Top two U.S. chemical companies Dow Chemical and DuPont signed an agreement in an all-stock merger of equals to merge into an enterprise worth US $13 billion, reported Guangdong LED. This is one of the largest international business and industry merger. After the merge, the new company will trail behind German BASF to become the world’s second largest industrial company, while becoming the largest global chemical company.

The combined new company will be renamed as DowDuPont, and will be separated into three businesses Agriculture, Material Science, and special materials through tax-free spin-offs. Shareholders of Dow Chemicals and DuPont will each hold 50% of the company shares. DuPont’s CEO Ed Breen will be named as the group’s new CEO, while Dow Chemical CEO Andrew Liveris will be appointed as the new Executive Chairman.

Dow Chemical also expects more than $ 1 billion in additional annual EBITDA at full run-rate synergies after fully acquiring Dow Corning shares. Previously, the company held a 50% stake in the 76-year old joint venture established by Dow and Corning.

“This transaction is a game-changer for our industry and reflects the culmination of a vision we have had for more than a decade to bring together these two powerful innovation and material science leaders,” said Andrew Liveris, Dow’s chairman and CEO.

The LED raw material and UV LED curing industries will be most affected by the chemical giants merge. Following the merge, Chinese LED raw material manufacturers will be at a disadvantage, it will become difficult for them to break the chemical companies international influence. However, the good news is following the merge, the UV LED curing industry will be able to grow at a fast pace.

DuPont and Dow's LED raw materials products

DuPont is a leading manufacturer in material innovation and technology, with a focus on raising energy efficiency and developing LEDs for advanced Liquid Crystal Display (LCD), Plasma Display Panel (PDP), and OLED technology. The company invested in innovation and providing solutions to improve LED lighting and display features. At the same time the company has been lowering manufacturing costs by:

1. Using DuPont CooLam thermal dissipation substrate materials in high brightness LED lighting. DuPont’s CooLam thermal dissipation substrate is specifically designed for thermal dissipation in LED lighting applications, and can extend the lifetime of LED products, has high reliability and design better quality LED light sources.
2. DuPont has invested in OLED technology to commercialize OLED TV and lighting in the future. In early October, DuPont display business announced it initiated production at a new plant to manufacture material for large OLED displays. The materials supplied by DuPont can assist manufacturers in developing brighter, longer lifetime, and lower the manufacturing costs of OLED panels.
3. To make LCD and touch panels more durable, the chemical company has released the DuPont Vertak, a display enhancement technology involving optical bonding. To improve resolution and The company’s DuPont Fodel eighth generation thick film ceramic composition can greatly improve the image size and image quality in PDP displays.

Dow Chemical’s LED raw material business will be managed by Dow Electronic Materials business arm. The parent company’s LED business in China is established in Dow Center, Shanghai. Dow Chemical’s LED business products are widely applied in LED production, MOCVD precursors, LED sapphire substrates, and material for LED chips that require photoresist processing. Related auxiliary materials used include Chemical Mechanical Polishing (CMP) pad and CMP slurry, which Dow Electronic Materials happens to be the leading manufacturer.

Dow Corning is a joint investment between Dow Chemicals and Corning that has mostly been developing and exploring organic silicon application. The company is a global leader in organic silicon, and a world leader in silicon-based technology. The company’s innovative optics and organic silicon solutions have penetrated the entire lighting value chain. The company has released plenty of new products and technology this year:

1. First generation Thermal Interface Material (TIM 1), and a new Dow Corning TC-3040 thermal dissipation gel that is more efficient, reliable, and has better thermal management capacity. The product is also smaller, and applicable in stringent conditions such as LED flip chip applications, where it can still develop excellent chip coverage.
2. New fluorescent film technology can realize a new generation LED, and innovative design and manufacturing methods in chip-level package. The product also possesses the features of very good mechanical durability, easy to process, and has very strong gas resistance, long lifetime, high product reliability. The products can optimize luminous output, while lowering overall costs.
3. To make LED product assembly, protection, and organic silicon solutions easier and faster. This includes Dow Corning® IA-1200 Hot Melt Room-Temperature Vulcanization (RTV) Clear Adhesive, a solvent-less material that enables fast assembly and improved reliability for LED lamps and luminaires.

Although, the costs of LED adhesives and sealants consist only a small portion of the total LED component cost, it is a crucial material that can have a decisive impact on the LED components overall performance. Hence, LED package manufacturers are very meticulous when picking replacement adhesives, which requires stringent testing to ensure all the parameters can meet LED package applications. The testing period usually lasts 12-18 months for LED package manufacturers.

Dow Corning and ShinEtsu holds more than 75% market share in the high light refractive adhesives market for high end LEDs. To achieve adhesive manufacturing in China, Chinese adhesive manufacturers invested mostly in low refractive adhesive markets, which has a lower technology entry barrier. Beijing KMT Technology started to enter the high end high refractive lighting market in 2012. In April 2014, Dow Corning sued Beijing KMT Technology infringed the company’s LED optical silicone encapsulants patent ZL200480028707.8. In December in the same year, China’s Patent Reexamination Board of SIPO ruled Dow Corning’s patent was invalid, and the patent infringement case was rejected after the patent became ineffective.

DuPont established its Beijing office in 1984, and registered as DuPont China in Shenzhen in 1988. The DuPont group has established more than 40 companies and joint investments in China, and employs about 6,000 people in the country. Many of its global operations and headquarters have been moved to China. Dow Chemical’s business in China dates back to as early as 1930s, and the country is the company’s second largest global market. Dow has invested US $1.2 billion in the Greater China region, and in 2014 its annual sales reached $4.3 billion. The result of the equal merge between Dow Chemicals and DuPont, and Dow Chemicals complete acquisition of Dow Corning will make it difficult for Chinese LED material manufacturers to compete against this international chemical giant. To a certain degree Chinese LED manufacturers have been limited by international manufacturers in the material market.

 Merge to speed up UV LED curing market developments

DuPont produced many different types of materials, equipment and systems, providing high quality printing efficiency solutions. These products include ink and printing materials, where oil printing and printing material is an important business sector for Dow Chemical. Adhesive materials is also an important business sector for the company.

Printing is an important application market for UV LED curing, UV LED printing can meet package and printing industries high efficiency, energy efficiency, and environmental development trends. Taking into consideration rising industrial electricity costs, environmental regulations, and green printing authorization. There is increasing pressure on printing manufacturers, which is why UV LED printing will definitely become a growing trend. French market research company Yole Developpement claims global LED-UV curing market value will grow six times from US $45 million to $270 million in 2012-2017. LEDinside also recently estimated the UVC LED market will reach US $356 million by 2020, but the market size is expected to be smaller than UVA LEDs 52% market share, which is mainly applied in the curing markets for the time being.

The UV LED printing market holds huge market potential, but UV LED light source prices are still above average. One set of UV LED tubes are sold for several hundred thousand Chinese Yuan per tube, much more expensive than conventional UV tube lights. UV inks especially designed for UV LEDs, which are used in an extremely narrow light spectrum that is suitable for only selective photosensitizers, and has high specialization requirements. The product costs is typically 20% higher than traditional UV ink, and sold at a higher price range. The integration of DuPont and Dow Chemicals could speed up UV LED printing process.

Other impact from Dow Chemical and DuPont’s merge requires further observation. Additionally, Dow Chemical and DuPont’s merge requires supervisory authorities’ approval, and shareholders agreement. The company expects to complete the merger deal by second half of 2016. However, a Reuter’s report pointed this megamerger of the century, might attract intense scrutiny from regulators around the globe to prevent it from monopolizing the market.