Why China May Not Take Over LED Lighting Just Yet (CREE; RBCN; PHG; VECO)

From Greentech:

It’s all about the epitaxial talent, says Osram Opto CEO Aldo Kamper. Also: supply forecasts and the dawn of six-inch wafers.

China became the dominant player in solar modules in a few short years because of standardized manufacturing recipes, a diverse supply chain and high demand.

Now, several Chinese companies have begun to crank out solid state lights. Still, history may not repeat itself in exactly the same way, says Aldo Kamper, CEO of Osram Opto Semiconductors, the chip and LED division of the multibillion-dollar Osram empire, in an interview with Greentech Media.

Part of reason is epi, or the epitaxial growth of films. LEDs are built from precise layers on a sapphire substrate.

“It’s somewhat of an art. You can’t make decent stuff without epitaxial active layers,” he said. “Every machine has its own identity. You need R&D."

“There is still a technology gap and a large quality gap,” Kamper added. “It is not so easy to catch up.”
The technology gap, in fact, has already emerged on a few occasions, he said. Kamper says he has heard of some cities and agencies in China swapping out Chinese-made streetlights for lights from more established manufacturers because of technical issues.

Some Chinese fixture vendors, in fact, have begun to advertise that their lamps employ LEDs from Osram and other vendors as a selling point. “For them, that is the badge of quality that they can go to their local government with,” he said.

How the LED story plays out in China is perhaps the most crucial question facing the solid state lighting industry. The solar industry didn’t expect to be colonized quickly, but factory equipment makers and suppliers helped eliminate a lot of the mystery in the industry. China’s remarkable pipeline of grad students and scientific talent, a crucial ingredient in its rise in solar, will likely come in handy in lighting, too.
Other things on Kamper’s mind:

--Supply is rising. “Last year and the year before, there were some shortages, but that is easing up,” he said. “With the aggressive nature of the investments that we and others are taking I would not see a shortage of supply.”

Osram is doubling capacity in Malaysia right now....MORE