Taiwanese Wafer Manufacturers Turn Sights to Mid-to-High Range LED Market

A mature LED market has seen a surge in demands this year. Upstream die manufacturers one by one are transforming their market strategies in response to continual decrease in prices. Chinese manufacturer Hong Hai has been dropping prices rapidly in the mid-to-low range LED market. Taiwanese wafer manufactures have turned to the mid-to-high range LED market in order to maintain their gross margin performance. Flip Chip technology has become this year’s new battle ground with companies like Epistar and Genesis vigorously racing to start production.

The LED lighting market saw rapid rise in demands during the early part of 2013 leading to an ongoing price war between Taiwanese and Mainland Chinese wafer manufactures. This is especially true for San An Optoelectronics, Elec-Tech International, and Silan Azure – three big manufactures blessed with no subsidy debt or financial worries. Mainland Chinese manufacturers continue to drop prices in the mid-to-low range LED market. Gross profit performance for Taiwanese manufacturers has felt the pressure from the price war.   
Taiwanese manufacturers have aggressively been making adjustments to their lighting market strategies. Epistar and San An competed during the beginning of this year in the mid-to-low range wafer market, adding pressure for lowering prices. Epistar however has been able to evade the price war with Mainland Chinese manufacturers and at the same time able to create a placement strategy for their mid-to-high range flip chip and wafer level packaging technology. 

In July of this year, Epistar cooperated with Yuzhong Gaohong Lighting to establish Jingyang Lighting (晶陽照明) and add a new LED production line. Chinese traditional lighting manufacturers have has been the energy behind the maturing of LED luminaries. Cooperation between Epistar and Yuzhong Gaohong has opened up new doors for wafer production, with Jingyang Lighting estimated to produce their first batch of exports at the end of this year.

Epistar announced that there are plans in the near future for investment in Zhengyi Technology for expansion in blue and green LED die production. The two companies hope to enter into a new niche market by incorporating Epistar’s new technologies like embedded LED chips and Power Device with Zhengyi’s wafer level packaging and design flexibility. It is possible that Zhengyi in the future via their technology and vertical integration ability enter into the lighting product supply chain.

LED wafer manufacturer Genesis also aggressively increased their lighting product revenue proportions for 2013. Through downstream integrated flip chip technology, the flip chip has high luminosity, adjustable dimensions, and lessens production costs. However, high prices still leaves little to be desired for downstream consumers. The current market is mainly dominated by CREE flip chips, followed closely by PHILIPS Lumileds which also have flip chip production capacity. Genesis flip chip products already have a luminary manufacturer client base in Chinese and emerging markets and hope to increase revenue about 10 percent this year.

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