Dwindling profits in the LED package market has made market competitions far more ferocious, and has even affected phosphor, a key LED material. Whether it is the highly mature yellow powder or the maturing green and red phosphor, “increased volume and plunging prices” has become a LED phosphor tag. To better understand phosphor manufacturers challenging survival environment, LEDinside interviewed China’s leading phosphor manufacturer Bree Optronics Deputy General Manager Chao Liang.
Product similarities and sped up restructures, only one to two phosphor manufacturers will remain in the future
LEDs color rendering demands will increase in the next few years, but clients have implemented strategies of continual costdowns. Hence, phosphor usage will also decrease or be terminated following the declined LED usage. The LED phosphor market has maintained an annual phosphor usage volume of about 25 metric tonnes.
This indicates the future phosphor volume will be fixed. The LED phosphor market is relatively small in size, and there are few application fields. Once a manufacturer acquires 70% to 80% of market shares, other competitors basically are left with nothing. This signals competition in the phosphor market is intensifying and will be even more brutal than the LED chip market. The phosphor industry is pretty much a zero-sum game.
As for price cuts, companies are competing in Cost/Performance (C/P) ratio, indicating technologies are homogenizing. Even though phosphor powder is increasingly homogenized, there are at least ten or more phosphor manufacturers in China. However, there are almost no large phosphor manufacturers left, and in the future only one or two manufacturers will remain.
Yellow phosphor prices reaches rock bottom, high CRI elevates red phosphor market position
Yellow phosphor prices have reached an all-time low and profits are thinning. “The main issue is phosphor technology’s low entry level over the last few years, its low investment requirements, so there are various sized manufacturers with uneven product qualities,” said Liang. “The current market situation is the result of manufacturers attempt to stay afloat in the market by cutting prices.”
Amid declining yellow phosphor profits, some manufacturers implemented a business strategy of giving away yellow phosphor as a complimentary gift to clients that procure green or red phosphor.
Responding to this market trend, Liang noted even yellow phosphor has specific technology demands, and there are significant differences in market and technology demands. Even though yellow phosphor is a very mature technology, it cannot meet certain high end lighting demands. Phosphors manufactured in China have been unable to meet these demands.
Currently, Bree Optronics is still improving its yellow phosphor, and the effects have been evident. “Even though yellow phosphor is cheap, it doesn’t mean we should stop manufacturing,” said Liang. “In reality, yellow phosphor and green phosphor are connected. There are clearly different market demands in the LED market, it would be impossible to meet the entire market demand with low-end (phosphor) products.”
High performing red and green phosphor have become major pillars and the primary driving force supporting phosphor applications in the LED market, following lighting market increasing color rendering index (CRI) demands, and backlight market’s higher color gamut demands. Red and green phosphor is also the driving force in the industry. “It would be impossible to manufacture good quality products without high quality red or green phosphor,” said Liang. “Technology advancement is a necessity, without it the product would be unable to meet rising demands.”
Bree Optronic’s revenue reflect yellow phosphors comprise for half of the shipment volume, but it has a very low revenue share. The company’s main source of revenue is still high color rendering red and green phosphor.
High color rendering and high color gamut phosphor will lead the market in the future. There is currently a shortage in high color rendering phosphor for lighting applications. “Light emitted by excited red phosphor on the market currently tend to be closer to the red light region on the light spectrum,” explained Liang. “Hence, yellow and green light absorption becomes much stronger, which can either raise the CRI or lead to lower color temperature. All these can cause the luminous efficacy to drop. If the absorption issue can be solved future LED light efficiency can be increased 20% to 30%, but this will depend on future red phosphor developments.
Expanding patent deployment and limiting foreign companies core patent interference
Patent lawsuits in the phosphor industry include the legal battles between Everlight and Nichia, Mitsubishi and Yantai Shield Advanced Materials, and Intematix red phosphor patent. Followed by the sales of Bridgelux. On top of this is Cree and Epistar’s recent global LED patent cross-licensing agreement. A lot of events have taken place in the industry in 2015. Chinese manufacturers have found a new springboard to jump over the industry’s patent entry level.
The LED industry has been plagued by patent issues, and manufacturers are focused on patent developments. With Lumileds, Bridgelux, and Cree loosening their grip on patents, how will this impact phosphor’s patent situation?
The domestic market is very volatile at the moment, from a technology perspective it will be very difficult for Chinese manufacturers to breach foreign companies patent networks. Since Bree Opto’s establishment it has actively deployed its patent strategy, and has applied both domestic and international patents. Some of the company’s red phosphor has acquired patents rights in Europe, U.S., Japan, and Korea. The company will actively apply for more international patents to protect itself in the future.
With Nichia’s YAG patents nearing its expiration date, Liang believes it will have a limited impact on phosphor manufacturers, due to its low market ratio. Nearly all Chinese LED package manufacturers are using domestically produced yellow phosphor. However, with the product’s patent limitations ending, yellow phosphor will continue to be used for a very long time, but its usage volume will gradually drop.
Phosphor film technology and granular phosphor products have greatly increased falling bin rates creating “zero inventory” for LED package manufacturers hit bin rate.
Hit bin rate refers to LED package type that combines phosphor with glue, and after evenly applying the mixture, it is cured with a dispensing robot. However, dispensing technology usually will cause the phosphor to settle, causing each finished LED product to be slightly different. There are certain fluctuations in the finished dispensed color points, and when LED package manufacturers select their products they usually will choose products that fall in between their desired bin area. Products with light emittance that fall outside of the bin area are often LED package inventory or outside bin products. All these are invisible costs. If manufacturers are able to achieve high hit bin rate than there is a higher probability of the product meeting the client’s bin area. This in turn would increase company’s shipment rates. The smaller the phosphor grain size, the greater the chances of the LED package manufacturer meeting the hit bin rate. However, the grain size cannot be too small. “When grain sizes are relatively fixed, the key will be the compatibility between the phosphor and glue,” said Liang. “When the phosphor grain has a suitable size, it is able to greatly ease the phosphor settlement situation and evidently raise the hit bin rate.”
Following CSP technology maturation and promotion, complementary phosphor film technology and applications will also improve and highlight hit bin rate performance. Bree Optronics has started phosphor films R&D process to meet different structured white CSP LED chip demands, and is developing ultra-thin phosphor film to improve its competitive edge in the market.
