It’s forecasted that all the patents related to LED issued since 1990 will expire from 2010 in succession. The former patent structure will have to be adjusted by then, which may lead to reforming LED market.

Take Japan for example, which ranks No.1 in LED industry. Nichia had been issued 74 patents from 1991 to 2001, covering LED fabrication, epitaxial wafer, chip manufacturing, chip packaging, processing technology and raw materials such as phosphors, etc. By means of its patents, Nichia monopolized the LED market before the year of 2002 and enjoyed high gross margin.

In addition, Cree also holds many patents related to LED and has gained its dominant position in American market.

Along with the fact that many patents held by antecedent companies will expire in 2010, new manufacturers may have opportunity to develop. Companies who hold patents may take measures like expanding license deals with other companies to make full use of their patents before the expiration date. At the same time, they may develop new patent technology to produce new products.

In other words, new companies have more opportunities while antecedent companies with patents should develop new patent technology to boost the LED industry.

At present stage, LED manufacturers from Europe, America and Japan, like Nichia, Toyoda Gosei, Cree, Philips and OSRAM have begun to sign LED patent cross license agreements to avoid the problem of patent. This action is quite rare in the past.

For example, OSRAM and Avago filed patent lawsuits against each other in 2006. As a result, the two companies signed LED patent cross license agreement- Avago shares the manufacturing and selling rights with OSRAM, while OSRAM obtains the right of LED backlight module for LCD.

At the present time, Taiwan has become an important LED producing area for companies from Europe, America and Japan. Besides, Taiwan is one of most important producing areas of blue light LED chips with an output of 40% in the world.

The fact that LED patents will gradually expire should enable companies from Taiwan, which may benefit a lot from it, to target the HB LED market.

In addition, LED industry in Mainland China is also developing rapidly. According to the statistics, there are more than 1,000 packaging companies in Mainland China, among which 600 are medium-scale or large-scale, mainly distributing in Pearl River Delta, Yangtze Delta, Jiangxi, Fujian and Bohai Bay, etc. At present stage, LED packaging capacity in Mainland China is around 60 billion per year. The market of HB LED packaging industry in Mainland China in 2006 increased by 46% to 14.6 billion RMB from 10 billion RMB in 2005.