Globalized competition is inevitable in the LED industry with an increasing number of overseas LED companies entering Chinese market and vice versa.
Chinese LED companies acquire renowned international manufacturers, fewer companies receive government funding.
Acquisition is fairly common in the Chinese LED industry, and some have merged with some long established global players.
A good example is Go Scale Capital’s acquisition of Lumileds.
As of June 2015, there are 10 acquisition cases worth highlighting. Specifically, Chinese company Leyard acquired Leafun and Glux, Epistar acquired TSMC SSL, and Jingsheng acquired 51% of Zvision’s share. Lastly, Roshow Technology’s acquisition of Miki Mobile.
Acquisition has made headlines again. Roshow Technology invested RMB 150 million (US$ 23 million) in a new venture investment company in June, that is seeking suitable acquisition candidates. Leyard spent RMB 189 million investing in two other companies. Also, Lianchuang Opto acquired Fonda Technology with RMB 100 million, while Ledman Opto invested RMB 170 million in Infront Sport and Media.
The few companies that received government funding are listed companies HC SemiTek andSunShineLighting, which each received RMB 49 million and RMB 91 million.
Financial crisis, depreciating Japanese Yen force Japanese companies to shut down overseas LED plants
Unlike other prospering LED companies, large Japanese companies shutdown their LED plants. In March, Sharp was in a financial crisis with its annual deficit reaching RMB 1.5 billion. The crisis has led to large-scale layoffs and the closure of its LED business. By mid-April, media reports noted Sharp was discussing closing down its Mihara LED plant in its internal restructure plan.
Panasonic also plans to shut down its overseas LED plant in Indonesia in coming October, moving its production line to Japan although it previously claimed to increase sales to RMB 20 billion LED in early May. It’s believed that the weak Japanese Yen mainly caused that hindered import margin.
Korean companies busy launching new products and cooperating with other Chinese LED companies
Apple could be the biggest winner when it comes to the most popular smart LED bulb. If a smart LED bulb is incompatible with the Apple HomeKit, it will lose a great number of customers.
LG released a series of smart lighting products and control system that can be integrated into Apple’s HomeKit in June to get more exposure.
However, Seoul Semiconductor and Craig had been through a year-long patent suit which ended with Seoul Semiconductor winning the lawsuit. Winning the suit seemed to make Seoul Semiconductor more confident in acquiring other companies. In August, a subsidiary of Seoul Semiconductor, Viosys bought 50% of SETi’s share to develop UV LED business.
In comparison, Samsung seems to be the biggest winner among the three major Korean LED companies.
Samsung acquired YESCO, a U.S. LED signage manufacturer, to expand its signage business in early March. By the end of March, Samsung was boasting about ‘spreading the value of outdoor LED signage to consumers worldwide.’ In late March, Samsung started to fulfill this promise, but it was emphasizing LED lighting field.
On March 27, the strategic partnership agreement between Shanghai Feilo Acoustics and Samsung allows the latter to expand its business in China. In June and July, followed by the cooperation between Samsung and the other two companies, namely Xiamen Greener Opto and Dalian Lumin Lighting, Samsung has successfully wrap up Chinese market from three different geological directions.
With the emerging Asian LED companies continuingly gaining market share with low-price products, European and the U.S. companies are therefore forced to restructure in order to survive in the new market.
European and the U.S. manufacturers restructure to fight price and patent wars in 2015
In March, Osram plans to spinoff low margin businesses to focus on automobile and LED components business. Working toward transferring from traditional lighting to LED lighting manufacturer , Osram partnered with Belkin International, introducing three basic smart lighting components to the market in June.
The spinning off is frequently associated to similar strategies used by Philips. Although, Philips’ consecutively price down policies distracted people from its spinning offs. On April 22, 2015, Philips introduced an inexpensive LED bulb in the name of celebrating Earth Day. The low priced LED bulb implies Philips has joined the LED bulb price war. The company successfully cleared out its inventory and slashed 30% of the prices in the Asian market.
Early on in January, Cree was first reported to fighting patent lawsuits with Harvatek and Unity Opto Technology. Throughout July to August 2015 new patent issues emerged, U.S. company Feit Electric sued Cree over LED patent infringement. On the other hand, Cree has signed a LED patent cross-license agreement with Epistar. Recently, attention was drawn to the heated patent war again after U.S. court’s ruling invalidated GE Lighting’s claim against Lighting Science Group (LSG).
