To learn more about Cree’s plan in the China market, LEDinside has recently visited Guoqing Tang, Cree’s General Manager of Business Development in China. During our interview, Tang emphasized that Cree pays great attention to the local China market and that “Cree chips for China” will be an important localization goal in 2010.

 

According to Tang, apart from its existing packaging lines, Cree has also established its first LED chip production base outside of North America. It has signed an agreement with Huizhou government to purchase a 58,000 square-meter facility in Huizhou Zhongkai National High-tech Industrial Development Zone, which is now under construction, and expected to begin mass production of LED chips in the latter half of 2010. Cree’s current chip facility is only allocated to the production, testing, and classification of pre-packaged LED chips (including white-light LED chips). This facility does not have MOVCD systems yet, but Cree does not rule out the possibility of producing epitaxial wafers in China in the future.

It is quite easy for a well-esteemed company like Cree to win support and project subsidies from local Chinese governments. However, the subsidies from local governments are not the main incentive for Cree; it established facilities in Huizhou to expand its local market – in addition to being geographically close to existing packaging lines, most of its customers are from southern China. Therefore, the main goal of Cree’s facility establishment in Huizhou is to improve LED component production and enhance its customer service.

In the next stage, Cree’s objective is to implement strategies in China as its business develops in the country, added Tang.

 

Tang summed up the concept of localization as follows:
1. Personnel localization: Currently, Cree has around 2,000 employees in China, and will recruit more employees for its new facilities. In the future, priority will be given to local employees.
2. Product localization: new LED types, such as XPG, are already being produced in China.
3. Technology localization: Cree works closely with local Chinese lighting manufacturers to help develop green lighting products and enhance China’s LED technological standards.

Moreover, Cree has made significant achievements in several landmark projects in China; for instance, Cree’s LED components are applied in the World Expo Theme Pavilions and the World Expo Center.

LED is one of the most suitable light sources

As for the outlook of China’s LED market in 2010, Tang believes that LED lighting will witness explosive growth in 2010. In addition to street lighting, indoor lighting will have also show breakthrough development. He also noted that LED display will also continue its upward trend, but with limited growth because the Olympic Games is over and the World Expo is about to pass. Being more optimistic about LED lighting in 2010, Tang remarked that the demand from indoor lighting will also pick up soon in China, in addition to LED lighting applications in roads, landscapes and architectures.

In Tang’s opinion, LED lighting has its strengths, but also weaknesses, such as its high price; however, LED is unquestionably the most suitable, environmentally-friendly lighting source at present. Technological improvements in light source, power efficiency, as well as secondary optics are crucial. He added, to ensure the healthy and sustainable development of the LED industry, we must explore and leverage its advantages.

Insights from LEDinside

At the end of 2009, the National Development and Reform Commission of China (NDRC) proposed Opinions on the Development of Solid State Lighting Industry (hereinafter referred to as “Opinions”), where the NDRC set the long-term goals for the LED industry, expecting that by 2015, LED lighting products will account for 20% of the functional lighting market, over 50% of the LCD backlight source, and over 70% of the landscape and decorative lighting products. In light of these projections, the outlook of the LED market in China is bright.

The “Opinions” also aims to realize local manufacturing of large-scale MOCVD equipment, key materials and over 70% of the chips by 2015. Nevertheless, as more than 80% of LED chips and components in China are still imported today, Chinese government has to actively introduce technologies and capacities from international LED giants. Hence, for LED makers who are eager to enter the China market, it is necessary to think about how to localize their manufacturing process to ensure their dominance in the market.