Growing demands in the LED market were fueled by decreased product prices, government bans on incandescent light bulbs, and shift away from traditional lighting to more energy efficient LEDs. Financial service company Credit Suisse believes that from the current state of the industry, LED manufacturers have already begun moving in two different directions, with manufactures including Phillips Lumileds, OSRAM, CREE, Samsun LED, and Innotek mainly moving towards products and manufacturers such as Epistar, Lextar, and Seoul Semiconductors towards OEM.
Credit Suisse has a positive outlook for Epistar and Lextar’s OEM positioning strategy. At the same time they believe that compared to the horizontal labor division system established in the past due to increased growth in LED backlight demand, the move towards vertical integration in the LED era has given LED manufacturers far more advantages. Epistar and Lextar have therefore both adopted a vertical integration strategy with Lextar implementing the strategy from LED epitaxial wafers to packaging. Credit Suisse upheld a positive forecast of the two manufacturers switch to vertical integration.
According to Credit Suisse’s statistics, LED permeability rate for LED lighting in 2013 rose from 16 percent in 2012 to 21 percent. The rate is expected to rise further to 37 percent by 2015. Production value in 2013 is roughly US$18 billion and is predicted to reach US$34.3 billion by 2015, with a total growth rate of 40 percent. Credit Suisse is confident about the growth for operational use of commercial and architectural applied lighting. They believe that these applied fields have the highest permeability for 2013. However, residential lighting is still lagging behind. According to Credit Suisse, this applied lighting field will only see a rise in permeability if light bulb prices decrease and government subsidies are issued.
