Three, EPISTAR, Elec-Tech analysis progressive vertical integration strategy comparison

Homemade or purchased, or take away, seemingly two simple business decisions, but it is important to an enterprise strategy, that is, whether the implementation of vertical integration. According to the definition of economics, vertical integration and vertical integration is refers to the enterprise, the production and supply of raw materials, production and sales of products or combined in the strategic form, is a kind of enterprise development strategy, the expansion of existing operations in two possible directions, is the company's business activities extend backward to raw material supply forward or extended to a strategic system of sale terminal. The purpose is to strengthen the control of core enterprises in the whole process of raw material supply, product manufacturing, distribution and sales, so that enterprises can grasp the initiative in the market competition, in order to increase business profits and each stage of the overall competitiveness of enterprises. Global LED manufacturers vertical integration strategy to watch the global LED industry, the five major manufacturers plus the Korean Department of the top three manufacturers have adopted a vertical integration strategy, but to varying degrees.

The reason of the enterprises to implement vertical integration, it is because of this a few big river itself has a strong export, downstream packaging capacity is enough to support the epitaxial chip business enjoy obvious economies of scale, and the giants in the chip and extension have a large number of patents and proprietary technology, therefore, it will be more inclined to produce their own chips to avoid disclosure of proprietary technology and private information. However, even if the above-mentioned international large enterprises are rarely pure vertical integration. Even if the majority of enterprises in the industrial chain layout extends to more than one link, but also more or less to purchase or sell some of the intermediate products. As a result, most of them still belong to integration (tapered). On the advantages and disadvantages of the gradual integration of textbooks will be explained, this article no longer expand. But it is certain that when the application of LED products gradually mature, the scale of growth of downstream application market, self LED application products business to support the economies of scale in the upper reaches of the required capacity, international companies must tend to reduce the chip or device and other intermediate products of foreign sales ratio. Downstream of the LED lighting market volume, cross-strait LED industry vertical integration condition gradually fermentation compared to these international companies, cross-strait LED enterprises not only in the patent input end, and the initial stage, because of the size of small, no one has the strength and scale of vertical integration to complete the whole industry chain, so naturally chose the way of market for its own development, every enterprise will try to focus on a limited resources industry chain management. It also created the global LED industry's largest professional market, although compared to vertical integration, bear a high transaction cost disadvantage, the economies of scale but each surviving firms are able to achieve the greatest degree of their business areas. The fierce competition in the market also allows LED companies across the Taiwan Strait full of vitality, stimulate the full entrepreneurial spirit and innovative awareness. But LEDinside estimated to 2015, China's LED general lighting actual demand reached 67 billion 800 million yuan. With the continued growth of the economy and the popularity of LED upgrade, to 2020 will reach 138 billion 600 million yuan. The increasing Chinese LED industrial scale, while the downstream LED lighting market is booming gradually can support more large enterprises, the China LED enterprises, the implementation of vertical integration strategy for more fully: for example, to support upstream capacity to achieve economies of scale, from the transaction cost, the cost is better than that of downstream can be purchased; together with the low-cost strategy to seize the market; shorten the new product development process, the rapid application of the latest technology advantage; to avoid the outflow of core technology and business information; avoid subject to key materials upstream suppliers etc.. In fact, LEDinside observed on both sides of many enterprises in this direction of effort, but most of them only from the package extended to the application, from the application into the package, a package from the extension to the epitaxial chip, but also is a typical crystal electric, three and de haorun, because of their influence on important industries the more. How they achieve vertical integration through different ways, from the layout of the chip to the packaging and application of the layout, it is worth us to analyze and think.

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