“Existing LED business method does not present any hope at all.”

This is a comment by a former executive who used to be in charge of LED business in Samsung Electronics for a long time. And none would disagree with him that domestic LED industry is in difficult situation.

Faced with restructuring and business closures, ecosystem of domestic small and medium companies in epitaxial/chip segment is just a step away from collapse due to deteriorating profitability. LED lighting market is being taken away by Chinese companies and falling behind global lighting companies due to weak brand power and popularization of the LED products is being delayed due to cost pressure.

 
▲Samsung Smart LED Signage

How about LED convergence technology segment then? The markets for the just budding LED convergence segment are very diverse and wide, including medical, agricultural life, shipbuilding and shipping, sensor communication, UV LED, etc.

In recent announcement of hub establishment project outcome for LED convergence industry, Jong-Hyup Paik, Managing Director of General Project & Business Division, Korea Photonics Technology Institute (KOPTI), said that “we have emphasized and focused on LED convergence technology since 7 to 8 years ago. Although we expected more companies from other industries to participate in early stage of the project, utilization of the convergence technology by current 248 companies can be regarded as a modest achievement.”

The role of domestic LED-related laboratories and convergence centers is limited to LED equipment build-up and performance analysis, with insufficient R&D support which directly translates into demand creation for small and medium companies. It is a vicious circle: The new market is rather small, prompting just a few companies to enter it, which in turn does not help make it any bigger.

Prospect is still positive for LED industry

Despite the difficulty, prospect for LED industry is still bright enough. Global market for LED light source is projected to achieve annual growth rate of 13.6%, growing from around USD 23 billion in 2014 to around USD 48 billion by 2020, according to market researchers. During the same period, domestic market for LED light source is expected to show annual growth rate of 18.5% to become KRW 4.3 trillion by 2020. In fact, Korea has posted trade surplus for the last five years despite continuing price dumping by Chinese companies, which is an amazing feat.

The situation is the same for LED lighting market. Global LED lighting market is expected to grow by 45% annually until 2020 and domestic market is also expected to grow by 41.7% up until 41.7%.

So, now is the time to return light back to the LED industry. LED industry should focus on securing profit than on external growth by increased revenue, break out of simple LED lighting to find niche markets in displays and automotive electronics and extend its flip chp/CSP technologies. It is also an industry consensus that it should select strategic LED light source technology, secure premium LED lighting production technology and focus on commercialization of high value-added convergence technologies.