In acquiring an 80.1% stake in Philips' combined LED components and Automotive lighting business (with Netherlands-based Philips retaining the remaining 19.9%), new owners GO Scale Capital (an investment fund sponsored by GSR Ventures and Oak Investment Partners) will gain Lumileds of San Jose, CA, USA, a company that began 2015 strongly after gaining market share in 2014, according to a Research Note from the IHS LED Intelligence Service.
While the overall packaged LED market only grew by single digits from 2013 to 2014, Lumileds was one of only two of the top 10 LED suppliers (along with China-based MLS) to record growth of more than 20%. Lumileds' market share hence rose from 5% in 2013 to 6% in 2014.
In 2013 Lumileds revenue was similar to that of LG Innotek, Seoul Semiconductor and Cree. In fact, Lumileds ranked fifth, behind Seoul Semiconductor, says IHS. However, in 2014 it established itself clearly as the fourth-largest packaged LED firm, and joined only three others (i.e. Nichia, Samsung and Osram) with more than $1bn in annual packaged LED revenue. By fourth-quarter 2014, Lumileds had also overtaken Samsung, to third in the quarterly rankings.
Lumileds' 2014 performance resulted from growth in lighting, automotive, mobile camera flash and other key areas. Notably, it has smaller share in backlighting – a market that disappointed in 2014 – especially in the second half of the year. Lumileds's areas of growth helped it to gain against other competitors that have a larger share in backlighting, such as Nichia, Samsung, Seoul Semiconductor, LG Innotek, Lumens and Toyoda Gosei. However, its growth is also based on share gains at certain customers. It remains to be seen if Lumileds can continue this strong performance under its new owner, IHS comments.
Philips stated last July that, by spinning off Lumileds, it would be better positioned to compete for new business from outside customers that regard Philips as a competitor. The announcement ends years of speculation about the future of Lumileds, during which Korean, Taiwanese and US LED firms were variously rumored to be potential suitors, says IHS. However, in recent weeks it became clearer that it would be a private-equity deal. Information began to leak out and, prior to the latest announcement, GSR Ventures already began to be quoted by some news sources as a likely partner, the market research firm notes. The timely announcement will finally bring Lumileds some stability and help its staff and partners move forward with more clarity, it adds.
As often happens, however, answers lead to more questions. With GSR Ventures' focus on China, and its existing investments in China-based Lattice Power and other companies, might Lumileds consider moving some of its production to China in the future? Is there any relationship between Lattice Power, GSR Ventures and the Nanchang regional government, as has been reported by certain Chinese media outlets? Is this a sign of increasing future Chinese involvement in the packaged LED industry?
Sonny Wu, who will serve as interim chairman of Lumileds, is also chairman of Lattice Power, which - along with Toshiba/Bridgelux and Plessey - is one of the few firms to produce LEDs on silicon, while almost all other LED companies (including Lumileds) produce LEDs on sapphire. As little as a week ago, Wu said that he saw "tremendous opportunity for the GaN-on-silicon technology, which offers the ideal choice for next generation silicon chips". Will Lumileds consider any transition to GaN-on-Si over time, or will it continue to use sapphire, questions IHS.
