Taiwan LED wafer and packaging makers accelerate downstream luminaire and bulb deployment

　　Taiwan LED epitaxial wafer and packaging makers are accelerating their downstream deployment of luminaire and bulb systems to establish exclusive sales channels for their LED components, thereby strengthening cost competitiveness and mitigating the impact of the European and U.S. debt crises on weakening LED lighting demand.

　　Analysts point out that following the vertical integration of LED lighting supply chains by Korean giants such as Samsung and LG, recently Taiwan LED wafer and packaging makers such as Genesis Photonics, Everlight and Delta Electronics have also followed suit, moving from upstream components into the downstream luminaire and bulb sectors, aiming to expand sales channels for upstream components, reduce manufacturing costs, and increase product gross margins.

　　To obtain higher profits, Taiwan LED wafer and packaging makers are aggressively entering the LED luminaire and bulb markets, mostly promoting their own brands. However, Li Zhi-Yin points out that Taiwan LED wafer and packaging makers promoting their own brands requires massive capital investment, a strategy beyond the reach of small and medium-sized luminaire manufacturers with shallower pockets. Therefore, the majority of Taiwan's small and medium-sized LED wafer and packaging makers are expected to remain cautiously wait-and-see.

　　Furthermore, compared to international lighting giants such as Philips, OSRAM, and GE (General Electric), which leverage their strong brand and channel advantages to actively pursue vertical integration of their upstream supply chains, domestic LED epitaxy and packaging manufacturers rely on their competitiveness in manufacturing to actively pursue downstream supply chain vertical integration. However, looking at the long term, Taiwanese LED epitaxy and packaging manufacturers still cannot match international brand giants in brand competitiveness. They will need to invest substantial capital and time in building their brand image, which will be the challenge that LED epitaxy and packaging manufacturers face as they move toward developing their own brands.

　　In 2011, affected by the European and North American debt crises, the LED lighting market penetration rate did not reach double digits as expected, but only about 7%. Moreover, except for Japan, LED lighting subsidy policies in other countries remain unclear. Therefore, it is expected that the LED lighting market will only maintain a steady growth trend in the coming years.

　　Although the Chinese mainland government has announced that the development of LED lighting will be regarded as a key supported industry, and that subsidy policies will therefore be implemented for the promotion of LED lighting products under the "Twelfth Five-Year Plan," the relevant details of the subsidy methods will not be released until 2012.