Industry news

2016August

Hezonglianheng, the integration strategy of LED giant

From: www.szbako.com Data:07/08/2016

to watch the global LED industry, the five major manufacturers and three major manufacturers are basically using the vertical integration of the strategy, but in a different extent.

homemade or purchased, for personal use or for takeout, seemingly two simple business decisions, is related to an enterprise's important strategy, that is, whether the implementation of vertical integration.

global LED manufacturers vertical integration strategy

to watch the global LED industry, the five major manufacturers and the three major manufacturers are basically using the vertical integration of the strategy, but in a different extent.

reason for the enterprises to implement vertical integration, that is because the giant itself has strong downstream estuaries, downstream packaging capacity is enough to support the epitaxial chip business enjoy obvious economies of scale, and the giants in the epitaxial chip and have a large number of patents and proprietary technology, therefore, are also more likely will produce its own chip to avoid the disclosure of proprietary technology and private information. However, even if the above international large enterprises also have little pure vertical integration. Most of the enterprises even in the layout of the industrial chain extends to more than a link, but it is still more or less will external purchases or sells part of the intermediate product. As a result, most of them still belong to progressive integration (integration tapered).

on the progressive integration of the advantages and disadvantages of textbooks will have an explanation, this paper is no longer. But to be sure, when the LED application products gradually mature, the downstream application market scale growth, self LED application products business to support in the upper reaches of the economy of scale of production capacity, the Dachang tendency to reduce the proportion of chip or device and other intermediate products of foreign sales.

but LEDinside estimates to 2015, China's LED general lighting actual demand of 67 billion 800 million yuan. And as the economy continues to grow and LED penetration rate increased to 2020 will reach 138 billion 600 million yuan. In the scale of China's LED industry grow gradually, while the downstream LED lighting market to flourish also gradually be able to support more large enterprises, the Chinese led enterprise, the implementation of vertical integration strategy for more fully, for example to support upstream capacity to achieve economies of scale, dispense with the cost of transaction, cost is better than that of outsourcing, upstream and downstream collaborated with low cost strategy to seize the market, shorten the new product development process, the rapid application of the latest technology advantage, to avoid the outflow of core technology and business information; avoid subject to key materials of upstream suppliers and so on.

in fact, ledinside observed on both sides of many enterprises are efforts in this direction. However, most of them only from the package is extended to the application, part from the application extends to the package, minority extending from the package to epitaxial chip, but typical is crystal electric, Ann and BDO, because they influence on the industry of the more important. How they achieve vertical integration through different ways to complete the layout from the epitaxial chip to the package and application, it is worth to analyze and think.

crystal electric, Saman, de haorun amounts to vertical integration strategy contrast

but de Ho Runda had to face the problem is different from the industrial chain of entire firm is a strong integration of the people together, but the upstream and downstream and there is no smooth cooperation. All aspects of the business unit is to buy and sell, downstream advantages did not form an effective force. And while the interior of NVC right bucket with lower cost to obtain the ownership of NVC, control to the NVC channel is a step may be completely live with BDO system of the coup. Through the vast sea of NVC, de haorun amounts to have the opportunity to successfully get through between various elements within each camp, downstream of large orders driven upstream capacity release and implementation of all aspects of the industry chain of economies of scale, so as to achieve the lowest total cost target.

in three, had been the location of the chip factory. Although with the local government through the market for investment in a large number of finished lighting orders, gradually establish a relatively large number of applications, but the chip is still the main business of the entire firm. And in low order chip Universal homogenization, chip companies was forced to price war as a major means of competition, Sanan situation is before the Department of Taiwan containment, after domestic follow-up. In an optoelectronic capacity, must also have a huge sea downstream, in order to ensure a steady demand. So Sanan is positive through equity investments in a number of ways to establish a community of interests, forming a weak effect of vertical integration system.

and the vertical integration of crystal power is still a market based resource allocation mode, the downstream partners, the use of their own crystal power development capabilities to provide assistance. The cooperative development can be run through the whole industry chain, from the chip, packaging module to final product and brand and pathway can use crystal electric rich industry knowledge, accurate insight and innovation of production technology. The benefits of virtual vertical cooperation are very obvious, in fact, is to strengthen cooperation in the upstream and downstream while maintaining the necessary openness. This is different from the full market, the crystal power can provide value-added services to the downstream partners through this cooperation, to help customers succeed to maintain customer loyalty. And customer growth in turn to bring more orders for crystal power. And at the same time such customers can be more than one, to ensure that a certain amount of similar customers, will make the crystal power has always been in the status of the safety of the industrial chain.

but imagine the binding of this integration will be very weak, crystal electric mainly to the incumbent is their ability of research and development, technical ability and does not have constraints influence to maintain the loyalty of the partners. And this ability to be based on attractiveness may not be as common as looking for a partner to be more reliable partners. Because in the dynamic market, through the learning effect, the ability to migrate, the ability of the pros and cons of the contrast will be converted.

no strategy can be applied to all enterprises, all the environment. The right strategy is the best strategy. Sanan optoelectronics, de haorun amounts, EPISTAR three vertical integration mode has its own characteristics, which can not be better, but for vertical integration provides three optional reference case. And in the future, will still have REFOND optoelectronics, Jufei such attention to packaging manufacturers, there will also be Huacan photoelectric, dry according to optical that specialize in chip manufacturers, and kept trying to extend to the upstream and downstream of country star photoelectric Silan. The same business environment, but so completely different strategy mode, which is China's LED industry for the future of great enterprises for the best chance of trial and error.

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