Taiwan-based LED firms should know the difference between the markets of panel backlighting and general lighting before entering, David Su, chairman and president of Taiwan-based LED firm, Lextar, has stressed.
The market of panels is an oligopoly with the top-five panel manufacturers accounting for 90% of the total market share, Su pointed out. The advantage of this type of market is when a new technology gets incepted by these big panel makers, the spread of this technology would be very rapid, added Su.
Lately, the heavyweight players in the panel market have been integrating their panel productions. The strategy for firms like Samsung Electronic, according to industry sources, is to adopt in-house production to integrate the entire supply chain. This is beneficial in obtaining more market share for these firms but harder for stand-alone LED firms to survive, said Su.
Cost-down is still the key for competitiveness and LED firms need to decrease the components used within the products while trying to solve the radiation problems. According to Su, this requires tight cooperation between LED and panel firms.
In contrast, the market for LED lighting is different, said Su. It can be divided into two parts, lighting sources and lighting systems. For lighting sources, no single firm has significant market share. For lighting systems, there are countless distribution channels each serving different types of demand.
The challenge for LED lighting firms is the need to achieve improvements of luminous efficacy and the ever-changing designs annually, Su pointed out.
According to Su, LED lighting firms can do two things: to replace traditional lighting and to provide a comprehensive lighting solution.
Su pointed out that to replace traditional lighting is easier because the emphasis would be on the light bulbs' compatibility with things like interface and light switches.
To provide a complete lighting solution is more different but with greater prospect of growth, according to Su. The complete solution can alter designs according to the special characteristics of LED lights and does not have to be compatible with the appearance of traditional lighting, said Su.
However, price difference between LED and traditional light bulbs still exists, hence cost-down will still be the focus for complete replacement. Su stated, "In my opinion, the cost of LED light bulbs will be closer to the cost of energy-saving light bulbs in the next 2-3 years".
Surprisingly, the cost difference of LED lighting systems is not very far away from its traditional counterparts. Therefore, to achieve continuous growth, it is inevitable for LED firms to cost-down and to provide comprehensive lighting solutions to increase market share, Su concluded.