Ruifeng Optoelectronics was established in 2000 and was the first company in China to do SMD packaging. This is mentioned in our introduction. The strategic layout of Ruifeng Optoelectronics is actually a bit like that of Alto Electronics. Alto Electronics focuses on applications, while Ruifeng Optoelectronics is positioned in the light source area and will not consider extending to downstream chips for a long time. Everyone has seen our recent announcement that we invested 400 million yuan in purely expanding production capacity. Because we feel that a big opportunity is coming for the industry, Philips has set a target of growing LED by 150%. And inversely calculating the size of the LED packaging market, it is inevitable that LED lighting will replace traditional lighting. Traditional lighting also has a market size of trillions, so LED will also have a market size of trillions. With such a large market size, our capabilities are limited, so we focus on the light source. In the future, the top three light source factories in the world will definitely be worth tens of billions.
For us at Ruifeng Optoelectronics, it is enough to do this well within three to five years. We are currently expanding production capacity without extending it downstream or upstream.
Second, for Ruifeng Optoelectronics, the customer positioning is also to locate major customers. We have analyzed traditional lighting and found that two types of companies can survive. One type is brands such as Philips, which have strong brand promotion. Although Philips has such a large sales volume, its share is actually very small. There are also many of our OEM, brandless and even cash-transaction companies. They may account for the majority. These are countless small companies. Therefore, the future prospects of lighting are very bright, but Ruifeng Optoelectronics only makes standard bodies, which is to do a good job in light sources. In two or three years, Ruifeng Optoelectronics will still focus on making light sources. But as a light source, the added value will not be too high, and a gross profit of more than a dozen points is already good.
For Ruifeng Optoelectronics, what should we consider when we reach 10 billion or 20 billion? What’s the next direction of development? I think Ruifeng Optoelectronics should develop in the direction of materials. In the past two years, we will lay out some core materials, such as EMC brackets, phosphors, and glue, which we have also been looking at recently. On the one hand, we need to focus on the materials we use. In the industry, Ruifeng Optoelectronics still has some advantages in packaging and material application. The LED industry is actually a materials industry, and the packaging process is a combination of applications in different environments. The development of the LED industry is ultimately determined by materials. For Ruifeng Optoelectronics, in the future, based on the encapsulation scale being sufficient, several very large companies will be accommodated here. It depends on whose strategic positioning is more concentrated. In two or three years, we will focus on doing our job well. The layout for two or three years later is to do a good job in materials. On the one hand, materials lead the development of the industry. Secondly, the added value is relatively high. The current positioning of Ruifeng Optoelectronics is based on customer strategy to position major customers. Like Philips and Osram. Their growth itself is certain. They are a very powerful company in the industry . It was very difficult for us to get into his system. As long as we get in, I can grow as he grows. They have very high requirements for our customers. Secondly, there is a natural barrier as soon as I enter. For example, Philips will only have 2-3 suppliers in China. Once they enter, they will be a natural barrier, and they will have very high requirements for us and for our strength in research and development. This is our market segmentation and strategic positioning.
ANNA