Lighting Forum Points Way for LED Lighting Makers in Taiwan

Industry insiders and experts agree fut

The revenues generated by the global light emitting diode (LED) lighting market is projected to grow to US$5.2 billion by 2012 from 2007's US$330 million, according to the Taiwan government-backed Industrial Technology Research Institute (ITRI). In light of such promising forecast, a forum was held recently in Taipei, attended by insiders from industry and research institutes, to discuss how makers in Taiwan can fully capitalize their existing capabilities and develop viable alternatives to better compete against the heavyweights.

At the forum L.L. Lee, Deputy Director of Power Electrics Lab of the Electro-technology Division at the Energy & Environment Research Laboratories under the ITRI, advised local LED lighting manufacturers to continue strengthening products and build new business models to gain footholds in the global market, which is sound advice nevertheless considering the top-7 lighting makers, including Philips, are involved in LED lighting.

Showing she had done her homework, Lee said that the revenue for the global LED-lighting market will grow to US$5.2 billion by 2012, with the compound annual growth rate (CAGR) being 28.5% during 2007-2012. “Architectural lighting will continue to make up the major LED-lighting segment while commercial lighting applications will gain ground,” she said.

Z.X. Lin, a manager at ITRI's Industrial Economics and Knowledge Center (IEK), also emphasized the importance of the huge China market, advising the island's LED-lighting manufacturers to look across the Taiwan Strait to expand. Backing his suggestion with fact, Lin said China's LED market reached a value of US$2.7 million in 2008, or around 37% of the global market.

China is likely to be among the top-3 LED powers by 2015 mainly because of its huge market potential and production capability, Lin noted. Also with lighting generally consuming some 30% of all electricity used, China would be eco-intelligent to adopt more energy-efficient lighting as LED, especially when the pace of urbanization in China speeds ahead, a process that inevitably builds more office and retail structures that have a voracious appetite for lighting. Lin added that China has pledged, as part of its 11th Five-Year Plan (2006-2010), US$147-220 million in subsidies to develop its LED industry.

Minimize Risk

M.X. Hsieh, vice president of LED chipmaker Epistar Inc., stressed that LED lighting must be designed to be user-friendly and safe. Also, manufacturers, he suggested, should do their best to minimize management risk and improve technologies to keep with rapid market fluctuations, avoiding the meltdown that hit the island's dynamic random access memory (DRAM) chipmakers. He continued that Taiwan's LED-lighting manufacturers are noted for being sensitive to market fluctuations due to having excellent management of asset, R&D and engineering capabilities.

Lextar Electronics Corp.'s president, F.J. Su said that Taiwan's extensive developments of LED-backlight and information-technology (IT) industries have built a solid foundation for the island's LED-lighting industry.

“Despite the LED lighting market having much more potential than the LED backlight segment, the latter is still the major moneymaker for LED manufacturers,” Su emphasized. He added that, based on intelligent control technologies that have matured on the solid development of Taiwan's IT industry, LED-lighting manufacturers could start a new business model sharply different from that established by traditional lighting manufacturers: to introduce total lighting solutions. Also and again repeating by now a stale line, he suggested that China is Taiwan's breadbasket, that Taiwan's LED-lighting manufacturers perhaps have little choice but to rely on the vast China market for its future.

Pointing out what is taken for granted in the industry, Su said that thermal dissipation is the major hurdle in the way of LED-lighting manufacturers. LED lights can compete with traditional counterparts as soon as they become equally efficient in cooling and light output. In other words, LED-lighting manufacturers must overcome such inefficiencies in LED lighting, he said.

Impending Change

Edward Po, general manager of Philips Taiwan's lighting division, said that Philips held a forum in October last year in Boston, telling institutional investors of the rapid change in the global structure of the LED industry, which will likely replace traditional lighting with mainly LEDs from 2014 to 2015. “At the latest, such replacement would happen from 2017 to 2018 to start the restructuring,” he said. According to a leading British newspaper, incandescent bulbs will be fully phased out in many European nations in a few years.

Po added that while the lighting industry has grown at CAGR of 5-6% over the past few years, LED lighting has replaced traditional lighting at annual rate of 50%. He estimated that the market for replacement components of traditional lighting to wither as LED lighting fixtures will become fully integrated. LEDs will also have added features, he said, as dimming, adjustable color-temperature, light-color, and light-intensity.

Also noting LEDs' versatility relative to traditional lights, Po said that the former is color adjustable to create moods in stores that can enhance shopping willingness.

Global Strategy

Pointing out perhaps inadvertently Philips' global LED strategy, he said that the lighting giant has spent around 4 billion euro over the past three years acquiring firms dedicated to lighting-fixture and control design in the United States, Australia and Italy, likely laying the groundwork for its LED-lighting plan.

W.H. Jiang, director of Delta Electronics Inc.'s LED-lighting business, pointed out that the lack of industry standards is making business more haphazard and confusing for Taiwan's LED-lighting manufacturers. In addition, he believes that Taiwan's LED-lighting manufacturers are too slow in product development. “It usually takes at least six to nine months to go from design to verification before shipping a new LED light, whose life cycle is only about 18 months, with such predicament further compounded by the average six-month cycle for LED chips,” he said.

Jiang also believes that Taiwan's LED-lighting manufacturers need the government's assistance to set up distribution channels at home and in China, instead of mere funding, underlining perhaps the shadier side of doing business in China where ethical practice takes a backseat to nepotism, horse-trading and influence-peddling.

Citing Sharp of Japan's introduction in March last year of a US$43 LED lighting fixture, underselling Toshiba's US$107 counterpart, Jiang advised Taiwan's LED-lighting manufacturers to focus on high-end products to evade the vicious-cycle of price wars.

Repeating Consensus

Angela Huang, president of Leotek Electronics Corp., also repeated the consensus that the future for Taiwan's LED-lighting industry is in China, where authorities plan to ambitiously install 10,000 LED streetlights each in around 20 first-tier cities. “With the mainland authorities aggressively promoting the project to lure foreign investments, Taiwan's lighting manufacturers should tap such opportunity to win contracts by offering advanced technologies and designs proven by its industry standards,” she said.

Huang stressed that Taiwan's makers should prioritize performance/price ratios in designing LED lighting, especially when the Chinese makers are catching up fast, with the LED technology gap with Taiwan having been shortened to two to three years from over 10 years after years of official investment in R&D. Simply, superiority lies in building the best performing LED lighting at the lowest price. Claiming high performance/price ratios will enable Taiwan makers to be top suppliers in China, she said.