• Mid-power LEDs including 5630, 3030, and 2835 LEDs will become mainstream on the market. LEDinside
projects mid-power LEDs to have a 48% share in the lighting-use LED market value for 2014.
High Power LED COB LED Mid Power LED Standard LED
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Lighting
LED TV Direct Type
LED TV Edge Type
NB &Monitor
SmartphoneTablet
Sign Board
30143020
3528(Slug) 3528(1.0T) 5630(Slug)
6060 5730(Slug)
3030 EMC3535 EMC
2016 Ceramic3535 Ceramic6060 Ceramic
COB Ceramic
3528 EMC3030 EMC
3535 Ceramic6061 Ceramic
5630(Slug) 6780(Slug) 6720(Slug) 7020(Slug) 7030(Slug)
2014 3020 4014
4014(Slug) 3020(Slug)
010(0.4T) 030(1.2T) 3808(1.0T) 008T(0.8T) 336(0.8T)
3528 1015 2121 5050 3535
Power Consumption
0.05W - 0.3W 0.3W - 0.5W 0.5W - 1W 1W - 3W 3W - 7W 7W - 100W
C/P Ratio Becomes Key To Success With Tech Advancements
Product Application
PPA/PCT
EMC/SMC
Ceramic
Lead Frame & Substrate in Different Product Position
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Outline
1) Market Outlook & Perspective
-From LED to LED Lighting
2) LED Technology Development
- Trend to Cost Reduction
3)Emergence of Low Priced Lighting Era
- Rise of Asian Manufacturers
4) Conclusion
-Risks and Opportunities in the Mature Industry
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Philips Lighting Business Restructures to Face the Challenge
Royal Philips
Consumer LifestyleHealthcare Lighting
Innovation
& Service
Package & AutomotiveAnnual Revenue Guidance
>USD 2 Billion
Philips LightingAnnual Revenue Guidance
>7.1USD Billion
The rise of Asian lighting
producers has brought
intense competition, and
traditional lighting firms such
as Philips and OSRAM have
started to plot new
strategies to correspond to
the change.
What’s The Impact From Chinese Low Price Strategy
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Confronted By the Rise of China, Taiwan LED Companies to Cope With Industry Changes through Acquisitions and Alliances
Horizontal Integration Vertical Integration Strategic Alliance
Because LED industry is suffering from oversupply issues, LED companies continue to go out of business and being merged. Take Epistar for example, it copes with industry changes through horizontal integration. Everlight also finds more opportunities by acquiring downstream lighting manufacturers. On the other hand, CREE has become a shareholder of Lextar, a LED manufacturer, hoping to reduce costs through strategic alliance.
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Low-Priced Lighting Era
Manufacturers Turn to All Sorts of Methods to Lower Costs
Lighting manufacturers are implementing
various low-pricing strategies to meet
market demands, as competition
intensifies and the industry enters low-
pricing era.
Gov. Support
Economics of Scale
Automated Production
New Business Models
Low-priced Lighting Era
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• After Chinese local governments decided to subsidize Chinese LED chips since 2010, the MOCVD installation in China has
been higher than other regions. Through the upstream subsidies, China can have high cost competitiveness when
manufacturing LED.
Chinese Subsidies Lead to Higher MOCVD Installation in China Compare to Other Regions
Global New MOCVD Installation By Region
2014 2015(F)
HC Semitek Sanan Opto
Sanan Opto Changelight
Changelight Kaistar
Aucksun HC Semitek
Nanojoin Tongfang
Top 5 LED Chip Manufacturers with the Largest MOCVD Expansions
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MOCVD Remained as the Main Subsidy Target
• Subsidy provided by China local authorities accounted for around 3-5% of the companies’ revenue in general and MOCVD
remained as the main subsidy target.
• San’an Opto recorded RMB 196 million (US $31 million) subsidy for 1H14, and total subsidy for 2014 is expected to
double the growth of the previous year. Hence, San’an Opto will plan for large scale capacity expansion during 2014-
2015.
2013 (Million USD) Sanan ETI Nationstar Refond
Sales Revenue 601.95 504.82 184.25 110.00
Total Subsidies 33.86 37.42 6.47 1.84
- MOCVD 30.62 9.02 X X
- Other (e.g. buildings) - 28.40 6.47 1.84
Other Support (e.g. higher sales prices, Government Project..)
Project Support Project Support
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China Package Manufacturers Actively Expanding
to Reach Economies of Scale
KK Pcs/M
• The major strength of China package manufacturers still rely on cost competitiveness, where manufacturers actively expand
their capacity to produce standardized products, and ultimately achieving economies of scale.
• Tier-one Chinese LED package manufacturers’ capacity grew 40-50% in 2014. Chinese manufacturers’ capacity is close at
Taiwanese manufacturers’ heels.
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Chinese Package Manufacturers Raise 2835 Strength
Through Standardization and Domestic Production
• Chinese package manufacturers 2835 LEDs are very cheap, mainly because of economics of scale achieved by standardization.
Therefore, pricing has been very competitive.
Sanan Opto, ETI ,
HC SemiTek, Epitop…
Chongia, Everwin,
Dongxu Metal….
Grirem Advanced
Material, Bree Optronics…
Standardization
LED Chip
LeadFrame
Phosphor
Domestic Production
60%24%
5% 7%
2% 2%
Chip (10x30mil)
Lead Frame
Adhesive
Gold Wire
Phosphors
Labor
2835 BOM Cost Analysis
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Automated Production Lines Sufficiently Lower LED Bulb BOM Cost
• Take LED bulbs for example, 40 equiv. LED bulbs Labor costs were halved by introducing automated production lines, and
production volume is estimated to be above 10-15 million bulbs to be economically beneficial.
14%
Labor
7%
Automated
LED
AC/DC Driver
Heat Sink
Housing
Screw+Glue
Assembly
Others
Assembly Assembly
40W Equiv. LED Lamp BOM Cost
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What Can you Buy with RMB 11?
• A 1.2 m LED tube’s FOB price costs a mere RMB 11. Twenty-three manufacturers from different industries have established
a LED Lighting Strategic Alliance to develop cheap LED lighting products. These manufacturers are sharing the same market
resources to quickly develop lighting products, while lowering material prices and production costs reasonably.
LED Package
AluminumCapacitors
MB6S
Driver IC
Transistor
Glass Tube
ALPCB
Ceramic Capacitors
LED Driver
Brand & Channel
SMT
Capital
It is Not Enough to Buy Fast Food in Shenzhen, China
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Outline
1) Market Outlook & Perspective
-From LED to LED Lighting
2) LED Technology Development
- Trend to Cost Reduction
3) Emergence of Low Priced Lighting Era
- Rise of Asian Manufacturers
4) Conclusion
-Risks and Opportunities in the Mature Industry
ALL RIGHTS RESERVED. REPRODUCTION PROHIBITED WITHOUT WRITTEN PERMISSION. 29 January 2015 | Page 26
0%
10%
20%
30%
40%
50%
60%
LED Chip LED PKG Lighting
HHI Index
High Oligopolistic Concentration
Low Oligopolistic Concentration
Red Sea Competition
Low Entrance Threshold Leads to Chaotic Condition in LED Industry
Four Market Structure and Its Corresponding Price Competition
Type of Competition
HerfindahlIndex Range
Intensity of Price Competition
Competition <10% Intense
Low Oligopolistic Concentration
10~18% May be intense or low, depends
on product differentiation
High Oligopolistic
Concentration18%~60%
May be intense or low, depends on competition among companies
Monopoly ≥60% Usually low, unless there is threat
The Herfindahl–Hirschman Index(HHI) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. It is defined as the sum of the squares of the market shares of the 50 largest firms within the industry, where the market shares are expressed as fractions. The result is proportional to the average market share, weighted by market share.
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Taiwan:
Epistar group recorded monthly TIE capacity reached 850K pcs in 2014. Total production capacity is expected to exceed 1,200K pcs/month in 2015 after merge with FOREPI.
China:
San’an Opto recorded 600k monthly capacity in 2H14, which will reach 1,000k/month by 2H15, nearing rival Epistar’s production capacity.
HC Semitek has two wafer manufacturing bases located in Wuhan and Suzhou. The TIE capacity will reach 200k/month by 2015.
HC Semitek
Philips Lumileds
Lextar
Seoul Viosys
OSRAM Opto
Samsung LED
LG Innotek
Nichia
Sanan Opto.
Epistar Group
2015(F) 2014
Chip House's Wafer Capacity Estimates
The Industry Will be Concentrated as Tier-Two Competitors Begin to be Eliminated after The Market Matures
While tier-one LED manufacutrers continue to work on capacity expansion, price reduction remains in the LED industry. Soon, tier-two manufacutrers will be eliminated from the market follow this trend. Profits in the overall industry will also increase as the industrial concentration becomes more obvious.
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Time
Decorative
Mobile Backlight
TV BacklightDisplay
LED Lighting
2014
Market Size
LED Industry
Gradual decline
缓慢的衰退
Need innovative applications to fill the gap
Smart Lighting?
Plant Growth Lighting?
产业成熟化:新的创新应用是什么?
LIFI?Rapid decline
Industry Maturity: What is The Next Innovative Application?
• Entrepreneurs should take LED innovation cycle into consideration to push the industry onto the next level.• If the industry recession becomes a reality, how to deal with the industry downturn, as well as how to manage
the industry after the downturn.
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TrendForce
LEDinside
WitsView
DRAMeXchange
EnergyTrend
ANAVTI
Thank you!
儲于超 Roger Chu,
Research Director of LEDinside,
TrendForce
RogerChu@TrendForce.com
www.ledinside.com TRi
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