There are rumors that Samsung may sell LED lighting business to the outside world. A year ago, Samsung announced that it would stop the LED light business in the global market except South Korea. This month, Samsung once again reduced the scale of LED lighting business and downgraded the LED lighting business unit into a group. In addition, the Korean government has designated LED lighting as a suitable type for SMEs, and may also cause Samsung to sell LED lighting. However, it is puzzling that the Korean government has also developed the "LED Lighting 2.0" program to dominate the global market.
South Korean companies have lost to the low-cost competition strategy of mainland LED lighting companies. Samsung Electronics and LG Innotek have also reduced the scale of LED lighting business.
Samsung Lejin reduced LED lighting business
Since mainland manufacturers have introduced products with low prices and similar performance to Korean systems, the light-emitting diode (LED) lighting in South Korea has become less profitable, which has caused the two Korean factories to reduce the scale of LED lighting.
According to the Korean media's economic report, Samsung Electronics (Digital Electronics) downgraded the LED lighting division into a group in early December. Samsung once developed LED lighting as one of the five new tree businesses, but has recently changed direction. LG Innotek (LG Innotek) recently sold the sapphire substrate (SapphireWafer), which is a raw material for LEDs, to SSLM, a joint venture between Sumitomo Chemical and Samsung Electronics.
Due to the increasing demand for environmentally friendly lighting, the LED lighting market itself is continuing to expand. It is expected that the market size will reach approximately US$17 billion in 2015, which will grow by approximately 9% compared to 2014. Based on the 2014 sales benchmark, Samsung Electronics and LG Innotek each ranked third and fifth in the global LED lighting market, but both companies were unable to avoid losses because the LED lighting market was in serious oversupply. status. According to data from the city's regulator IHS, the LED lighting market is in a state of oversupply of 23%, mainly due to the large investment by mainland players with the advantage of government subsidies.
Mainland players have almost caught up with South Korea in technology. In addition, Phillips recently sold approximately 80.1% of its LED parts subsidiary, Lumileds, and the buyer was a land-based fund, Go Scale Capital. The industry believes that Lumieds is mainly for the purpose of obtaining the LED patent held by Philips.
However, some commentators believe that South Korea still included LED lighting in SMEs for the industry in 2013~2014, so Korean companies missed the golden moment of fostering business in China. There are also rumors that Samsung may sell LED lighting business to the outside world.
At present, Samsung and LG Innotek are planning to strengthen the internals in the LED lighting business strategy. Samsung plans to transfer the process methods accumulated in memory and semiconductors to LEDs, and it is expected to reduce production costs to a lower level than currently. In addition, LG Innotek related people said that the performance of high value-added products such as automotive LED lighting is not bad, and will develop related businesses with high-end products as the center.
LG Innotek sells LED wafer equipment
With the rise of mainland players, LG Innotek has reduced its competitiveness through vertical integration of LED processes, and it is difficult to make a profit because of continued price declines, oversupply and price competition. As a result, LG Innotek handed over the LED sapphire 矽 wafer production equipment to the joint venture SSLM of Sumitomo Chemical and Samsung Electronics.
Related equipment has been relocated to SSLM's production line in Daegu, South Korea in October. The scale of the equipment is based on 6 inches and can produce 12,000 pieces per month. The LG Innotek Sapphire team responsible for wafer production will be deployed to other divisions.
According to the analysis, LG Innotek is in the process of closing the wafer business because it is difficult to create profits. At present, sapphire twin rods and wafer prices continue to decline. In the second half of 2014, the Apple iPhone originally considered the use of sapphire glass as the cover glass material, and ultimately did not adopt this program, causing the price to plummet.
In addition, most of the current companies are trading at a price below the profit and loss balance point (BEP). Compared with self-production, the production of chips after external procurement of wafers is more conducive to ensuring cost competitiveness. The increase in the supplier of 6-inch sapphire enamel wafers is also one of the background factors for the transfer of LG Innotek.
South Korea puts LEDs into SMEs
The expansion of the Korean chaebol force is staggering. At the end of 2010, the South Korean government established the "Peer Growth Committee" in an attempt to restrict the expansion of the chaebol of large enterprises by regulations. At the end of 2011, the Peer Growth Committee listed 26 industries, including desktop computers, digital electronic door locks, driving navigation systems and LED lighting, as "small and medium-sized enterprises suitable for the industry" and restricted the operation of large enterprises. In February 2013, 16 service industries, such as baking and catering, were further designated as “SMEs suitable for the industry†to protect the survival rights of ordinary small citizens.
It has been reported that Samsung Electronics intends to end the LED lighting business, mainly because the Korean government has designated LED lighting as "small and medium-sized enterprises suitable for the industry." However, at the end of January 2015, the "Peer Growth Committee" decided to exclude LED lighting from "SMEs suitable for the industry". Therefore, Samsung Electronics, which announced the withdrawal of LED lighting products in 2014, may be considering returning to the market. In addition, it is like LG Electronics and East Lightec (Dongbu Lightec), and they are also eager to try.
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