Look at the Taiwan LED components industry how to find opportunities for transformation

Rapid growth in the market, attracting Asian emerging countries into the LED component industry, competition is more intense. Taiwan LED industry is facing on the element combinations will have difficulties, thinking about the direction of the transformation, Japan is no exception, but the Japanese system manufacturers and component manufacturers, through financial cross shareholding or technology development, the construction of symbiotic relationship, is still the world's largest supplier of Taiwan for reference, further development new opportunities for industrial transformation.

After 2002, LED component technology continues to rise, with the rise of the mobile phone backlight market, the global market growth in the size of LED components, high brightness LED components dominate the market development.

In addition to a small number of active components, electronic components industry generally have low barriers to entry, low product price, product specifications and diverse products, system application and development leading product specifications and other characteristics, so the bargaining power will become zero component manufacturers to keep abreast of customer demand, the key to profitability.

The case of Japan Industrial Symbiosis

Japan SONY, Canon, Toshiba and Panasonic and other international brands in the consumer electronics field, in the automobile industry Toyota group, plus a huge domestic market, to lay a good base for development of electronic components and materials industry.

But in recent years, Japan has been the strong competition Chinese of mainland China and South Korea, the market share is not as good as before, but the electronic components and materials industry still has an important role in the world, such as high brightness LED components, small motor, soft printed circuit boards and other passive components, still is the world's largest suppliers.

Japan's electronic component manufacturers and system vendors to maintain symbiotic and outsourcing relations. However, with the increase in the cost of production in Japan, Japan's electronic component manufacturers to actively invest in research and development, accumulation of other companies are not easy to imitate the technical advantages and Know how, to strengthen this symbiotic relationship into a positive cycle.

In addition, the Japanese component makers will cut from the manufacturer's point system, evaluation system of product development direction, and by system vendors cooperation, develop new products, and "Design in" in the system of new products, achieve higher gross margin and competitive advantages.

In order to understand the direction and trend of development of the system, the zero component manufacturers will build the same Pilot line as the system vendors, and even build a laboratory of the leading system vendors. Finally, with the global system vendors to share their plans for the development of a blueprint for the development of components, in addition to grasp the existing customers, but also by looking ahead to the field of development planning, to find the future of cooperative system vendors.

Finding a way out of Taiwan

The development of LED industry in Taiwan has more than 30 years of production and market construction, the capability of rapid reaction to market changes, enter the high brightness LED component field until 2008 as the world's top second high brightness LED components suppliers, and in 2009, South Korea by master portable electronics and LED backlight market advantage of the rapid rise of the sea, to become the world second suppliers.

Analysis of recent changes in the global market share of high brightness LED components in Taiwan, after 2008, about 15% in 2011, except for a brief upgrade to 19%. Over the years, there are only one hundred million light into the world's top ten suppliers, in addition to the gap between South Korea and the expansion of signs, leading to the rapid reduction of the distance between Mainland china.

Taiwan LED components industry is the biggest difference with the international giants, is that the Taiwan LED industry to take a professional division of labor production model. Due to the small size, limited resources, to take OEM or ODM market management model.

Lumileds, OSRAM, CREE and other international Nichia LED elements taken from major manufacturers, production of vertical integration, the upstream epitaxial grain to downstream packaging. In addition to technical links to create technical advantages, shipping products are packaged in a good LED component products to facilitate system customer applications, reduce transaction costs.

The development of Taiwan LED industry vertical division components, although technology development is not easy integration, customer transaction costs are relatively high shortcomings, but has advantages in reducing risk, specialization, unit production costs, from 1980s still in use. Therefore, if the plight of China's LED components industry, all attributed to the professional division of the business model is too simplistic fear.

In recent years, LED technology continues to grow, for system products, LED components have become the key components of the system's impact on the operation of the product, from the "LED TV" word can be seen.

In order to grasp the supply of LED components, to avoid being subject to the upstream suppliers, system manufacturers to integrate, put into the production of LED components. China's LED components industry has both OEM and ODM market management model, facing customer competition and threat, resulting in the loss of orders. System vendors also grasp the market, since the rapid rise of LED components industry, South Korea and Mainland China in the process of the rise of the LED industry, is an example.

Constructing a new business model

The development of LED components industry so far, the application market continues to expand, the product price has continued to decline, coupled with backward integration system manufacturers pressure, make LED components manufacturers need to develop new business models, pre competition in the future.

For example, the United States CREE downward integration, cross foot LED lighting market, Japan's Nichia automotive LED lighting layout, Taiwan photoelectron billion foot LED lighting brand management, both for their own products to seek new access to the sea, to maintain the global industry status.

At present, the global market for LED components is clearly oversupply, the profit margins of new manufacturers are limited,