Makers are boosting the lighting downstream segment to take advantage of the projected demand upswing in coming years.
Taiwan’s LED manufacturers continue to strengthen the components and service segments while pushing for vertical integration. This is to enhance competitiveness against mainland China and South Korea counterparts. Local companies are eyeing the lighting sector, which is expected to achieve higher growth in coming years as the backlighting segment enters a slow phase due to maturity.
Suppliers are taking advantage of the island’s strong upstream network. This is because a diode-based lamp consists of a chip, packaging, optics, board, heat sink, driver, control software and service, power supply and housing fixture. The first two each make up 30 percent of the total costs, and the housing 20 percent.
The local industry represents more than 20 percent of global shipments for epitaxial wafers, chips, packaging and modules, according to the Photonics Industry and Technology Development Association.
At present, domestic component makers are working with luminaire companies to penetrate the finished product sector. Chip supplier Epistar and the Formosa Plastics Group have a joint venture with Nan Ya Photonics for the automated manufacture of bulbs. Those developing own models include Lextar. The vertically integrated company specializes in LED epitaxial wafers, chips, packaging, SMD and LED lighting.
The bid, however, is not without challenges. Spending on major raw material phosphor powder remains high, and competition is fierce in the low- and medium-power LED categories. To counter the latter and increase product value, suppliers are focusing R&D on high-power diodes.
Companies are also moving toward reducing lumen costs to boost market penetration. They are using lumen per dollar instead of watt, following the parameters of the US Department of Energy. The last predicts outlay will be $1 for 500 lumens by 2015, and 1,000 lumens after five years. Epistar hopes to achieve the last in 2015.
So far, cool-color LED packaging has better efficiency and lower price than warm variants. Last year, its 133 lm/W version was $13 per 1,000 lumens, while the 95 lm/W warm-color counterpart was quoted at $18. This year, the former will reach 166 lm/W and $6 against the 133 lm/W and $8 of warm color. By 2020, the gap will narrow down only in terms of luminous efficacy with 215 lm/W for cool color and 211 lm/W for the other at $1.
Packaging and module services account for about 60 percent of Taiwan’s total revenue from the line, and chips and wafers the rest. The first two are forecast to reach $3 billion in production value this year and $4.2 billion in 2014.
That of LED ICs will reach $2 billion by year-end and $2.7 billion in 2015, based on IMS Research estimates. This will reinforce Taiwan’s position as the world’s largest supplier of the component.
