Certain LED manufacturers have turned their attention to niche lighting market applications in the wake of declining LED profits, but MLS is ambitiously vying the IC semiconductor industry and emerging markets to boost its profitability in the future.
“We are evaluating the possibilities of entering the IC semiconductor industry, and transfer our expertise in LED semiconductor technology,” said MLS General Manager Lawrence Lin in an exclusive interview with LEDinside Thursday at Nangang Exhibition Center of the Taipei Building Show in Taiwan.
“In the future MLS businesses will be divided into IC semiconductor package, LED package, and lighting,” he added.
China’s investment and support in the semiconductor industry was one of the reasons behind this move, and the company remained confident in its semiconductor package technology. “We already have extensive experience in LED package, which we hope to apply in IC semiconductor as well,” said Lin. “Our current technology capacities is sufficient for packaging 8-pin IC chips.”
MLS intends to transfer its technology know-how in LED package industry to IC semiconductor as well, and noted it had been using more challenging copper and silver wire materials in LED package bonding.
Whether the company’s IC semiconductor package will include smart lighting products or semiconductors used for other IoT applications remained unclear. The scheduled timeframe for the initiation of its IC semiconductor is scheduled to take place in 2016, but commercialization will occur sometime later.
The company’s ambition to become a leading lighting manufacturer and remain profitable in the next three years was clearly evident by its diversifying product strategies.
MLS General Manager Lawrence Lin. (LEDinside)
MLS LED package business strategies
For its LED package business, MLS intends to split 40% of production capacity for lighting and 40% for display backlight. LED backlight display market has become a new growth momentum for the company, since small pitch display products have increased LED chip usage volume. “LED chip costs now make up 50% of the cost in small pitch displays,” said Lin.
The company has succeeded in acquiring about 70% market share in the LED backlight market in China, and entered most mainstream LED display manufacturers supply chain, he added. “The only exception has been Unilumen.”
Keen on expanding its production capacity, MLS aims to raise its LED package production capacity to about 50 billion pieces per month by 2016, but will focus on optimizing its work force and technology after reaching this particular milestone, said Lin.
The company has been scaling up its production capacity to reach its production capacity goals recently, and has constructed two new factories in Jiangsu Province, China. The new factory in Xinyu, Jiangsu Province will have a production capacity ten times that of its factory in Zhongshan, Guangdong, and will be focused on manufacturing products shipped in China. Its other new factory in Jian, Jiangsu Province will be producing products shipped to oversea markets, and has started mass producing products during second half of 2015.
Additionally, Lin was still optimistic about the market growth from the lighting industry. Since LED market is still in the replacing traditional luminaires there is still potential room for growth for LED manufacturers. MLS intends to achieve a sweet spot by expanding its lighting product portfolio to boost lighting profitability and the strategy would be relevant in the next three to ten years.
“There is still 30% room for optimization of lighting efficiency in terms of $/lm,” he added. “This can be accomplished either through technology advancements or through pricing strategies.”
International markets MLS is targeting in the future
Changes in the global economy and waning profitability in LED industry has spurred manufacturers to diversify their product and business strategies throughout 2015, and there are several factors at play. Impact from the slowdown of China’s economy has been felt by even domestic big players such as MLS.
The World Bank projects China’s GDP growth rate will reach 7.9% in 2016, but the local LED market looks challenging even for MLS this year.
Competition in China is so intense that Lin projected MLS will experience limited revenue and profit growth this year, the only good news is its uptick in market shares in the vast Chinese market. Yet, he upheld a bright outlook for 2016, and expected lighting to grow 30% following the rebounding economy.
“There are 30,000 LED manufacturers in China, the market is so fragmented that the top 10 manufacturers have a combined market share of less than 10%,” said MLS General Manager Lawrence Lin in an exclusive interview with LEDinside Thursday at Nangang Exhibition Center of the Taipei Building Show. “At some point you will have to look into international markets.”
Lin projected the company would see most revenue growth from the U.S., India and Southeast Asia markets. He also highlighted Iran in Middle East as a market where the company has seen considerable growth, and noted political and economic instability in Saudi Arabia has made market conditions more volatile. His outlook was mostly based on GDP growth, since India was projected to see 6% and even above growth in 2016, while the Philippines in Southeast Asia has seen 8% to 10% growth.
MLS is very active in the Indian market. In October 2015, DIGITIMES reported the company and long-term LED chip supplier Epistar started a joint LED chip factory venture in India, which Lin confirmed was an ongoing project. According to Lin, Epistar will be in charge of the new joint venture management. “Ita Lin, Associate Vice President at Epistar, has been appointed by the company (Epistar) as the new head of the Indian office,” said Lawrence Lin.
“In the Indian market, we are mostly supplying LED package products,” said Lin. Indian government policies spurred local LED industry growth, but since most of the implemented LED subsidies encourage local LED assembly it has been hard for foreign manufacturers to import finished luminaire products into the market.
The company is also very active in the Indian lighting associations and committees establishing new lighting standards, in which the company representative in Middle East has been participating, said Lin. In Middle East markets, the company has been the only Chinese LED company to join the Middle East Lighting Association, which is headed by Philips.
