Chinese LED manufacturer San’an Optoelectronic Co. (San’an) has been picking up its pace in internationalization and deployment of business strategies this year. In the LED chip field, the company has become a top international manufacturer with its acquisition of Luminus, with its investments in Taiwanese LED manufacturer FOREPI has greatly improved its competitiveness. In terms of its overall business strategies, the company has set up a lighting sales company, and plans to extend its reach in downstream applications.
San’an Investment in FOREPI Provides Breakthroughs in LED Chip and Oversea Markets
San’an announced on Oct. 8, 2013, that the company’s Xiamen branch had completed share registration for its acquisition of FOREPI stock shares. An industry source commented scalability is obvious, and is another breakthrough for the company’s LED chip technology and oversea markets.
According to San’an’s information, the Xiamen subsidiary will be using no more than NT$ 2.35 billion (US$80 million) of funds raised to purchase 120 million ordinary stocks through private equity from FOREPI, a listed company on the Taiwan bourse. San’an’s Xiamen subsidiary is currently FOREPI’s largest stockholder and owns 19.77% of stock shares.
San’an intention of purchasing 19.9% of FOREPI stock shares is to quickly enter core international patent network, according to a Chinese-language investor securities report. FOREPI owns nearly 300 plus patents, and with its recent procurement of 151 patents from U.S. manufacturer Luminus, San’an has a much louder voice now in international patent competitions. On the other hand, by cooperating with FOREPI, the company can directly enter oversea markets through methods of becoming a FOREPI OEM.
Besides the three major Taiwanese LED manufacturers Epistar, FOREPI, and CET-MOS Technology Corp. that have more stable market shares, other Taiwanese LED companies market shares have begun to slide, and become gradually replaced by Chinese LED manufacturers, said a Sinolink Securities analyst.
At the same time he believed, FOREPI will be authorizing many patents to San’an and providing technological support. San’an will be able to have major LED chip technological breakthroughs, and at the same time expand its international market.
San’an Speeds Up Vertical Integration by Moving Towards Mid-Downstream Markets
San’an subsidiary company set up through joint venture with downstream manufacturers Jiawei Corp. and Yankon Lighting, has signed an LED order worth RMB 500 million with MTC Corp. San’an repeat extension into mid-downstream markets is speeding up vertical integration.
San’an announced the company will be using its own capital to set up a new subsidiary with Jiawei for LED application R&D, manufacturing and sales on May 28, 2013. Under same market conditions, the company will prioritize the use of San’an LED chips.
The company announced again on Sept. 9, that the company will be establishing subsidiary Xiamen Yankon San’an Technology Ltd. (literal translation) though joint venture with Yankon. The subsidiary will be mainly focused on manufacturing new LED light sources, R&D of new lighting products, and exploring lighting sales channels.
In midstream LED package field, San’an signed a LED chip order valuing RMB 500 million with MTC Corp. on July 17. The order will be completed within one year, and is a guarantee to San’an’s performance. In addition, San’an has fulfilled its plans of cooperating with LED midstream manufacturers.
Some in the industry believe this type of win-win partnership is more likely to be replicated, and applied to other clients. On one hand, in its competition with Taiwanese manufacturers and others, the company’s LED chip products are increasingly approved by downstream clients. Its market share is also gradually increasing.
Since Chinese LED manufacturer Yankon Lighting has its own domestic sales channel, and is mostly an OEM in overseas market, the joint venture company brand and sales channels will be focused on export market, explained the Sinolink Securities analyst.
San’an cooperation with large Chinese light source manufacturer not only can guarantee San’an LED chip sales, it can also increase the company’s control of downstream resources and supply chain, the analyst added.
