Nichia's Layout Strategies for Attracting Customers Are Changing

The leading global LED maker Nichia has remained low-key for many years, but with increasing opportunities in LED lighting, Nichia's layout strategies for attracting customers are changing. Recently, Nichia held a technical seminar in Taiwan - its first-ever on the island - and almost 100 players in the LED lighting supply chain participated, including the Hon Hai Group (Foxconn), Taiwan Semiconductor Manufacturing Company (TSCM), China Electric, as well as various traditional lamp producers. Nichia said during the seminar that in 2012 it will focus mainly on expanding LED single-chip products and that lumens-per-dolalr (lm/$) will almost be equal to Taiwan's competition in order to supply downstream customers with competitive prices in the LED bulb market. Nichia Taiwan's chairman, Masao Shono, said that the LED lighting market is booming, but Nichia will nevertheless adhere to the direct sales model that involves providing direct customer technical support. Shono further said that while other LED manufacturers are moving towards a vertically integrated model, Nichia will not develop downstream lighting products. In order to avoid competition with customers as well as to enhance links with customers, Nichia is considering holding technical seminars one or two times a year. The LED lighting market has entered global competition and for Nichia to secure the spot of the world's No.1 LED manufacturer, it is transferring its product focus to lighting applications. Nichia said in 2012 its cool white LED lights will have a color temperature of 5,000K with luminous efficacy reaching 170 lm/W. Lab results achieved luminous efficacy of 249 lm/W in 2011 with polycrystalline-packaged surface light source products reaching 140 lm/W. However, Nichia is pushing to reach 150 lm/W in 2012 and has a year-end goal of 170 lm/W. The luminous efficacy of large-size packages is estimated to reach 160-180 lm/W in 2013 with low-wattage LED products going from 135-155 lm/W to 160-170 lm/W in 2013 as well. In response to the intensified competition in LED bulb prices, 40 watt LED bulb prices have dropped to US$10 a bulb, and 60 watt ones are also expected to be US$10 by the second half of 2012. Nichia says it is also going to make its 757 product series more cost-efficient in order to stay competitive. According to Nichia, in the past, industries believed that Nichia was simply a "representative of high prices." However, LED ball bulbs that use 0.6-1.3 watts NF757 have seen substantially lowered prices. At a CRI (color rendering index) of 70, the price-performance ratio of these bulbs can reach over 300 lm/$. Although these prices are still higher than the current ones offered by Taiwan's LED factories, Nichia said this doesn't outweigh the advantages of reliability and global patent it provides along with the secure confidence it has with LED lighting customers. Nichia also said that while the LED backlighting market have been dominated by a bunch of major players, the LED lighting market is much different. Therefore, Nichia has been holding technical seminars for customers in Hong Kong and China since 2011. Eeven though the LED lighting market is developing at a faster pace in Japan and the United States, it is expected that China's LED lighting market will grow at an alarming rate, making Taiwan an important base for the development of the LED industry. Despite South Korea's spring up in the LED industry, Nichia said it managed to stay as the market leader through its firm foundation and LED patents in 2011. Its revenues in 2011 reached about NT$90 billion (US$3.05 billion), but contribution from the lighting segment remained low. It added that it has 20-22% of the global phosphor and LED markets and has more than 7,000 employees. Although the progress of global LED plant expansion was delayed in 2011, Digitimes Research has pointed out that in 2011, Nichia continued its expansion plans with an annual investment of up to JPY70 billion (US$839.9 million), and is going to maintain its goal of shipping 50 billion LED chips in 2012. Nichia said that it will continue to expand its LED industry in 2012 due to growing demand for LED lighting, particularly for LED single-chip packages. Source: www.digitimes.com