With welcoming the era of lighting, LED industries are slowly switching from horizontal labor division to vertical integration development. Switching to vertical integration is Samsung’s main development strategy. Samsung LED China General Manager and Sr. Vice President Dr. Guoqing Tang pointed out that with continuing the vertical integration plan subsidiary products are concentrated in the mid-to-high power market. The company has also chosen a distributor mode to cut into the highly dispersible lighting market.
Vertical integration development has already become a trend within the LED industry. During a conference at LED Taiwan, Dr. Tang when speaking about China’s LED market layout mentioned that Samsung’s vertical integration will include the manufacturing ability for core materials like phosphor and epitaxial wafers. This will contribute towards product quality guarantee and be beneficial towards product technology upgrades.
Dr. Tang also pointed out that Samsun currently focuses mainly on 1W-5W high powered and 0.2W-1.2W mid-powered LEDs. Aside from mid-to-high powered LEDs, 6W-56W COB products and 2W-4.5W alternating current LED products are also Samsung’s focus for LED development.
In regards to channel extension, Dr. Tang mentioned that compared with hefty costs and expensive labor for sales teams going directly through manufacturing companies, it is much cheaper to use a distributor channel. This is especially true for the construction and commercial lighting market. At the same time able to do a more complete credit risk assessment for emerging markets. Aside from this, compared with going through direct sales channels, distributor companies have superiority in supply chain flexibility, high traffic networks, and convenient services.
