The worst is thought to be over as 2015 comes to an end, a quick overview of developments in the past year show product prices have reached new historical lows in the past year. The elimination race has escalated with restructures becoming the new norm in the industry.

Everywhere in the LED industry, companies are transforming their business models or investing, but these are just a façade. Underneath the surface, LED manufacturers are more concerned about core technologies.

Wen Fa Soong,  Lextar’s VP in the China region. (All photos courtesy of LEDinside)

Compared to 2014, there has been more changes in LED technologies in 2015. Merger risks had overshadowed technology changes, making it less obvious. In reality, OLED no longer is a concept, but a finished product. Even though flip chip LEDs is not mainstream technology, many in the industry have deployed their strategies in this sector. Even UV/ IR LED that previously had very low market exposure, has been ushered to a new height. Light engine conceptual products have gradually been implemented, and the industry has expanded its strategy. Even flash lights, smart lighting, CSP and COB products have been ushered into a new historic height.

Just exactly what happened in the LED industry in 2015? In an exclusive interview with LEDinside, Lextar’s VP in the China region Wen Fa Soong outlined eight major technology trends in the LED industry in 2016.

OLED TV to spur LED makers to advance technology 

For the emerging OLED TV market, even though it is a competitive technology against LED TV-backlight, and in theory will affect LED usage volume in TV backlight applications, its market share remains low in the TV market. OLED TVs estimated market share will be lower than 1% in 2016, hence it will not present an immediate threat to LED TVs. Additionally, in the future new generation LCD factories will be founded, hence its production costs and yield rates will be far more competitive than OLED. For the time being, OLED TVs will not be able to threaten LED TVs market position in the short term.

Moreover, OLED TVs will spur LED TVs manufacturers to develop high spec products, and eventually propel LED TVs into high-end markets, which could potentially achieve the effect of raising LED usage volumes in TV backlight applications.

Lextar's booth at a lighting show.

Flip chip technology raises market penetration and introduction of high voltages in low to mid power LEDs

The advantage of flip chip technology is its capacity to operate under high voltage or currents, hence the market’s introduction of high voltage products has been a logical move, and fits cost competitiveness demands.

Even though there are many limitations in current flip chip technology, as the technology becomes increasingly comprehensive, more LED industry insiders are willing to try out this innovative technology. In the future, it is believed the potential outlook of flip chip technology and related package products will be positive.

Improvements in flip chip’s cost advantages, yield rates, and technology issue solutions, will be required before it can enter the next phase, and be introduced in small to mid-power applications.

High gross margin IR/UV LED products under industry lime light as price wars rage on

The LED industry and market has been rapidly changing in 2015, with many companies reorganizing their business organizations and strategies. Companies have also continued to raise their products luminous efficacy, while cutthroat price wars have pressured companies to further lower costs. At the same time companies are hoping to enter niche markets to raise profitability.

Due to impact from China’s LED supply chain, Taiwanese LED companies have been seeking markets with high gross profits. UV and IR LED markets in particular have showed the most remarkable performance. As a large Taiwanese LED manufacturer, Lextar has been actively deploying its emerging market strategy, and its IR and UV LED business developments are following industry market trends.

According to Lextar, the company’s promoted IR products have been used in domestic and international security applications, power sources, touch screen applications, and other consumer electronic products that all received client recognition. The company’s UV LED products have also been promoted on a large scale, due to its excellent LED chip capacity, and extensive power product applications.

Lextar also noted, in general products emitting UVA wavelengths have been applied in industrial curing and exposure plus high power module applications. Currently, Lextar is cooperating with domestic and international manufacturers in UV LED R&D, and in the future will be even more actively developing UVC wavelength solutions to become a one-stop retailer for all UV wavelength products. Additionally, UV LEDs are characterized by its high degree of customization, the products need to be designed specifically to meet client needs. This fits well with Lextar’s vertical integration operation model. 

Light engine: Focuses on end-user application demands, continually advancing technology specs

As competition intensifies in different links in China’s LED supply chain, manufacturers are increasingly preferring light engines with low cost and high C/P ratio.

Lextar was one of the earlier manufacturers that released light engine products, and its light engine products currently use High Voltage (HV) chips. The product is designed so no additional drivers need to be integrated into the light source module, and the plug-and-play design allows it to light up immediately after installation. The company provides traditional luminaire companies the easiest and simplest lighting solution. Traditional light source modules integrate drivers into the LED luminaires on a light board. The bulbs light up once the bulb is connected to a power source, and it has also abandoned the electrolytic capacitor design found in older generation products. The design can significantly raise the light source lifetime. By pairing it with Lextar’s in-house designed high voltage LED dies, the product’s reliability has been greatly improved. Luminaire manufacturers only need to add an outer shell to complete the product assembly, which solves the products photoelectric match and other technology issues, while greatly lowering the luminaires assembly cost.

The company has been developing light engines, and has become more focused on end market demands. Aside from luminous efficacy performance, Lextar has continued to maintain advantages from its in-house manufactured LED chips, while the company’s different light engine technology specs advancements has allowed the luminaire to be used in different lighting applications, for instance ultra CRI R9 and below BBL color point performance and concentration. Worth noting is Lextar has developed and produced solutions that can be mass produced, and will continue to supply clients balanced and suitable light engine products.

Oligarchy in flash LED market lifted, but technology entry barriers still present in the short run 

Previously, the flash LED market was an oligarchy dominated by a few suppliers, but after Lextar developed the market technology in the last two years, clients have started to gradually apply the LEDs in their products. The Taiwanese LED package maker estimated its market shares would continue to grow throughout 2017.

China’s domestic LED manufacturing has become a growing trend, with the exception of flash LEDs. However, unlike other mass produced LED lighting products, flash LEDs need to consider the products unique properties and even appearance. In the short run, there are still certain technology barriers. Especially the usage of flip chips in flash LEDs could raise the product’s reliability, and could further display Lextar’s advantages as a vertically integrated supplier.

Positive outlook on smart lighting market potential, and rapid spread on the market

According to latest market research, the smart lighting market holds great potential, with its estimated market value to reach US $8.14 billion by 2020, and grow at a Compound Annual Growth Rate (CAGR) of 22.07% from 2015 to 2020. 

Smart lighting is defined by “integrating connection and communication” and targeting smart home and smart cities. However, there are still several issues that need to be solved for smart lighting to spread across the market. The first is standards, there is no unified technology standard for smart homes, and optimizing compatibility. Secondly, smart home product users have higher interoperability demands that are required to raise market acceptance for their products.

The main wireless communication technologies Lextar has applied in its products, include WiFi, Bluetooth and Zigbee. Companies should first target business activities, such as market positioning, advertisements and others. Lextar intends to enter the market through channels that consumers are most familiar with, and make it more convenient for consumers to acquire the products to open up market acceptance.

CSP LED catches on in backlight market, future developments will be dependent on speed of innovation 

CSP LED applications have soared in backlight and flash LED market sector, its development trend has been similar to traditional 2835, 3030, and 5630 LEDs, which were first widely applied in the backlight market. These LED applications in the backlight market skyrocketed and matured before being applied in other market sectors. This has become a norm for innovative LED technologies, where most start in backlight applications before being applied in lighting. From a technology viewpoint, there has not been a situation where LED backlight products could not be applied in lighting sectors. It is estimated from 2016-2017, CSP applications in the backlight sector will markedly grow, and Lextar will also apply the LEDs in backlight applications by 2015. It is estimated CSP LEDs explosive growth in the general lighting market will occur in 2017.

CSP LED technology has minimized or even reduced the need for leadframes to reduce package costs, and other product features include improved light shape and thermal dissipation advantages. Even though the product has many attractive application features, its small chip size and high Surface Mounting Technology (SMT) equipment precision requirements, lack of protection from leadframes has made it more fragile than traditional surface mounted LED package. This has also raised the package technology entry level for CSP LEDs, and requires integrating LED technology from top to bottom of the supply chain. Lextar is a vertically integrated LED manufacturer that possesses upstream to downstream technology that has utilized resources throughout the supply chain to develop CSP LEDs. Of course the deluge of LED manufacturers entering the market has also accelerated market competition, whoever innovates the fastest in the future will be able to acquire the most market shares.

COB and EMC will be unable to replace most LED applications, and will only be found in special low power lighting markets

COB products R&D has reached fourth generation products, and the substrates can reach a luminous efficacy of 150 lm/W under temperature of 85℃ and color temperature of 3,000K. COB light source features can be widely applied in commercial lighting, and offer customized services including CRI 90, 3-step binning and special color temperatures.

Certain spotlights that use low power COB products are gradually being replaced by high power EMC products, for instance 3030 and 5050 LED market shares have been eroded as a result. However, one of COB’s feature is its low thermal resistance, which has made it irreplaceable in products with long lifetime demands. An advantage of COB is the light source can be easily applied in optic designs and possesses high light quality. Hence, it is widely applied in commercial market including track lights, PAR lights and spotlights.

To sum up, the future of the LED industry still remains bright, even though there are still pricing pressure. However, lower prices will also spur higher market penetration and accelerate the elimination of low quality products. LED enterprises will gradually shift to developing niche market products.

(Author: Skavy Cheng, Editor, LEDinsidehttp:// Editor and Translator: Judy Lin, Chief Editor, LEDinside)