Over the last 10 years LED package manufacturer ProLight Opto Technology (ProLight) has weathered through tough situations, including a financial crisis that nearly brought the company to the brink of bankruptcy. The company managed to turn around its operations under the management of current Chairman FM Chen, who since joining the company in 2007, has worked closely with General Manager Michael Hsing to convert the company’s business strategy. The pair has successfully transformed a company close to insolvency, into a listed company on the Taiwan bourse with an annual revenue of more than NT $1 billion (US $30 million).

The company has been meticulous in deploying its lighting market strategy in architectural, entertainment and commercial lighting sector. Having gained a steady foothold in the LED lighting sector, ProLight is now vying automotive lighting sector’s LED modules. In an interview with LEDinside reporters, Hsing touched upon the company’s past business strategies during the last decade, and revealed future strategies.

ProLight Opto Technology General Manager Michael Hsing. (LEDinside)

ProLight attracts Epistar investments during a challenging environment

Founded in 2004, ProLight has been one of the early players in the LED lighting market. The market was relatively small at the time, and nearly completely dominated by Philips Lumileds. In other words, manufacturers planning to enter the market had to confront top competitor Philips Lumileds. Launching similar LED products meant the odds of winning market shares would be relatively low, therefore, ProLight decided to differentiate its product design. The company was determined to make products that could replace Philips Lumileds LED lighting products. Hsing, who comes from a strong R&D background, was confident in the company’s LED lighting products. But the product flopped on the market shortly after its release.

“At the time, most people in the LED lighting industry did not understand the importance of light shapes,” explained Hsing. “Until the products were sold we failed to realize the products required secondary optic lens designs. Hence, our products could not replace Philips Lumileds products, and most of the products became unmarketable since clients had to redesign the secondary optics.”

Probably due to its unique product design, ProLight made its way into the niche market for mine lamps, and began to profit during first half of 2006. However, the company’s business quickly took a sharp turn in the following year. Disagreements among company management and the lack of a clear product strategy and development blue print led to falling sales. The company reported its worse performance in 2007.

The company began to restructure its product development and business strategy shortly after Chen’s appointment as the new company Chair. It reset targeted clients and application markets, a strategy that finally reversed slumping businesses and compensated previous losses. “We started to make the same LED lighting products that could replace existing products on the market,” said the Chairman. “We have differentiated our product designs and manufacturing from competitors, by especially developing LED optics with compatible sizes, but also retain existing technology strengths.” The products were well received on the market because of its low price, and high reliability. Leading Taiwanese LED chip manufacturer Epistar eventually invested twice in the company, and now has a 30% share in the company.

Customized products account for half of company revenue

After restructuring its product strategy, the company started to focus on niche markets instead of commercial markets. ProLight also started customizing product designs to meet client needs. To form partnerships with clients, the company begun making commodity products. Once clients developed a trusting relationship with ProLight and its services, the company then customized client products, thus enabling product differentiation and improving client market competitive advantages. Hence, companies will no longer have to engage in cutthroat price wars in a red sea market.

ProLight’s customized products make up at least 50% of its revenue share. For customized products to succeed, companies need to deliver perfect product quality performance and services, and also acquire high R&D capacity and technologies. Moreover, the products have to be open to flexible manufacturing. The company not only has these conditions, it has also combined checkout software, and in-house developed management production software. Only by using these software tools can the company effectively manage operations, and monitor each procedure, and respond to issues in a timely manner.

The company is also very special in that it insists on not stocking up its inventory. Therefore, if clients place a small volume order, employees have to carefully purchase raw materials and reach yield rate targets. To illustrate how seriously the company takes its clients, Chen joked: “We treat every order as our last one.”

Company steadily focuses on LED module and automotive lighting market in 2015

ProLight, which is focused on niche market developments, has always insisted on making products that are different from competitors. The differentiation process starts from raw materials used, Bill of Material (BOM), and cost structures. By using this method, the company has lowered overall LED retail prices, while maintaining product quality. The company emphasizes it only focuses on sectors where it is most confident, and prefers to take things slowly and consistent with existing protocols. Since the company was once nearly insolvent, it has been restructuring its strategy to optimize business development.

In terms of product strategies, ProLight has been focused on LED module and car market applications in 2015. The company’s High Voltage (HV) LED drivers eliminate the use of LED drivers, and frees up space originally allocated to the drivers. This cuts down assembly costs considerably. The capacitor-less design also extends LED lifetime considerably. However, there are tariffs for LED modules in China, which raises manufacturing costs and lowers profitability. Hsing hopes the Taiwanese government can improve the tariff situation, otherwise setting up a factory in China will be the only solution for manufacturers. In the automotive market, the company is applying for ISO related certifications and will start mass production in 3Q15 after its products are certified.

After expanding production capacity in 2014, ProLight, which previously focused on high power LEDs, will also be raising mid-power LED product shares. The company has optimized production utilization rates to keep up smooth product line operations.

Company copes with intense market competition with three consecutive years of high growth plan

Since 2012, ProLight has launched a plan to achieve “50% revenue growth for three consecutive years.” The aim has been to improve stagnant growth between 2010 and 2012, and the company eventually achieved high growth rates from 2013 to 2014. By 2014, the company revenue soared to NT $1 billion, and the company continues to target a revenue of NT $1.5 billion by 2015.

In the next two years, the LED lighting industry competition will intensify. Therefore, the company has been steadily investing in equipment and expanding production capacity annually. The company has also been expanding its factory in Zhongli District located in center Taiwan, and will be establishing retail shops in Southern China. Additionally, ProLight is also considering the possibility of setting up a factory in China.

As the LED market develops, market competition has also intensified. Companies often have to face different challenges, and under the precondition of fair competition ProLight has the right market strategies to face global competition. To maintain its market lead, the company has implemented a technology differentiation strategy and preparing itself by developing its R&D technology to offer optimized customized services to clients.

(Author: Angela Yang, Reporter, LEDinsidehttp://Translator: Judy Lin, Chief Editor, LEDinside)