In 2013 with the promotion of the LED lighting market, there was a large increase in demand for the LED wafer market. Despite this, the question over domestic overcapacity still remains. Currently, Taiwan production mainly centers on mid-to-low range LED wafers, relying heavily on imports for high performance wafers. So there is still a bit of difficulty in entering into the lighting application field. Facing opportunities and competition in the lighting market, what development strategy will wafer manufacturers use to break into the market? LEDinside was fortunate to get an interview with Taiwan GENESIS Photonics’s general manager Chen Zhengquan to share with us the company’s future strategy. 

 
GENESIS Photonics’s General Manager Chen Zhengquan

Using Price/Performance Ratio to Win over Competitors for Mid to High Ranged Products

According to President Chen, GENESIS Photonics’s LED components are mid-to-high range, mainly in television backlighting, cell phone backlighting, and wafers, all providing high quality illumination. In the market layout, 40% of revenue comes from Japan, and 50% from China. European and American markets are also speeding up market layout. Currently, following the popularity of HD tvs, smart phones, and tablet computers, 40% of the total revenue for GENESIS Photonics comes from back lighting products. In response to the growing trend for large sized HD screens for smart phones, phone backlighting needs crystalline wafers for higher luminosity, causing the use of LED to steadily increase. Therefore the demand for high quality crystalline wafer will increase as LED TV popularizes. This is especially true for HD screen which also caused a rise in LED demands. In the field of backlighting, GENESIS Photonics’s leads in technology superiority. The company intensifies development according to market demands, with a strong commitment to high intensity density flow wafer research, raising lm/$ and decreasing cost.  If there are 2044mil products on the market, most can only be made to 0.5W, but GENESIS Photonics can maintain crystalline wafers with a circumference of 1W. This enables lm/$ to increase significantly, giving the consumer a great cost advantage.

However, President Chen expressed that LED backlight market can not support the entire production capacity of the upstream industry. To balance the entire upstream supply and demand, lighting application is still one of the biggest focus. Presently, application of crystalline wafers in lighting products has become GENETIC Photonics’s main focus of development, making up 55-60% of the company’s overall monthly revenue.  “It has been observed that European and American big manufacturers and domestic manufacturers are all racing to compete for the LED market.  This is particularly true for March of this year when demands for LED products started to raise. Looking at the domestic market, in the first quarter of this year the export sales for downstream luminaries is better than that of last year. We feel that this is quite exciting. LED lighting has an opportunity for a new start this year, having an effect on the whole industry chain.”

The Industry Leader Also Becoming the Leader in Flip Chip Components

However, the current LED industry is at a low excess capacity, lacking in high-end products. High-range wafer technology is firmly in the grasp of European and American large manufacturers, making many manufactures feel frustrated with the impediments placed on technology patents. From the point of view of LED industry development rules, following the increased number of downstream and upstream mergers, the boundaries between them is becoming more and more unclear with the two working closely together. From wafers to components and then to modules, the supply chain boundaries are becoming increasingly small. To have an even closer cooperation with downstream consumers, jointly developing products is the key to the current problem.  For this reason, aside from focusing on wafer research, GENESIS Photonics also places focus on strengthening upstream wafers and components, as well as engine technology patent integrated layouts. They also place patent superiority into the guarantee for downstream consumers, creating a win win for both sides.


GENESIS Photonics displaying their new AT Flip Chip crystalline wafer and MATCH LED components at Guangzhou International Lighting Exhibition


President Chen used GENESIS Photonics as a case example: Three years ago the company promoted the new Flip Chip technology and applied for a related patent. However, perhaps due to investment cost and risk factors, packaging manufacturers were not willing to produce the product. In order to convince consumers of the superiority of the Flip Chip, GENESIS Photonics decided to lead the way themselves and produced the Flip Chip components, telling everyone about the feasibility and superiority of the product. At the same time, they looked for innovative lighting manufacturers to work with, letting consumers know that advantages of the components used in the lighting. After being promoted by big American and European manufacturing companies, lighting consumers personally experience the advantage of the Flip Chip, this technology will be mainstream。

Why did the company do this? Street lamp components, for example, are almost completely made by European and American LED big manufacturers. Looking into the Ten Thousand LED lights in Ten Cities project results,  the majority of problems come from the use of domestic LED components, while European and American manufacturers of LED elements have no problems.With European and American big manufacturers having an advantage with upstream and downstream integrated technology, any problem can be solved using the different layers of the entire system. However, when buying domestic products, it is difficult to define who is responsible for solving specific problems. This is because domestic production uses a division method. After division, it is hard to pin point responsibility for the errors because it’s hard to determine the point of origin. Is it the crystalline wafer or components that are at fault, or is it that neither sides caused the problem because the problem lies in requirements for the crystalline wafer and the packaging for the components? With it being so hard to distinguish where the errors lies, in the end every one suffers. In order to avoid conflict, almost everyone only uses European and American manufacturers. This has lead to Europe and America almost having a complete monopoly. To break the bottleneck in this industry deadlock, GENESIS Photonics decided to design epitaxial wafers and crystalline wafers that have comparable technology quality to that of international big manufacturers. Component product technology and performance has even surpassed international competitors, making domestic downstream industries recognize GENESIS Photonics’s technology standards and agree to use their products. We believe that GENESIS Photonics will definitely succeed, but the domestic industry chain layout needs to be re-integrated for production health, thus breaking the long-term oligopoly with European and American manufacturers to increase the selectivity of domestic manufacturers.

For example, GENESIS Photonics is going to do a similar LED industry chain to that of MediaTek; focusing on upstream research and development, going through their own mature Flip Chip technology development, and developing various lighting components for development application such as light bulbs, downlights, and street lamps. Also, GENESIS Photonics consumers can get more information on luminary design, industry channels, and brand management. As a result, the company can create a healthier win-win situation for the industry chain.  In this stage, GENESIS Photonics, along with international phosphor manufactures and Japanese lighting companies, all have more Flip Chip applications and accessories; We hope that with more successful examples, technological competitiveness of the LED components and programs will also integrate into the country.

At this year’s Guangzhou International Lighting Exhibition, GENESIS Photonics displayed their entire series of Flip Chips and Eutectic Bonding technology, which is a new basic components for MATCH LED. The components successful integration includes lighting applications like MR16, light bulbs, downlights, PAR lighting, high bay lighting, wall washing recessed lighting, street lamps, and more. The company plans to start shipping in the second quarter of this year following an increase in demand. “The future development in vertical integration of upstream and downstream technology is more favorable and has more effectiveness than lateral expansion of production capacity”, President Chen stated. Genesis Photonics future will be more focused on vertical integration with customers or partners to create a competitive advantage, increasing the level from the system to improve product cost, as well as effectively shortening the time required for product development, rather than limited to the epitaxy and crystalline wafer production capacity expansion. It is estimated that by 2015, GENESIS Photonics’s Flip Chip new revenue for crystalline wafers and MATCH LED components, as well as related solutions, will account for half of total revenue.

GENESIS Photonics MATCH LED new components：150°, the world’s largest light angel, starting production in the second half of the year

About the company’s recent development plans, President Chen revealed to LEDinside that the company’s Kunshan plant will open this November. It will be vertically integrated from the crystalline wafer to component layout, helping the component and lighting industry compete internationally.

LEDinside Observations

LED crystalline wafer production outcome is already settled. Homogenization and dumping cannot break the European threshold and patent network. Displaying synergistic effect, strengthening cooperation in the LED industry vertically at the level of technology integration might be able to compliment one another and break the monopoly or oligopoly European and American manufacturers. Genesis Photonics is the industry leader, and is committed together with clients from crystalline wafers, components, or optical modules and other system levels to improve product cost, emulating Cree and Philips Lumiled integrated production mode.  This model is conducive to promoting mutual assistance to downstream industry surplus and deficiency. LED industry in order to achieve optimal allocation of resources and avoid wasteful duplication, hope to be able to promote “co-creating value” for industry health, and also create a place for itself among Greater China LED lighting market development achievements.