U.S. LED manufacturer Cree’s stocks dropped to US $41.1 recently, after Goldman Sachs downgraded the stocks from buy to neutral, according to a report by China Post. As Cree’s lighting revenue increases, Taiwanese manufacturers believe Cree’s business focus is turning towards downstream.

Cree’s stock fell 3.68 percent, and has impacted Taiwan’s LED chip industry stocks as well. Epistar’s stocks also fell 1.61 percent to NT $55 (US $1.82).

The traditional U.S. LED chip manufacturer’s recent financial reports showed revenue from lighting components and luminaires increased 30 to 40 percent. Taiwanese LED manufacturers believe the downstream sector has become more valuable in the LED supply chain and is increasingly leaning towards branding and luminaires. In the long run, Cree’s business focus is expected to be in the downstream sector. Cree’s luminaires are fairly competitive, but during its transiting business model the company might be competing with existing clients.

Cree has cooperated with many Taiwanese manufacturers in the past, said a LED chip manufacturer. Cree used to purchase blue LED chips from Chi Mei Lighting Technology and red LED chips from Epistar. In the future, upstream Taiwanese manufacturers will probably remain as Cree’s top choice for LED chip supplies.

Unlike LED TV backlight’s evident seasonal cycle, where third quarter is usually cooler, LED lighting has shown stable growth. Compared to TV backlight markets standardization trend, LED lighting has many different application markets. Taiwanese manufacturers in general are upbeat about long term developments in the LED lighting demands. LED bulbs are expected to reach a market scale of 1.2 billion bulbs, and is expected to increase at least 60 percent YoY to exceed 2 billion bulbs.