(Author: Judy Lin, Chief Editor, LEDinside)

Compared to other manufacturers in the industry, MLS is optimistic about LED market developments and market potential with plans of scaling up LED package production this year from 50 billion PCS to 70 billion PCS, said MLS General Manager Lawrence Lin recently at a strategic partnership agreement signing ceremony with Taiwanese lighting manufacturer YACG at Denwell restaurant last Sunday.

“Our goal is to raise our 2” LED wafer usage volume average to 3 million PCS by 2019, and for our facility in Jian, China to reach full production capacity of 15 billion LEDs,” said Lin.

“About a third of our LED chips are purchased from Epistar, a third from HC Semitek and the remaining is mostly taken up by Auckson Opto comprises,” said Lin. Other LED chip companies named as MLS suppliers include Optotech and Tsinghua Tongfang.

“Blue LED chips procured comprise about 70% to 80% of chips, while red LED chips procured amount to about 10%,” said Lin.

“The industry currently is experiencing LED chip supply shortages because many LED manufacturers have scaled down production,” said Lin. “The current trend is also in favor of bigger sized LED chips, where only a few manufacturers have the capacity and related patents to make.”

Aside from its lighting business, MLS is a main player in the LED backlight business in China, where it has 60% to 70% market share in terms of volume, and about 30% shares when measured with value. Most of the main players in China’s LED display industry are MLS clients, such as Leyard and others. Red LEDs purchased from Epistar for instance are often used for LED signage applications.

MLS decision to scale up production mostly results from its positive outlook of lighting developments in U.S., where market penetration rates is a mere 7% to 8%, indicating there is still large room for growth.

U.S. DLC 4.0 standard to spur LED chip market developments

MLS for instance has seen its revenue in the U.S. market soar 50% YoY in 2016, and even reported a CAGR of 3,000%. The high figures were the result of the company starting out at a relatively low base level in the U.S. market, said Lin.

The U.S. market is promising but presents various obstacles for interested manufacturers, such as chip quality and price wise. The latest DLC 4.0 standard for instance requires the LED tube light efficiency must reach 135 lm/W, this indicates the LED package efficiency has to be at least 200 lm/W, said Lin.

The higher lumen efficiency requirements would benefit LED chip manufacturers specializing in high power applications, such as Cree, Osram and Lumileds to name a few. Finding economic patented LED chips will be a goal for lighting manufacturers vying to meet the new DLC standards and long certification process for those interested in the U.S. market.

“Clients in general only want the latest certification specs,” said Lin. "So manufacturers have to prepare in advance for the certification process, and to convert all their lighting product specs to meet those set out by new standards."

Moreover, the U.S. LED market has one of the lowest prices for LED bulbs. “The factory prices is between $ 0.6 to $0.8, depending on bulb specs,” he added. “There is actually very little room left for further price falls.” Even an 800 lumen output LED filament price has nearly halved from $3 to $4 to $1 to $2 this year.

In contrast, to its industry counterparts, MLS has been very aggressive in expanding its package production capacity, product line up in general lighting and decorative filament bulb applications this year. The company continues to expand its global distribution channels through acquisitions and partnerships in 2016.  The U.S. market remains one of the largest lighting markets, comprising about 25% of global lighting revenue, but remains a difficult one to enter for most Asian manufacturers because of high lighting quality standards. How MLS will cope with its business strategies in the long term will be worth observing.