Chapter 13 The third section explores the road to breakout

According to the data from IMS, according to the survey results of The World Market of Light Emitting Diodes 2009 Edition (The World Market of Light Emitting Diodes 2009 Edition), Seoul Semiconductor ranks fourth next to the world's third-generation LED Package companies Riya, Osram, and Philips, and The management of Seoul Semiconductor also expects that the total sales of Seoul Semiconductor will reach 1.3 billion US dollars in 2011, surpassing Philips in an all-round way and ranking third.If you still have an impression of the previous content, you may feel that Seoul Semiconductor sounds a bit familiar.right!It is Seoul Semiconductor, which was sued by Nichia for "imitating" Nichia's technology!

1. The grievances between Seoul Semiconductor and Nichia Since 2006, the two companies, Nichia Industry and Seoul Semiconductor, have been involved in patent litigation disputes, especially on gallium nitride-based light-emitting components such as patent infringement of white LEDs, design rights, and patent infringements of semiconductor lasers.In a series of lawsuits and counter-suits, mutual complaints spread throughout the US, Europe and Asia.When the lawsuit was at a fever pitch, Nichia suddenly announced on February 2, 2009 that it had reached an LED patent litigation dispute with Seoul Semiconductor in South Korea, signed a cross-licensing agreement, and ceased to operate in the United States and Germany. , Japan, Britain, Korea and other countries for all patent litigation.The two parties agreed to mutually use patented technologies including LED and laser diode technologies.However, the details of the settlement have not been made public.

The industry generally believes that Seoul Semiconductor has made a breakthrough in white LED technology on the basis of learning and imitating the technology of Nichia Industry. The sub-industry bargained capital and finally reached a technology swap agreement. To this end, Seoul Semiconductor declared, "We are as proud of our 'Packaging' concept technology patents as many as 5,000 items."The so-called "Packaging" is just the result of changing the technology of other manufacturers and repackaging the combination.Seoul Semiconductor's brazen development strategy is inevitably criticized by others, but at least they, as businessmen, fully realize the significance of the commanding heights of technology, and squeezed into the core circle of technology at all costs.Moral factors aside, such a strategy does capture the nature of the industry.Figure 3-27 shows the industry positioning of Seoul Semiconductor. It copied and improved technology from Nichia Chemicals, and chose a downward breakthrough similar to Nichia Chemicals starting from the upstream of the industrial chain.

2. The way to success: technical imitation and single-point transcendence From the perspective of the nature of the industry, the Big Three in the traditional sense occupy the largest market share and mid-to-high-end technology, while Nichia, through continuous technological innovation, has stronger scientific research capabilities and improved its profit margins.But Seoul Semiconductor took a controversial shortcut: it fully imitated the technology of a mature company, Nichia Chemicals, and surpassed it in key technologies.As a result, we got the stepping stone to get closer to the essence of the industry. Nichia, who realized it later, was constrained by the new technology of Seoul Semiconductor, and was forced to share a share with Seoul Semiconductor and reached the terms of technology exchange. Seoul Semiconductor successfully broke through the industry built by core manufacturers. barrier.

In addition, Seoul Semiconductor is also constantly trying to consolidate its technological foundation.Taking advantage of its first-mover advantage and the imperfect rules and regulations of the new industry, it introduced Posco, a consortium with strong political power, in December 2009, and then lobbied its own standard proposal to the South Korean government.Once this proposal is passed, the standards for competitors in various industries to import LED lamps to South Korea will be followed by Seoul Semiconductor.Once such rules are established, they are more likely to be adopted by other countries. In this way, Seoul Semiconductor hopes to gain the commanding heights of technology on a global scale and maximize the utility of this technology.

3. Summary Latecomers without technology have almost no chance to surpass other than imitation. Instead, they can imitate the mature technology that already exists in the market, and improve on this basis to shorten the time for technology research and development. This is the advantage of being a latecomer.Under the technical protection of the local government, Seoul Semiconductor achieved a breakthrough in technical barriers through continuous imitation and the advantage of being a latecomer.This is the same as when Japanese semiconductor companies and automobile companies started by copying European and American design processes.Therefore, for Chinese companies that are one step behind, it is a feasible way to give full play to the ability of imitation and transformation that Chinese industry is good at, to take a slant and cut into the core of the industry.

Seoul Semiconductor's technology imitation route is suitable for those companies that have worked on LED technology for a long time, just like Seoul Semiconductor itself has to directly face the pressure of patent disputes with Nichia during the long-term imitation process.A lawsuit has been fought in various markets around the world for four years, which shows that this road requires strong endurance and firm self-confidence.Is there a better way for Chinese companies that are accustomed to going downstream in the short-term market and pursuing short-term, flat and quick returns?We set our sights on Everlight Electronics, a leading company in LED lighting in Taiwan.

1. Taiwan's LED industry dilemma: mastering edge technology, lack of centralization ability (1) Taiwan's mature LED packaging industry Taiwan's LED industry began in the early 1970s and has since developed into an important region for global LED manufacturing.At first, because of the relatively low barriers in LED downstream packaging technology and capital, it became the first field for Taiwanese LED companies to enter. In 1976, with the manufacture of red LED by Wanbang Company, Taiwan entered the LED midstream industry.At present, Taiwanese enterprises have established a relatively complete LED industry chain.Since 2000, the output value of LED in Taiwan has reached the second place in the world, second only to Japan.Figure 3-28 shows the global LED output value distributed by region in 2007. The total global output value reached US$6.678 billion (approximately NT$213.8 billion), of which 25.2% of the output value came from Taiwan, equivalent to NT$5.389 billion.

(2) Taiwan's LED is concentrated downstream, lacking the ability to centralize power technically Although Taiwanese companies have sprung up in the past 20 years and made outstanding achievements, most of them are still in the middle and lower reaches of the industrial chain. They are engaged in packaging, authorized OEM by foreign companies, and have not entered the core technology field.Even the upstream companies only rely on patents authorized by foreign giants, rather than independent research and development.In Figure 3-29, the light-colored labels are the major manufacturers that have authorized patents to Taiwanese companies, and the dark-colored labels are all Taiwanese LED companies that have been authorized by major manufacturers.In addition, in terms of LED applications, Taiwanese companies provide products with low luminous efficiency but relatively stable quality, occupying a place in the mobile phone, backlight and other markets.As for products with high luminous efficiency, Taiwanese companies currently do not have enough capacity to manufacture them.

(3) The short-sightedness of businessmen ruined the LED opportunities that Taiwan once had Taiwan did not lack talents like Nakamura back then. In the 1970s, when Shi Xiu, the father of Taiwan's LED, started MOCVD epitaxy technology in Japan, he strongly suggested that the Taiwan Industrial Research Institute establish a metal-organic chemical vapor deposition (MOCVD) research and development technology.However, Zhang Zhongmou, who was in charge at the time (also the boss of TSMC), refused to further industrialize LED lighting on the grounds that the future of LED was unclear, and he believed that the new star fluorescent lamp in the lighting industry at that time would become the mainstream in the future.Ten years later, when Japan had successfully industrialized LED lighting, it was too late for Taiwan to start metal-organic chemical vapor deposition (MOCVD) technology.At present, although Taiwanese companies have packaging technology and have been widely authorized by major manufacturers, they are still facing the situation of being trapped by upstream core patents. The key technology of LED will not be controlled by others.The short-sightedness of businessmen often leads to the weakness of an industry, which is something Chinese entrepreneurs should learn from.

(4) The good times are over - downstream technology does not have the ability to centralize Beginning in 2007, the once-prosperous Taiwan LED encountered Waterloo.All companies, regardless of upstream and downstream, have collectively dived, and the stock prices of major companies have underperformed the market. Why?The main reason for the decline of Taiwan's LED industry is the slowdown of downstream demand and the rapid expansion of production capacity.Mobile phone backlighting is the main application area of ​​Taiwan's LED industry. Since 2008, the demand for mobile phones has decreased, resulting in a gradual decline in the price of corresponding small-sized LED panels.At the same time, as a large number of manufacturers moved their factories to mainland China, where the cost is lower, the overall profit margin of the products declined.It can be seen from this that enterprises in the middle and lower reaches of the industrial chain have a narrow range of market applications for their products, face fierce competition, and are particularly vulnerable to fluctuations in market supply and demand.Therefore, in order to be invincible, you must master the core technology.As far as the nature of the industry is concerned, a large number of technology patents of Taiwanese companies are concentrated in the mid- and downstream chip packaging and lighting applications. Compared with the concentration and wide coverage of upstream core patents, such downstream application-level patents are relatively scattered and lack similar epitaxy. The core technology of the chip.Therefore, as shown in Figure 3-30, most of Taiwan's midstream OEMs are only attached to the fringe of the core industry because they do not have the support of centralized power.Therefore, attempts to centralize and decentralize power and break into the core interest circle cannot be carried out. 2. Everlight Electronics: capital for technology, upstream and downstream alliances against risks Taiwan's Yiguang Electronics is the only one among many Taiwanese lighting companies.The company was established as early as 1983. It has been focusing on the packaging of LED chips for decades. It successfully developed SMD (surface mount device) packaging technology in 1996 and became the leader in SMD packaging. It is an LED LCD TV manufacturer such as LG, Sharp, and Samsung. The main supplier of the company, the monthly production capacity is about 1 billion pieces, and the annual sales volume is nearly 300 million US dollars.However, after the staged success, Everlight neither complacent nor blindly expanded upstream. Instead, it chose to strategically invest in upstream manufacturers and transform the capital obtained in the midstream and downstream into control of upstream technological strength. In the upstream, Everlight is already a major shareholder of Epistar (Taiwan's leading chip factory), Tegoo and Guangzhou Gallium and other LED chip factories. In October 2009, Jingdian invested a total of 722.4 million yuan, accounting for 19.9% ​​of Tegoo's equity, surpassing Everlight's 15.9%, becoming the largest shareholder of Tegoo, and setting a precedent for LED upstream industry alliances.And Yiguang is also the largest legal person shareholder of Epistar.In this way, Everlight is an LED packaging factory. After this round of cooperation, Taiwan's upstream chip factories have entered the sphere of influence of Everlight, making Everlight full of resources in the future.This also makes Everlight the packaging factory with the most complete layout of LED upstream epitaxy, and has reached a cross-authorization of all patents with the international lighting manufacturer Osram.Table 3-2 shows the sales statistics of Taiwanese LED companies in December 2008 and January 2009.From the monthly sales ranking, it can be clearly seen that Everlight Electronics is the leader in Taiwan's LED packaging industry, significantly ahead of the competitors behind it, and Epistar, which it controls, ranks first in Taiwan's chip production and sales. Downstream, Everlight is also strengthening its layout in the lighting market in mainland China. On the basis of the original Guangzhou Hengguang Electronics Co., Ltd., on April 11, 2009, it jointly established Shanghai Yaming Solid State Lighting with Shanghai Yaming Bulb Factory. Xiamen Software Industry Investment and Development Company signed a contract, announcing that it will jointly build Xiamen Modern Lighting Application Design and Entrepreneurship Center.Fully tap the production capacity and cost advantages of the mainland.As shown in Figure 3-31, the experience of Everlight, which is located in the middle reaches of the industrial chain, is worth learning from because it has selectively invested and held upstream technology-based enterprises, thereby gaining technical control and exchanging capital for technology. Make an attempt to break into the core area.Everlight's strategic deployment and control of the upstream and downstream links has guided Everlight to move closer to the essence of the industry.The key lies in the former, which is to gain control of upstream technology through capital investment. The lighting market in mainland China is very similar to the LED lighting market in Taiwan.They are generally located in the middle and lower reaches of the industrial chain, and the industry is composed of a large number of small enterprises, and the structure is very scattered.The difference is that Taiwan's LED industry started early. After starting from the middle and lower reaches, some enterprises have sprung up, and they can quickly enter the upper reaches and win the favor of foreign giants.This allows Taiwanese companies to cling to the fringes of the inner circle and gain a share of the highly competitive emerging LED market.In contrast, mainland lighting companies are more backward than Taiwanese companies in terms of technology, and the overall structure is very loose, without a complete industrial chain layout. Local small companies can only enclose their own land, and are still viciously fighting in a red sea. Chinese companies generally have a misunderstanding about the lighting industry, that is, lighting is a low-tech and low-threshold industry. To succeed, you must first establish a good channel and build a good brand.As everyone knows, this unhealthy trend just exposed the Achilles' heel of Chinese lighting companies' greed for short, flat and fast.Summarizing all the previous cases, all reveal that technical factors are a necessary condition for pursuing the essence of the industry.First of all, Gudan put aside whether it conforms to the nature of the industry. For Chinese enterprises, mastering lighting technology is the first step to get closer to the nature of the industry.Where should Chinese lighting companies start with no technology at all?It is impractical to cut directly from the upstream cutting-edge technology, and the requirements for capital and talents are too high, which is inconsistent with the current situation of Chinese lighting companies.You may wish to refer to Taiwan Everlight, start with the relatively mature packaging technology in the midstream, and use the advantages of China's manufacturing industry to seek breakthroughs.As for how to master technology, in addition to self-development, you can learn from Seoul Semiconductor, imitate and improve existing technologies, bypass patents, and seek new breakthroughs.If it is difficult to even imitate, you can refer to Everlight's practice and strategically deploy upstream technologies, that is, selectively invest in excellent upstream manufacturers.Only when you have mastered the technology can you make an attempt in line with the nature of the industry, that is, to seek a balance between centralization and decentralization to make full use of the technology at hand.To try to centralize power, Chinese companies need to use technology with bargaining power to break into the circle with big factories as the core, so as to strive to obtain the technology of big factories and break through technical barriers.Finally, after firmly controlling the technology in hand, use technology as a weapon to incorporate other companies to form an alliance.Through decentralization, the production capacity of Chinese enterprises will be brought into play, which will eventually expand the market and allow more applications of the technology in hand.