EXHIBIT 1033
`
`Yu-Shan Su, Competing in the Global LED Industry: The Case of Taiwan,
`Intl. J. of Photoenergy Vol. 2014, Art. 735983
`(available at http://www.hindawi.com/journals/ijp/2014/735983)
`
`(“Global LED”)
`
`

`

`Hindawi Publishing Corporation
`International Journal of Photoenergy
`Volume 2014, Article ID 735983, 11 pages
`http://dx.doi.org/10.1155/2014/735983
`
`Review Article
`Competing in the Global LED Industry: The Case of Taiwan
`
`Yu-Shan Su
`
`Department of Industrial Education, National Taiwan Normal University, No. 162, He-Ping E. Road, Taipei 106, Taiwan
`
`Correspondence should be addressed to Yu-Shan Su; yssu@ntnu.edu.tw
`
`Received 2 April 2014; Revised 19 May 2014; Accepted 19 May 2014; Published 5 June 2014
`
`Academic Editor: Ho Chang
`
`Copyright © 2014 Yu-Shan Su. This is an open access article distributed under the Creative Commons Attribution License, which
`permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
`
`Light-emitting diode (LED) is a very essential application for energy-savings nowadays. The revenue of the Taiwan LED components
`industry is ranked top one in the world, followed by that of Japan and South Korea. Based on the advantage of their electronics
`industry, Taiwanese LED companies create a unique model to compete with the international firms. Large international LED
`companies achieve economies of scale by vertically integrating their operations. Taiwanese LED companies specialize and achieve
`an optimal efficiency by vertically disintegrating across the upstream, midstream, and downstream sectors in the value chains.
`Taiwanese LED companies create economies of scale and economies of scope through a complete industrial value chain.
`
`1. Introduction
`
`Energy-savings are getting more and more important in
`recent years, since both global warming and energy reduction
`are getting more and more serious. Light-emitting diode
`(LED) is a very essential application for energy-savings
`nowadays. Asia is the major of the global production base
`for the LED industry and home to the four countries with
`the highest LED revenue, namely, Taiwan, Japan, South
`Korea, and China. In 2010, Asia accounted for 81.3% of the
`global market share. The revenue of global high-power LEDs
`reached US$10.1 billion in 2012, with an annual growth rate
`of 13.4%. The high-power LED market share of Taiwanese,
`Japanese, South Korean, and Chinese firms, when combined,
`amounts to 61.3% of the global total, leading the global LED
`industry [1].
`The revenue of Taiwanese LED components industry
`reached US$4,673 million in 2011, which accounts for approx-
`imately 30% of the global total, ranking first in the world.
`In 2010 and 2011, not only the revenue of Taiwanese LED
`components industry was the highest in the world but
`also Taiwanese LED industry has become the leader of the
`global LED industry. Developed for four decades, Taiwanese
`firms play an important role in the global LED industry.
`And Taiwanese LED industry has established a complete
`
`industrial value chain. The upstream and midstream revenue
`was approximately US$1,800 million and the downstream
`revenue was approximately US$2,800 million 2011 [2].
`Japanese firms have been the global leaders of the LED
`industry with its high-level technologies and capabilities for a
`significant length of time. In the past, Japanese firms claimed
`over half of the global market share. Global market share of
`Japanese firms declined to 41.5% in 2010 because of strong
`Taiwanese firms and aggressive Korean and Chinese firms.
`The fast-growing South Korean firms secured a market share
`of 10% in 2010. In 2002, Korean companies of Samsung
`LED and LG Innotek have aggressively expanded their LED
`industries and pioneered the market of liquid crystal displays
`(LCD) televisions with LED backlighting. The market share
`of Chinese firms was 5% in 2010 and continues to grow [2].
`There are numerous advantages of LEDs, such as their
`compact size, long lifespan, high luminous efficiency, durabil-
`ity, power-saving abilities, and pollution-free characteristics.
`Many governments worldwide have focused on the LED
`industry in recent years. In the future, LEDs will be used
`primarily for lighting purposes, such as the lighting man-
`agement systems of the high-efficiency light source and the
`intelligent lighting systems. In Taiwan, more than 800 LED-
`related firms exist, with an employment population of over
`20,000. By 2015, the revenue of the Taiwanese LED industry
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 1
`
`

`

`2
`
`is estimated to exceed US$18,000 million, transforming LEDs
`from tiny electronic components into a leading industry that
`attracts worldwide attention.
`This paper focuses on the LED components industry and
`analyzes the trends and developments of the LED industry
`in Taiwan and in the globe. The positioning and competitive
`advantage of Taiwanese firms in the global LED industry is
`also analyzed.
`
`2. Analysis of Global LED Industry
`2.1. Scope of LED Industry. Composed of semiconductor
`materials, LEDs combine semiconductor electrons and elec-
`tron holes to emit photons that can be made into light-
`emitting components. The LED industry comprises the fol-
`lowing two parts (see Figure 1): (1) the components industry,
`which includes epitaxies, grains, packaging, and modules,
`and (2) the application industry, which includes light bulbs
`and alternative light sources. This study focuses on the LED
`component industry.
`The value chain of LED industry included (1) single chips
`and epitaxial wafer (Epi-wafer) in the upstream sector, (2)
`grain in the midstream sector, and (3) package and module
`in the downstream sector (see Figure 2).
`(1) Upstream sector of Epi-wafer: where the primary
`products include single chip and epitaxial wafer.
`Wafer is formed by cutting monocrystalline silicon
`stick into single wafer substrates and growing mate-
`rial compounds on substrates using Metal Organic
`Chemical Vapor Deposition (MOCVD) method.
`(2) Midstream sector of grain process: where the primary
`products are grain. Epitaxial wafer diffusion and
`metal evaporation are performed as required, fol-
`lowed by wafer masking, etching, and heat treatment
`to create grain electrodes. Finally, the grain is cut,
`tested, and inspected to complete the midstream
`production of grain.
`(3) Downstream sector of package and module: various
`LED components are formed through a series of
`processes, including die bonding, wiring, wax sealing,
`and baking.
`
`2.2. History of Global LED Industry. During the initial stage
`of the developments, LEDs only emitted infrared or red light
`with the addition of GaAs. As material sciences advanced,
`energy released as light was applied to produce various diodes
`capable of generating lights of varying colors. LEDs possess
`a number of advantages, such as low power consumption,
`durable components, radiation-free characteristics, and a
`compact size. As the luminous efficiency gradually improves,
`LEDs have become an ideal substitute for traditional lighting
`systems. The history of LED development is provided below
`(see Table 1).
`In 1907, Henry Joseph Round of Radio Corporation of
`America first found that light-emitting components have the
`characteristics of a rectifier. The first components were named
`light-emitting diodes, abbreviated as LEDs, and published
`
`International Journal of Photoenergy
`
`LED components
`industry
`
`LED applications
`industry
`
`∙
`∙
`∙
`∙
`
`Epi-wafer
`Grain
`Package
`Module
`
`∙
`∙
`
`Lighting
`Backlight
`
`LED industry
`
`Figure 1: Scope of the LED industry. Source: this study.
`
`in the journal [3]. In 1955, Rubin Braunstein of Radio
`Corporation of America identified the infrared radiation
`effects of GaAs and other semiconductor alloys for the first
`time. In 1962, Nick Holonyak Jr. of General Electric Company
`in United States developed the first light-emitting diode that
`could emit visible red light suitable for practical use. In 1992,
`Shuji Nakamura of Nichia Corporation in Japan developed
`the first GaN diodes. In 1995, Shuji Nakamura of Nichia
`Corporation successfully fabricated green- and blue-light
`GaN LEDs. In 1996, Shuji Nakamura proposed fabricating
`white-light LEDs using blue-light InGaN LEDs to excite
`fluorescent substances. In 1998, Nichia Corporation launched
`the first white LED product. In 2012, the Cree Company in
`United States introduced a luminous efficiency of 254 lm/W,
`establishing a new record of aluminous efficiency [4].
`
`2.3. Analysis of Global LED Value Chain. The global LED
`market grew substantially recently. The market share of
`Taiwanese, Japanese, South Korean, and Chinese firms com-
`bined accounted for 81.3% of the global total in 2010 and
`over 80% in 2011. The primary LED producers have been
`based in Asia in the world. In the future, the primary arena
`of the global LED industry will continue to base in Asia.
`And Taiwanese, Japanese, and South Korean firms will be the
`dominant players. The global LED value chain is analyzed
`below (see Figure 2).
`As the established renewable energy industry drives the
`industrial developments of the LED industry, international
`giants like Philips, Sony, Hitachi, and Samsung are moving
`aggressively into the LED market [5]. Most large companies
`from Europe, the United States, Japan, and South Korea
`are vertically integrated companies that comprise upstream,
`midstream, and downstream segments. A number of global
`lighting conglomerates (such as Phillips Company in Nether-
`lands and Sharp Corporation in Japan) are vertically inte-
`grated companies supplying a large variety of LED compo-
`nents and appliance products. Top ten global LED suppliers
`are listed in the following table (seeTable 2 ) [6].
`In Taiwan,
`labors were divided across three sectors
`during the initial stage, that is, upstream, midstream, and
`downstream sections. Subsequently, this was transformed
`into a two-sector model, comprising an (1) up-midstream
`sector of Epi-wafer and grain process and (2) downstream
`sector of package, with the (1) up-midstream sector of Epi-
`wafer and grain process including the firms of Epistar, Huga,
`FormosaEpiraxy, Techcore and (2) the downstream sector
`of package including the firms of Everlight, Lite-on, and
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 2
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`

`

`International Journal of Photoenergy
`
`3
`
`Table 1: The history of global LED industry.
`
`Year
`1907
`1955
`
`1962
`
`1992
`1994
`1996
`
`Events
`Henry Joseph Round, who worked in Radio Corporation of America, found the first LED of SiC and published it in a journal.
`Rubin Braunstein, who worked in Radio Corporation of America, identified the emitted infrared radiation of GaAs and other
`semiconductor alloys for the first time.
`The first LED that could emit visible red light suitable for practical use was developed by Nick Holonyak, who worked in General
`Electric Company.
`Shuji Nakamura of Japanese Nichia Corporation developed the first GaN diodes.
`Shuji Nakamura of Japanese Nichia Corporation developed fabricated green- and blue-light GaN LEDs.
`Shuji Nakamura of Japanese Nichia Corporation developed fabricating white-light LEDs using blue-light InGaN LEDs to excite
`fluorescent substances.
`1998
`Japanese Nichia Corporation launched the first white LED product.
`2002 The 5 W of LED appeared in the market, and the luminous efficiency was approximately 18 to 22 lm/w.
`2009
`Japanese Nichia Corporation introduced a new luminous efficiency record of 249 lm/w.
`2010
`The revenue of Taiwanese LED components industry reached US$4,554 million and ranked top 1 in the world
`2011
`The revenue of Taiwanese LED components reached US$4,673 million and ranked top 1 in the world.
`2012
`U.S. Cree Company introduced a new luminous efficiency record of 254 lm/W.
`Source: this study.
`
`Upstream
`
`Midstream
`
`Downstream
`
`Epi-wafer
`
`Grain
`
`Package
`
`Module
`
`Epistar, Epitaxy, Arima, Huga,
`Luxtaltek, LED Expert, Genesis
`
`Shin-Ets,
`VPEC,
`AET, LMOC,
`Xing-Guang
`
`OPTO, Tyntek,
`Highlight
`Optoelectronics
`
`Everlight, Lite-On, Bright, UNI,
`TrendForce, ParaLight, LiteVision,
`EOI, Kingbright, SY, Ligitek, Rodan,
`Oasistek, CS bright, Solidlite, NanYa
`
`Nichia, Rohm, Sharp
`
`Toyoda Gosei
`
`Citizen, Stanley, Kagoshima
`
`Samsung LG, LG Innotek, Seoul Semidonductor LED
`
`Uniroyal, Cree, GelCore, AXT
`
`Agilent Technologies
`
`Philip Lumileds Lighting (Netherlands),
`Osram (Germany)
`
`Figure 2: Value chain of global LED industry. Source: this study.
`
`Taiwan
`
`Japan
`
`Korea
`
`U.S.
`
`Europe
`
`Kingbright. Also, Everlight Electronics Corporation is among
`the top-ten LED suppliers in the world (see Table 2) [6].
`In Japan, the technological capabilities of Japanese high-
`power LEDs lead the global LED component industry.
`Nichia Corporation and Toyoda Gosei Company are the
`leading holders of LED patents globally. Facing low-priced
`competition from Taiwanese and South Korean suppliers
`in recent years, the market share of Japanese firms slipped
`to approximately 30% in 2011, behind that of Taiwan, and
`ranked second in the world. In Japan, many LED firms are
`
`vertically integrated (such as Nichia, Rohm, and Sharp), with
`upstream suppliers including Toyoda Gosei Company and
`downstream suppliers including the firms of Citizen, Stanley,
`and Kagoshima.
`In South Korea, electronics firms have gained a rapidly
`expanding market share in recent years because of their brand
`advantages. The market share of Korean firms Samsung LED,
`LG Innotek, and Seoul Semiconductor LED grew rapidly
`to 26% in 2011, assuming the position of the third largest
`supplier in the world. With the support of the South Korean
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 3
`
`

`

`4
`
`Table 2: Top 10 global LED components suppliers in 2013.
`
`Rank
`
`Supplier
`
`Country
`
`1
`2
`3
`4
`5
`
`6
`7
`
`8
`
`9
`10
`
`Nichia Corporation
`Samsung LED
`Osram Company
`LG Innotek
`Seoul Semiconductor
`LED
`Cree Company
`Philips Lumileds
`Lighting Company
`Toyota-Gosei
`Company
`Sharp Corporation
`Everlight Electronics
`Corporation
`Source: Strategies Unlimited (2014) [5].
`
`Japan
`Korea
`Germany
`Korea
`Korea
`
`USA
`Netherlands
`
`Japan
`
`Japan
`Taiwan
`
`Revenue
`(unit: million USD)
`2058
`1390
`1189
`933
`921
`
`895
`821
`
`538
`
`486
`448
`
`3,500
`
`3,000
`
`2,500
`
`2,000
`
`1,500
`
`1,000
`
`500
`
`0
`
`International Journal of Photoenergy
`
`Unit: billion USD
`
`2010
`
`1,639
`
`1,454
`
`3,093
`
`2011
`
`1,494
`
`1,489
`
`2,983
`
`2012 (E)
`1,267
`
`1,646
`
`2,913
`
`Up-and midstream
` Downstream
` Total
`
`government, major companies such as Samsung and LG have
`adopted vertically integrated operations.
`In United States and Europe, because of the economic
`downturn and sluggish global market, the market share of the
`U.S. and European firms, which had previously secured the
`high-end segment of the LED industry, comprised approx-
`imately 20% of
`the global market share in 2011.
`In
`the United States, up- and midstream integrated suppli-
`ers include Uniroyal, Cree, GelCor, AXT and downstream
`suppliers include Agilent Technologies Company. In Europe,
`Philip Lumileds Lighting Company of Netherlands and
`Osram Company of Germany are vertically integrated sup-
`pliers.
`In China, the Chinese government provides subsidies
`to domestic firms for production equipment, land, leasing,
`and taxation, as well as market opportunities to foster the
`rapid developments of numerous Chinese LED suppliers.
`The revenue of the Chinese LED components industry has
`reached a growth rate of 24% in 2012 [6].
`
`2.4. Revenue Scale of Global LED Industry. In 2011, the rev-
`enue of the global LED components industry (including Epi-
`wafer, grain, and package and module) reached US$16,600
`million (see Table 3 and Figure 3) [1, 2]. Taiwanese, Japanese,
`and South Korean firms have become the main players of the
`global LED component industry, with their combined rev-
`enue accounting for 73% of the world total. In 2010, the global
`LED component market experienced a 6.5% recession for the
`first time. Driven by the rapid merging of the suppliers and
`a proliferating lighting market, the price of LED components
`remained stable in 2012, and the global components market
`rebounded to the 2011 level. As the performance of LEDs
`improves, and the energy-saving policies of the governments
`implement and industrial economies of scale achieve, the
`LED market will continue to grow in the future. The revenue
`is estimated to increase to approximately US$41.5 billion by
`
`Figure 3: 2012 revenue of global LED industry. Source: Topology
`Research Institute (2012) [1]. Up- and midstream: Epi-wafer and
`grain. Downstream: package and module.
`
`2016, with the rate of growth reaching 46% between 2010 and
`2016 [7].
`
`2.5. The Relations between International Companies and Tai-
`wanese Companies. Coopetition behavior between LED
`manufactures is explored by patent analysis. For example,
`Nichia has the advantages in the field of LED components,
`while Osram has the advantages in the field of phosphor
`[8]. There are existing cooperative opportunities for the LED
`manufactures because their technological capabilities are
`partially complementary. Since numerous LED patents are set
`to expire in 2012, cross-licensing will increase the strategic
`development of patent networks and create opportunities for
`late comers. Technological licensing is the only gateway into
`LED markets. For example, Taiwanese Epistar Corporation
`and Korean firms Sangsung LED, LG Innotek, and Seoul
`Semiconductor LED obtained technological authorization
`from five of the main global LED suppliers first. The relations
`between international LED companies and Taiwanese LED
`companies are shown in the following table (see Table 4).
`
`3. Trends of Global LED Technologies
`and Markets
`3.1. Trends of Global LED Technologies. There are four direc-
`tions for the trends of the global LED technologies.
`(1) Enhancing Luminous Efficiency. Currently, the average
`luminous efficiency of high-end products is 150 lm/W [4].
`In 2012, Japanese Toyoda Gosei Company mass produced
`and sold 170 lm/W LED packaging components, exceeding
`other companies. According to the goals set by the U.S. DOE,
`the luminous efficiency of white-light LED components will
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 4
`
`

`

`International Journal of Photoenergy
`
`Table 3: Rank of revenue of global LED components industry (by country).
`
`2010
`Revenue
`(unit: billion
`USD)
`4,554
`4,089
`3,185
`1,737
`1,337
`1,182
`
`% Country
`
`28% Taiwan
`26% Japan
`20% Korea
`11% Europe
`8%
`China
`7%
`U.S.
`
`2011
`Revenue
`(unit: billion
`USD)
`4,673
`4,33
`3,323
`1,686
`1,465
`1,367
`
`% Country
`
`27% Japan
`26% Taiwan
`20% Korea
`10% China
`9% Europe
`8%
`U.S.
`
`2012 (E)
`Revenue
`(unit: billion
`USD)
`4,860
`4,594
`3,477
`1,610
`1,598
`1,364
`
`5
`
`%
`
`28%
`26%
`20%
`9%
`9%
`8%
`
`Year
`
`Rank Country
`
`% Country
`
`2009
`Revenue
`(unit: billion
`USD)
`Japan
`1
`2,746
`Taiwan
`2
`2,719
`Korea
`3
`1,377
`Europe
`4
`1,127
`U.S.
`5
`926
`China
`6
`838
`Source: adapted from PIDA (2012) [2].
`
`28% Taiwan
`28% Japan
`14% Korea
`12% Europe
`9%
`U.S.
`9%
`China
`
`Table 4: Relations between international LED companies and Taiwan LED companies.
`
`International
`company
`
`Country
`
`U.S. patents
`
`Philips Lumileds
`Lighting Company Netherlands
`
`4127
`
`Osram Company
`
`Germany
`
`Cree Company
`
`United States
`
`Nichia
`Corporation
`
`Toyoda Gosei
`Company
`
`Source: this study.
`
`Japan
`
`Japan
`
`643
`
`567
`
`477
`
`347
`
`Relations with Taiwanese companies
`(i) Epistar Corporation is licensed by the technology of AlInGaP light-emitting
`diode from Philips Company.
`(ii) Epistar Corporation entered HV LED supply chain of Philips Company
`successfully.
`(i) Everlight Corporation is authorized by Osram Company with white and colorful
`technologies.
`(ii) Epistar Corporation allied with Deltato Company to develop HV LED grain to
`get mass orders from Osram Company.
`Taiwanese firms, for example, Epistar Corporation, Epitaxy Company, and Genesis
`Technology Company, have the pricing advantage, while Cree Company with
`strong LED lighting performed decline in 2011.
`(i) OPTO Company gained orders of cutting grain from Nichia Corporation.
`(ii) Everlight Corporation succeeded in the sue with Nichia Corporation.
`(i) Epistar Corporation cross-licensed with Toyoda Gosei Company to access LEDs
`on III–V semiconductor technology patents in 2010.
`(ii) Epistar Corporation and Toyoda Gosei Company formed joint venture named
`TE OPTO Corporation.
`
`reach 200 lm/W by 2014, and prices will decline to approx-
`imately US$2/klm. And we expect that the technological
`progress achieved by companies worldwide will soon surpass
`this goal.
`
`(2) Extending LED Lifespan. Currently, a LED component
`can operate for 40,000 to 50,000 hours in its lifetime [4].
`For special occasions, where the replacement of the light
`source is difficult (e.g., the ceilings of factories and airports
`that are extremely far from the ground), long-life LED light
`sources are required. The LED components of Toyoda Gosei
`Company can operate for up to 60,000 hours. Compared with
`traditional incandescent bulbs, LEDs are far more energy-
`efficient, long-lasting (100,000 hr compared with 1000 hr),
`and environmentally friendly [5]. Thus, they are suitable for
`use in special circumstances and can satisfy the demands of
`the global market.
`
`(3) Developing High-Voltage (HV) LEDs. Currently, most sin-
`gle LED chips are based on a low voltage of 3 V, but voltage in
`the mains ranges between 100 V and 220 V [4]. Thus, reducing
`
`the voltage from the mains will lead to a significant loss
`of power. Taiwanese Epistar Corporation began developing
`HV LEDs in the early stage, followed by latecomers Cree
`Company (in the United Stated) and Seoul Semiconductor
`LED (in Korea). HV LEDs possess the advantages of a
`compact size and the ability to be customized into various
`forms for integration. Thus, they have the potential for large-
`scale deployment in the lighting market over the next 2 to 5
`years.
`(4) Enhancing the Acceptability of Solar-Powered LED Light-
`ing Technology. LED lanterns powered by batteries, which
`are charged by grid electricity or small solar panels, have
`emerged as a cost-competitive alternatives to kerosene and
`other fuel-based lighting technologies. Solar-powered LED
`lighting technologies have a niche in rural areas that are
`off-grid and have no available electricity for the most part
`[9–13]. Solar-powered LED lights are increasing popularly,
`because the lower retail price of these lights can make them
`more affordable to lower-income households. Solar-powered
`LED lights offer off-grid energy service for rural areas or
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 5
`
`

`

`6
`
`International Journal of Photoenergy
`
`60
`
`50
`
`40
`
`(%)
`
`30
`
`20
`
`01
`
`0
`
`Unit: millions USD
`
`2009
`
`5305
`
`2010
`
`8252
`
`2011
`
`8908
`
`2012 2013 (e) 2014 (f)2015 (f)
`9745
`11287 13793 16275
`
`5% 55.60% 7.90% 9.40% 15.80% 22.20% 18.00%
`
`Revenue
`YoY
`
`developing countries like Malawi, Zambia, and Cambodia,
`and so forth.
`future technologies, solar-
`For the developments of
`powered LED lighting technologies [9–13] can offer the off-
`grid energy services for the rural area and for the poor, while
`white LED based PV lighting systems [14] and organic LED
`lighting technologies [15, 16] can continue to be explored
`in the area of energy saving lighting technologies. Besides,
`power management and intelligent control [17–19], thermal
`analysis and optimization [20, 21], cooling [22], and reliability
`issue [23] are also important for LED technology develop-
`ments. Particularly, solar power, fuel cells, and LEDs combine
`to light the way towards green economy [24].
`
`16000
`
`12000
`
`8000
`
`4000
`
`0
`
`3.2. Trends of Global LED Market. The global high-power
`LED market reached US$12.5 billion in 2011, 9.8% higher than
`that in 2010 [6]. Specifically, the lighting sector grew from
`US$1.2 billion to US$1.8 billion, with a growth rate of 44%.
`According to the market forecasts for the next five years,
`the market demands for lighting will increase, whereas the
`market demand for backlight lighting is expected to decline.
`The use of OLED will increase substantially because of smart
`phones.
`In 2012, the annual revenue for high-power LEDs reached
`US$10.1 billion globally (see Figure 4), with a growth rate of
`13.4%. The market share of Taiwanese, Japanese, and South
`Korean firms combined amounted to 61.3% in 2012, and the
`global LED industry is dominated by Asia [3, 25]. In 2012, the
`growth of LED products in China was primarily concentrated
`on low-power LEDs, with a growth rate of 30%. Among
`the high-power LED application categories, in 2012, large-
`scale displays using LED backlighting accounted for 34.1%,
`followed by lighting applications, which accounted for 16.7%.
`These figures are estimated to reach 28.7% and 33.4% in 2014,
`respectively [25].
`Currently, because energy-efficient light bulbs are still
`used extensively, the rate of penetration for LED bulbs was
`only 5.4% in 2012, that is, 1.05 billion bulbs, indicating a
`significant potential for market growth in the future. The pen-
`etration rate of the global LED lighting market is expected to
`increase from 11.3% in 2012 to 25.8% in 2014, with the revenue
`growing from US$16.5 billion in 2012 to US$41.9 billion in
`2014. Promotional policies and preferential implementations
`have been introduced in countries worldwide to boost their
`developments of the LED lighting market. In the general
`lighting market, LEDs are anticipated to comprise 50% of the
`market share in Japan, 30% in South Korea, and 20% in China
`by 2015 [4].
`In the rapidly growing LED light bulb market, new
`products developed in 2012 will replace the standard 60 W
`incandescent bulbs. Currently, an LED bulb equivalent to
`60 W, with a brightness of 800 lm, prices up to US$40. The
`selling price, which can be accepted by most consumers,
`varies between the different regions: (1) in the Japanese
`market, the selling price is US$25; (2) in the European and
`the U.S. market, the selling price is approximately US$15;
`and (3) in the newly emerging markets, the selling price is
`approximately US$7.
`
`Figure 4: 2009–2015 prediction of global high-power LED market.
`Source: DIGITIMES (2013) [4].
`
`4. Analysis of Taiwan LED Industry
`4.1. History of Taiwan LED Industry. Taiwanese LED industry
`has been developed for 40 years (see Table 5). Because of
`the relatively few obstacles and capital requirements for
`packaging technology, the downstream package and module
`sector were first built up by Taiwanese firms in the 1970s.
`In the 1980s, industrial value chain of Taiwan was extended
`to include the midstream sector of grains process. In the
`1990s, through technological diffusion and investments from
`U.S. overseas Taiwanese scholars, Taiwanese LED industry
`reached the developments of upstream sectors of the epitaxial
`process. In 2001, because of its technological accomplish-
`ments and expansion into the South Korean market, Tai-
`wanese LED industry not only successfully branched into the
`GaN LED market, but also took the leadership of the global
`LED industry. The history of the industrial developments is
`as follows.
`In 1972, Texas Instruments Incorporation established the
`first packaging plant in Taiwan. In 1975, Lite-On Technol-
`ogy Corporation established a LED packaging production
`line and became a pioneer among downstream packaging
`firms. From 1983, upstream technologies were focused by
`Taiwanese firms after the Optotech Corporation and Tyntek
`Corporation were set up and the downstream packaging
`industry was experiencing substantial growth. In 1996, the
`Taiwan Industrial Technology Research Institute collaborated
`with downstream packaging firms to establish a joint venture
`named Epistar Corporation, which focused on upstream LED
`processes. After the investments of the MOCVD research
`and technology transfer provided by several downstream
`suppliers of Epistar Corporation, a complete LED industrial
`value chain has been established in Taiwan. In 2005, Epistar
`Corporation merged with Epitech Corporation and High-
`link Technology Corporation. In 2007, Epistar Corporation
`merged with United Epitaxy Company. In 2009, the Tai-
`wanese government initiated a program called “rising sun”
`to promote the green energy industry. At that time, the
`LED and solar photovoltaic industries were considered “the
`
`Kingbright Elec. Co. Ltd., Kingbright Corp., SunLED Corp.,
`Kingbright Co. LLC, SunLED Co. LLC and Sunscreen Co. Ltd.
`Exhibit - 1033 Page 6
`
`

`

`International Journal of Photoenergy
`
`7
`
`Table 5: The history of Taiwan LED industry.
`
`Year
`1972
`1975
`
`1983
`
`Events
`The first packaging plant in Taiwan was set up by the Texas Instruments Incorporation.
`Lite-On Technology Corporation set up a LED packaging production line and become a pioneer among downstream packaging
`firms.
`After the Optotech Corporation and Tyntek Corporation were set up, not only the downstream packaging sector grew
`substantially but also upstream technologies were focused by Taiwanese LED firms.
`ITRI collaborated with Epitech Corporation to establish a joint venture named Epistar Corporation, which focused on upstream
`LED process.
`Epistar Corporation merged with Epitech Corporation.
`LED and solar photovoltaic industries are promoted by a “rising sun” program proposed by Taiwanese government.
`The revenue of Taiwanese LED components reached US$4,554 million and ranked top 1 in the world.
`The revenue of Taiwanese LED components reached US$4,673 million dollars and ranked top 1 in the world.
`The “entire Taiwan LED street lighting program” was implemented by Taiwanese government to further stimulate rapid growth
`in LED industry.
`Source: this study.
`
`1996
`
`2005
`2009
`2010
`2011
`2012
`
`two rising industries” and shortlisted as key programs for
`development. The revenue of the LED components industry
`in Taiwan reached US$4,554 million in 2010, the highest in
`the world. In 2011, the revenue of LED components industry
`in Taiwan reached US$4,673 million, the highest in the world.
`In 2012, the “entire Taiwan LED street lighting program” was
`implemented to further stimulate rapid growth of the LED
`industry.
`
`4.2. Analysis of Taiwan LED Value Chain. Depending on
`the manufacturing processes, the LED industry can be
`divided into three sectors, that is, (1) the upstream epitax-
`ial wafer sector, (2) the midstream grain sector, and (3)
`the downstream package and module sector. Unlike large-
`scale international manufacturers that adopt vertical inte-
`gration, Taiwanese companies adopt a division of labor
`across upstream, midstream, and downstream sectors to
`form professional cooperation. Because of the low entry
`barriers of the LED downstream package and module sector,
`Taiwanese firms penetrated the market from the downstream
`package and module sector in the early stage and maintained
`a continual growth after extending to the upstream and
`midstream sectors. Since the mass production of GaN-
`based LEDs in Taiwan, to reduce internal costs and increase
`revenue, the division of labor in the industry was transformed
`from the formerly trisegmented pattern (covering upstream,
`midstream, and downstream segments) into a bisegmented
`pattern (including up-midstream sector of Epi-wafer and
`grain process and the downstream sector of package and
`module) (see Figure 5).
`Major up- and midmidstream suppliers include Epis-
`tar, Huga, FormosaEpitaxy, and Techcore, in which Epistar
`Corporation is the largest red-light LED suppliers in the
`world. Downstream suppliers include Everlight, Lite-On, and
`Kingbright. Also, there are vertically integrated suppliers in
`Taiwan, such as Lextar Electronics Corporation and Taiwan
`Semiconductor Manufacturing Company.
`
`For the revenue of the up- and midstream Epi-wafer
`and grain production, Taiwanese firms ranked top 1 in the
`world. For the revenue of the downstream package and
`module production, Taiwanese firms ranked the third in the
`world, behind only Japan and South Korea. Taiwanese LED
`packaging products can generally be categorized as SMD
`LED, Infrared components, and LED displays. The focus of
`the future market is expected to shift from LED displays to
`LED lighting, since the growth of the liquid crystal displays
`(LCD) sales have been sluggish over the past several years.
`
`4.3. Clusters of Taiwan LED Industry. Three science parks
`are major industrial clusters in Taiwan, namely, Hsinchu
`Science Park, Central Taiwan Science Park, and Southern
`Taiwan Science Park (see Figure 6) [2]. These science parks
`converge into the clusters of the semiconductor and opto-
`electronic industries, forming a complete industrial value
`chain ranging from the upstream material and design to the
`downstream packaging and