A rational view of mergers and Acquisitions: LED Lite + crystal electric light industry

EPISTAR was founded in 1996, is the birth of assistance in Taiwan by ITRI photoelectric, Liteon, Everlight, Huaxing, Ding Yuan and other companies to create a joint venture Baihong, mainly the production of light-emitting diode (LED) of the wafer and chip, belonging to the LED industry on the middle areas, the output of the chip by the downstream packaging, can according to the market demand for products made of various applications.

EPISTAR has always been focused on the level of expansion, combined in 2003 at the end of 2005 with semiconductor crystal Mao, Guolian photoelectric, photoelectric element arsenic and even the 2007 merger of Yong technology, jump for wafer and chip manufacturers are leading the world's premier, on the downstream vertical integration with other LED extension strategy has not many manufacturers. Because the crystal is not directly involved in the downstream industry and customer competition, it is often the preferred choice for downstream manufacturers to find partners.

Lite on technology which was established in 1975 Liteon, has a long history, Taiwan is the first electronics companies, early to set up factories in Southeast Asia, is the Taiwan area investment industry pioneer LED. Lite on electronics in 2002 with its, Zhifu and Liteon Xulin subsidiaries to merge, Lite technology is the surviving and renamed the Lite on technology, cross industry wide, four core business is LED, power supply, chassis and imaging products.

Build a double niche

In the LED industry, the downstream packaging Lite started, but positive to the upstream development layout, seek to establish a complete vertical supply chain. As early as 1983 on the establishment of opto electronic Lite engaged in the middle reaches of the chip production in 1996, and involved in joint creation of crystal electric, covering the upper and middle reaches of LED wafer and chip.

In the downstream products, but also following the Lite billion light after second home made German technology leader OSRAM white LED authorized manufacturers in Taiwan, 2007. The United States accounted for LED shares have more than 30% of the rate of optical electronics, signal lamp and LED card market, the hard work of LED illumination field, in the mainland market successfully into "LED street plan ten city lights".

2011, the mainland launched the "12th Five-Year" plan, vigorously reward energy conservation and environmental protection industry, LED because of high efficiency, energy saving, long service life and other advantages, is regarded as one of the key industries.

Jiangsu municipal government of Changzhou on the active introduction of LED epitaxial technology, intends to set up factories in Changzhou to provide subsidies, including machine imports completely tax-free, a large number of Taiwanese businessmen to invest.

In September 2011, in view of the downstream packaging manufacturers have Lite settled in Changzhou, and the local government subsidies is quite favorable, in the double niche cost structure and industrial integration considerations, and decided to crystal electric industry and Lite on mainland TV Konka jointly invest $120 million, set up in Changzhou EPISTAR, by holding 60% dominant crystal electric Lite, 30% stake, while Konka stake of 10%. Changzhou crystal factory is expected to become the largest production base in mainland China crystal electric.

According to the original plan, product factory in Changzhou will adopt three party cooperation mode, and crystal electric leading production technology, the output of the chip supply Lite, let Lite sufficient ammo can actively attack the mainland LED lighting market pie, Konka can meet the product by LED TV backlight demand, and the crystal lite and Konka two the customer is also conducive to maintain full capacity state of Changzhou factory. As for local suppliers to save transport time and cost, the three party can share certain cost advantages, is mutual benefit, play their proper role.

Unexpectedly, by the global economic downturn, Konka in less than half a year suddenly opening product or product exit 10% shareholding, to undertake by crystal electric. Crystal electric said Konka exit will not affect the operation schedule of the product, everything is still in the original plan and market demand to continue to develop.

Economic downturn

In November 2011, the first electric crystal with Asia's largest energy-saving lamp manufacturer Yankon signed a strategic agreement, then, with another giant NVC future cooperation, the two companies will adopt LED chip camera is crystal power, make crystal electric proportion in LED lighting is expected to grow to 30% from 20%.

About the same time, Lite is also in January 2012 and 6 of the world's lighting manufacturers signed a strategic alliance agreement, the supply of Lite LED lighting source and module, and the main production base of Changzhou and may be Lite crystal factory.

Crystal electric recently not only with creation of crystal Lite alliance and UMC, also set up a joint venture to crown Quan LED plant in Shandong, more and Yankon and NVC, the two companies signed a strategic agreement.

EPISTAR moves frequently, and the downstream packaging factory orders for passive mode seems to be a major change, whether on behalf of crystal electric future will be more initiative and strive for common development of customer products packaging plant, whether on behalf of crystal electric began to shift from the upper and middle reaches of the level of expansion strategy into the upstream and downstream vertical integration, continued to be observed.

In fact, in the face of drastic changes in the market in recent years, the LED industry industry views quite decide on what path to follow, differences can be described as "each blow each number, each singing a different tune", as The Eight Immortals Crossing the Sea develop their supernatural powers. A consensus is, whether horizontal or vertical, LED industry must continue to expand the integration, in order to reduce costs, improve quality, enhance competitiveness in the current through the trough to pile up in excess of requirement, will meet peak demand, expected future.