Semiconductor Lighting - Many Market Segment Opportunities

Due to the promotion of alternative light sources and the global incandescent lamp replacement boom, the global LED lighting market experienced rapid growth in 2014, but in 2015, the prices of alternative light source products (including lamps and bulbs) fell sharply, and product profits were not as expected. Makes the LED lighting market growth impetus insufficient. The growth of the LED lighting market has slowed down. In 2015, the global LED lighting market was US$25.7 billion, an increase of 44% year-on-year in 2014, and the LED lighting market penetration rate reached 31%. It is estimated that the global LED lighting market will gradually become stable from 2016 to 2018. Some alternative light sources have been replaced, and the market growth rate is stable at about 20%. Lighting companies have begun to shift their focus to professional lighting, such as commercial lighting, engineering lighting and architectural lighting.

The global LED industry presents the following development characteristics: First, the market segmentation of LED lighting applications. In the face of the downward trend in the price of LED lighting products, global LED companies have been looking for subdivisions in the field. The key enterprises are moving toward the high end of the value chain, strengthening innovative research and development in such areas as industrial lighting, automotive lighting, plant lighting, and intelligent lighting, and providing alternative lighting solutions for different application environments. For example, in 2015, the global LED industrial lighting market will reach US$2.366 billion, and it is expected to reach US$3.935 billion by 2018, with a compound annual growth rate of 18.5%. In the industrial field, LED skylights account for the largest proportion of lighting products. Currently, the world's leading LED companies have entered the field, such as the United States General Electric, Corey, Toshiba, Iwasaki Electric. Second, the global high-brightness LED industry has grown at a slower pace. Over the past few decades, different application markets have stabilized the annual compound annual growth rate of the high-brightness LED industry by 20% to 30%. However, in recent years, the growth rate of output value has dropped significantly. In 2014, the output value of high-brightness LEDs was 14.2 billion US dollars, and the growth rate dropped from 19% in the previous year to 9%. In 2015, the output value rose only slightly, reaching US$14.5 billion, an increase of 2% year-on-year. Third, the international LED giant corporate mergers and acquisitions surging. In 2015, LED industry key companies announced the sale or split LED lighting business one after another, making the industry structure change. As the leading lighting company, Philips began its series of split and reorganization plans. Last year it announced that it will sell 80% of Lumileds, its lighting company, to Chinese capital GSR GO Scale Capital for US$3.3 billion, but was subsequently re-finding its buyers after being rejected because it was not approved. This year it also reached an acquisition agreement with a U.S. manufacturing company that manufactures OLED light engines and panels. Currently Philips is planning to spin off its lighting business and medical business.

In recent years, the market penetration rate of LED lighting in China has increased significantly, and it has been promoted in landscape lighting, road lighting, commercial lighting and other fields, and has accelerated the penetration of home lighting. In 2015, the overall scale of China's semiconductor lighting industry was 396.7 billion yuan, an increase of 15% year-on-year in 2014. Compared with the average annual growth rate of more than 30% in the past 10 years, the growth rate has decreased significantly.

From the perspective of imports and exports, the overall growth rate of China's export of lighting products maintained at a relatively high level from 2011 to 2014. In 2014, the total export of lighting products was 41.5 billion U.S. dollars, reaching the highest level in recent years, an increase of 16% year-on-year, and the export growth rate of lighting products remained above 10% in 4 years. Affected by the global economic environment, the overall export growth of China's overall lighting products also declined in 2015. In the first three quarters, total exports of lighting products totaled 33 billion U.S. dollars, an increase of 8.5% year-on-year in 2014, and the growth rate fell to one for the first time. Number of digits.

LED lighting products, as a category of products that have rapidly emerged in the lighting industry, have seen a rapid increase in product exports from 2011 to 2014. Driven by the global ban on incandescent lamps, China’s LED lighting exports have maintained a relatively high level. In 2014, the total export value was US$9 billion, a year-on-year increase of 50%, and the growth rate was over 60% for four consecutive years. Since 2015, with the gradual increase in the penetration rate of LED lighting, the market demand has slowed down and the export volume of China's LED lighting products has also slowed down. In the first three quarters of 2015, total exports amounted to US$8.4 billion, an increase of 20% year-on-year in 2014, and the growth rate has dropped significantly.

From the perspective of the challenges faced, the first is that core patents, technologies, and standards are subject to people. At present, the global LED high-end product market and core patent technologies are basically monopolized by the top five international giants. Philips, Cree, Osram, Nichia Chemicals, and Toyota Synthetic are among the five companies that have reached a licensing agreement through cross-licensing to form a patent pool of LED technology to consolidate the industry. The leading position, the weak corporate awareness of patents, and the lack of core patents will become a major obstacle to the development and expansion of China's enterprises and import and export trade.

Second, the high-end market lacks competitiveness. At present, most domestic companies have mastered the low-power LED chip technology, but lack the competitiveness in the high-end fields such as high-power and special application chips. For example, China’s market share in the high-end high-power lighting chip market is low, with 80% relying on imports. High-end chips such as automotive lighting are basically completely dependent on imports, and a large number of companies that can produce in large quantities are still few.

Based on this, two suggestions are proposed for the development of the industry: First, strengthen the positive interaction of the industrial chain and promote the innovation of independent core technologies. Through the joint efforts of leading upstream and downstream companies to achieve product coordination. Focusing on the new requirements of upstream chip technology and midstream packaging technology in emerging application fields such as downstream plant lighting, automotive lighting, and intelligent lighting, through multiple channels, we will strengthen guidance and focus on supporting the upstream and downstream backbone enterprises of the industrial chain to carry out strategic cooperation and joint cooperation. Tackling key issues, achieving a breakthrough in key common technologies and collaborative development of products. Focus on promoting key technology innovations such as silicon-based LED technology, homoepitaxial technology, patterned substrate technology, and MOCVD equipment with independent intellectual property rights to enhance the core competitiveness of the industry chain. The second is to promote the formulation of industry standards and improve the detection system to raise awareness of patents. Improve the LED integrated standardization technology system. Priority shall be given to the formulation of urgently needed and well-developed standards for the development of industries, and the development of basic standards, component standards, and system evaluation standards for LED systems shall be carried out in stages and with emphasis, and the promotion and implementation of standards shall be guaranteed. Rely on national and local quality supervision and inspection centers to strengthen market regulation and supervision. At the same time, relying on industry authorities and associations and other institutions to build LED IP public service platform, explore the establishment of intellectual property early warning mechanisms and patent sharing mechanisms, and establish a perfect patent pool.