Everlight Aims for Top-3 Position in Global LED Lighting Market

Chairman of Y.F. Yeh of the Everlight Electronics Co., the world's No.1 LED packager by volume, takes a brisk look around at the Hong Kong International Lighting Fair (Autumn Edition of 2011). For Yeh, whose company wants to become one of the world's top three brand name suppliers of LED lighting, the Hong Kong lighting fair (second largest in the world and largest in Asia) provides a valuable opportunity observing trends in the global lighting industry.

“Everlight became a world-leading supplier of LED backlights for TVs last year,” Yeh commented at a press conference held on the sidelines of the fair. “Our next goal is to become a world-leading supplier of LED lighting, which means that B2C [business to consumer] will become our next business model after B2B [business to business].”

Patents pose a tough challenge for everybody in this new industry, but Everlight is well prepared. By acquiring stakes in epi-wafer makers Epistar Corp., Huga Optotech Inc., and Tecore Co., as well as doing its own R&D work, Everlight has amassed over 2,500 LED-related patents, the largest number that any LED maker has ever collected. “Thanks to our portfolio of the largest number of patents in the industry,” Yeh says, “we have been able to maintain an unmatched position in terms of revenue and output volume, as well as profitability during the downturn.” The company's revenues reached NT$17.6 billion (US$586 million at NT$30: US$1) in 2010.

In spite of its unmatched patent holdings, Yeh confesses that his company is still exposed to threats from the 10% of patents in the industry that it is still pursuing. “Of all industries, LED perhaps is the one with the largest number of patents,” he explains. “And patents remain the foremost hurdle when you are pushing into markets other than mainland China.”

Unlike the company's LED packaging operation, which is dedicated to contract manufacturing, its lighting operation will promote Everlight's own brand names. “Although 80% to 90% of the world's lamps are made in mainland China,” Yeh laments, “neither the mainland nor Taiwan has ever built a lighting brand name that is known internationally. Everlight hopes to use its design capabilities to build a brand name as well known around the world as Osram and Philips.”

The company is currently promoting the brand name “Zenano” in Europe and America, and “Everlight” in Asia. Yeh is confident of successful brand promotion in the LED lighting market. “Taiwan has no mercury lighting or energy-saving lighting industries,” he explains, “because both are dominated by international players. Nevertheless, Taiwan has the world's strongest LED industry, because it has self-content technologies and a complete supply of patents. Also, it is standing on the same starting line as Osram and Philips in this new industry; so I believe that Everlight can build up its name in the international lighting industry in five years, just as HTC has done in the smartphone industry.”

Everlight has set up a marketing firm, Solid State Lighting Co., for its lighting operation. The new marketing company is vending a full range of industrial, commercial, household, and grow lights. The parent company plans to increase R&D staff to 1,000 when its new headquarter building is unveiled at the end of this year, up from 300 now.

Focus on the Chinese Market
On Yeh's market map, mainland China, Europe, and America take pride of place in the company's lighting operation, with the mainland topping the list with a planned 60% contribution to overall revenue. Accordingly, Everlight has established three joint ventures in the mainland in cooperation with local enterprises, another sign of its intention to forge connections with local enterprises as a shortcut to the mainland market.

The company will pinpoint Chinese government organizations as its primary customers there in the short term. In Europe and America, its products will be available for consumers at retail shops.

However, the company has chosen Taiwan as the starting point for its lighting operation, targeting both government organizations and general consumers. Yeh has demanded that all of Everlight's lighting products comply with government contract regulations. Some 80% of its consumer product sales on the island are through retail shops.

Although lighting now accounts for only around 10% of Everlight's total revenue, the company forecasts a three-fold growth next year. Yeh says that this increase will be due mostly to the low starting base, which allows huge room for growth.

The sluggish global economy has struck a severe blow to the global lighting market, which is expected to eke out a growth of only 5.6% this year, to US$83.9 billion. Yeh thinks that the growth slowdown is a good time for LED-lighting manufacturers to educate consumers about their products. Everlight will take advantage of this opportunity by opening an LED lighting museum in the first half of next year to make the new light source known to consumers.

Yeh points out that LEDs have many advantages over traditional lights, the foremost one being energy conservation. “LEDs now consume only 20% of the electric power that incandescent bulbs use to give off the same intensity of light,” he notes. “And this percentage will improve to only 10% in 2013. If all the lamps in Taiwan are replaced by LEDs, Taiwan will be able to save 22.8 billion kWh of electricity a year, equal to a reduction of 13 billion kilograms of CO2 emissions.” The amount of electricity saved would be about the amount that 1.5 nuclear power plants produce in Taiwan.

“Furthermore,” Yeh goes on, “LEDs are durable, lasting up to 50,000 hours before going defunct. Fluorescent lamps have only one tenth of that lifespan. Better yet. LEDs do not produce ultraviolet rays as fluorescent lamps do, freeing users from worries of skin aging with artificial light.”

High prices have been the major factor keeping LEDs from quickly gaining market penetration. “LED lighting is priced at three to eight times that of traditional lighting,” Yeh explains. “So government subsidies are crucial to the penetration of LED lamps.” He says that the Japanese government offered subsidies to LED-lamp buyers following the March 11 earthquake and tsunami, and that approximately 20 million LED light bulbs were sold in Japan up to October.

Yeh notes that the cost of LED lamps will fall steeply, from US$1 for 250 lumens now to an estimated US$1 for 1,000 lumens in 2015. “An LED bulb equivalent to a 60W incandescent retails for around US$30,” he claims, “but Everlight's bulbs of the same type are available for only US$6.”