TOPEC Views Veeco as Sole Competitor

News Source: 
STCN.Com

Chinese-language online media STCN.Com reporters interviewed Tang Optoelectronics Equipment Co. (TOPEC) Chairman and CEO Steve Chen during the 10th OfWeek LED Seminar 2013 and OfWeek LED Awards in Shenzhen on Nov. 15, 2013. The TOPEC leader shares insights on MOCVD equipment market developments in China. 

TOPEC annual MOCVD equipment sales reaches RMB 60 million

Chinese MOCVD manufacturer TOPEC, a subsidiary of listed company Tanlong Optoelectronics, specializes in the R&D and development of high-end equipment. The company is currently diligently working on domestic manufacturing of MOCVD equipment. A few years ago, imported MOCVD equipment accounted for nearly half the costs of a LED epiwafer production line. Due to high technological requirements and complicated manufacturing methods, the MOCVD equipment market in China has been monopolized by German manufacturer Aixtron and U.S. manufacturer Veeco.

TOPEC successfully shipped China’s first world class domestically made MOCVD equipment to clients. “The equipment operations have been very stable, and equipment sales revenue has been confirmed,” said Chen. The company’s MOCVD equipment sales surpassed expectations to reach RMB 60 million (US$ 9.85 million) and revenue sales will further exceed this number by the end of this year. Clients that have purchased TOPEC equipment include HC SemiTek Corp., Epitop and others. Due to MOCVD equipment’s high R&D costs, the company has implemented strategy of only producing when demands arise.

Veeco, which is the leader in China’s MOCVD market is the company’s biggest competitor, said Chen. The company no longer considers Aixtron as a competitor. In recent years, MOCVD equipment industry has undergone fast technological progress. However, Aixtron is gradually losing its market competitiveness, due to limited automation in its MOCVD equipment.  A lot of Aixtron equipment procedures still require manual operations. 

In addition, the company has acquired nearly 3 percent market share in China’s MOCVD market in 2013, said Chen. In recent years, more than 10 Chinese manufacturers have entered MOCVD equipment R&D. Probably responding to threats from Chinese MOCVD equipment makers; foreign companies have begun to slash prices. At the moment, Veeco’s single chamber MOCVD (single reactor chamber) costs about RMB 7 million, a more than 50 percent price reduction compared to RMB 15 million to 20 million in 2010. Price competitions have also caused Veeco to suffer gross losses in 3Q13.

In contrast, TOPEC’s equipment priced at RMB 60 million comes with six reaction chambers. Product prices varied due to timing of sales. “There is no more room for price wars,” said Chen. The company can only upgrade equipment performance to help downstream clients cut epiwafer costs. For example, upgrading equipment automation performance, and reduce raw material consumption. According to company estimations, its MOCVD equipment can help downstream clients shed 25 percent of epiwafer costs, in comparison to using Veeco equipments.

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