Wellypower Dominates T5 Fluorescent Lamp Making in Taiwan

Not a typical corporate captain who runs his empire from a distant executive chair but one who believes in the hands-on approach, Polo Yang, director of Wellypower Optronics Corp.'s Business Division, watches eagle-eyed at the fluorescent lifespan tester in his company's factory, comparing the latest results on a row of T5 fluorescent tubes from major international suppliers against those of his company.

Polo has ample reasons to be smug as the fluorescent tubes have been plugged in the same time since January this year. "Look, some of the big-name suppliers' tubes show darkening rings-or decaying light output which are signs of compromised electrodes, whereas ours still burn bright even after nearly four months of non-stop operation," he boasts.

Yang's company has been Taiwan's No.1 and the world's No.5 supplier of cold cathode fluorescent lamps (CCFLs) for liquid crystal display (LCD) TVs since its founding in 1994. Now it is the only local manufacturer in Taiwan of T5 lamps since branching out into CCFL and LED segments last year, with CCFLs being the mainstream light source in Europe for its very high energy-efficiency-to-dimension ratio among all fluorescent lamps. Yang's CCFLs measure only five-eighth inch.

Embodying David in a battle against goliaths, Taiwan-based companies like Wellypower are fighting uphill battles to diversify into the T5 lamp sector since global players such as Osram and Philips have historically dominated the market.

Aiming to Be Subcontractor

"We're not challenging these heavyweights. Instead, we aim to be their subcontractors," stresses Yang, who has taken concrete steps to enhance its toolbox: The company is using a Japanese-made, fully automated production line to turn out tubes at about one per every two seconds. Its lamps have a luminous efficacy of 105 lumens per watt and heats up to only 35 Celsius; and to extend durability, Yang claims that a unique formula procured from Nichia is added to the phosphorous powder to lengthen their service life. Most importantly, our manufacturing costs are lower than big players'," he adds. Yang also reports that his company's lamps last as long as 20,000 hours before significant declines in luminosity, comply with RoHS standards by containing only three milligrams of mercury, as well as being certified to UL ISO 9001, 14000 and IECQ QC 080000 standards.

Wellypower's technological prowess did not evolve overnight: Its founder is Taiwan's leading fluorescent maker, China Electrical Mfg., Co., Ltd., while AU Optronics Corp., Taiwan's top LCD maker, has bought stakes in it. "Theoretically, thinner tubes run into higher technological hurdles as the smaller tube volumes result in higher intensities of collisions among mercury molecules to generate ultraviolet rays, with such molecular interactions continuing to escalate with decreasing tube size. But making T5 is a piece of cake since we've been turning out CCFLs for many years, and you know that CCFL is much thinner than T5," Yang says.

"We diversified into T5 to emulate Philips, which managed to replace CCFL with T5 as backlights in LCD TVs larger than 42 inches diagonally to reduce costs. However, TV set makers eventually gave up using the bigger T5 lamps due to spoiling the original idea of making LCD TVs thinner. With Philips withdrawing from such effort, we started making the lamps for general lighting," Yang recalls.

Bright Future for T5s

Wellypower now puts out 700,000 T5s yearly, offering them in 2,700, 3,000, 4,000 and 6,500 Kelvin versions. Yang says the company plans to double the output by the end of this year. "We ship the lamps to our holding companies," notes Yang. The lamp production now accounts for only 10% of corporate revenue, which Wellypower plans to double next year. "Demand in Taiwan for the lamp has good potential since it has so far only a minor share of the local fluorescent lamp segment," he says.

Lamp makers in Taiwan estimate that T5s only account for few millions of Taiwan's fluorescent market, which is put at around 70 to 80 million tubes dominated by T8 (eight-eighths inch in diameter) and T9 (nine-eighths inch) specifications. Industry watchers believe that T5s will soon encroach on the dominance by T8s and T9s on the island due to higher demands for energy-efficiency and less-mercury content. A prediction that is coming true: so far the Taipei 101 and increasingly more high-tech buildings and clean rooms in chip-making and LCD factories have adopted T5s.

Also Tapping LEDs and CCFLs

Wellypower is not putting all its eggs in the T5 basket. While ramping up T5 production, the company is also planning to tap more opportunities for its LED and CCFL lamps, which now mostly go into LCDs as backlights. "The company aims to be an all-round manufacturer of lights," Yang boasts.

The company plans to boost manufacturing of LED emitters to 20-30 million units this year from last year's 12 million, with mainland Chinese manufacturers of cellphones and backlight modules being major customers of such emitters; while the company has also sold the emitters to lighting manufacturers such as desk-lamp makers.

Wellypower now turns out 23-24 million CCFLs a year, 43% of which go into TVs and 52% into monitors, with 5% being used as special applications like showcase lighting.

Although the company's consolidated after-tax net income of NT$1 billion (US$33 million at US$1:NT$30) for 2007 shows a yearly decline of 39.6%, its earnings per share remains NT$5.09 due to the high product value; while the company ascribes the decline mostly to significant depreciation.

Mega International Commercial Bank estimates Wellypower's after-tax income for 2008 to slump 10.4% year-on-year to NT$731 million (US$24 million), or NT$4.56 per share, on estimated revenue of NT$7.7 billion (US$258 million), which represents a 13.1% increase over last year. The bank attributes such earnings loss mostly to loss on foreign exchange, but feels that the 2008 earnings forecast remains higher than industry averages.