China SSL Technology and IndustryChina SSL Technology and IndustryChina SSL Technology and Industry China SSL Technology and Industry

Development Development StrategiesStrategies

Yuan FuYuan Fu

CSA ConsultingJan-18-2011

Outline

1. Status and Trends

2. Opportunities and Challenges

3. Development Strategies

Industry Overview 2009

Nearly 4000 companies, industry output 82.7B RMB

Industry Output2.3B RMB, 3% of total

more than 60

companies

growth rate 25%.

Upstream:

Industry Output20 4B RMB

more than 1000

growth rate Midstream: 20.4B RMB,25% of total

1000 companies

g10%.

Industry Output60B RMB,

72% of total

more than 2500

companies

growth rate 20%.

Downstream:

72% of total companies

Epi & Chip Production Capacity

Until the end of 2009: 135 units of MOCVD installed

By the end of 2010: around 300 units in total

Estimated 2012: almost 900 units

2015: over 1500 units

Chip: domestic production 52% But for high power chips over 70%Chip: domestic production 52%. But for high power chips over 70% imported

1800 0,6

880

1130

1360

1560

8001000120014001600

28%

44% 46% 49% 52%

0,3

0,4

0,5

50 65 100 135300

610

0200400600

2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

5%

20%

0

0,1

0,2

2002 2003 2004 2005 2006 2007 2008 2009

Chip domestic production MOCVD Quantity Forecast

Epi & ChipEpi & Chip Oversupply

Oversupply may happen at the end of 2011Upstream industry facing consolidation

600

400500

100200300

0100

2009 2010 2011 2012 2013 2014 2015(数据来源：国家半导体照明工程研发及产业联盟)

Total Demand (billion) Production Capacity（billion）

Industry Overview 2010 & Future

Total industry output 90B RMB at the end of Aug

Expected 2010 industry scale > 120B RMB, Over 40% growth rateExpected 2010 industry scale 120B RMB, Over 40% growth rate

CAGR is estimated at 35% in China from 2010 to 2015

Overall industry scale will reach 500B RMB by 2015

6000

3000

4000

5000 20102010--20152015，，CAGR~35%CAGR~35%

0

1000

2000

2006 2007 2008 2009 2010 2011 2012 2013 2014 20152006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Upstream Mid-stream Downstream

PackagingPackaging: Scale and Trend

2010 industry output: growth to surpass 10% to 22.5B RMB (3.41B USD)

High power and SMD products fast developing, ratio of high brightness products: more than 90% (Sales)products: more than 90% (Sales).

Packaging companies extending to downstream applications, mainly on general lighting.

25

10

15

20

0

5

10

2006 2008 2010（F）

Industry Output（B RMB）

Applications: Fast Growing

2010 industry output: 90B RMB (13.66B USD), growth to surpass 50%

Market share of general lighting increases rapidlyMarket share of general lighting increases rapidly

Landscape Lighting; 23%Auto; 2%

Others; 11%Landscape Lighting;

22%Auto; 2%

Others; 10%Landscape Lighting;

20%Others; 9%

Traffic Signalling; 6%

Signage; 4%22%

Traffic Signalling; 4%

Signage; 3%20%

Screen; 8%

Signage; 4%

Auto; 5%

Screen; 20%Backlight; 21% Screen; 18%Backlight; 21%Backlight; 25%

General Lighting; 13%

2009General Lighting; 20%

2010

General Lighting; 29%

2015 est.

Applications

Mainly driven by demonstration projects

Till Aug. 2010, 21 pilot demonstration cities adopted 1.6M LED lamps;

Compared with traditional lighting, qualified LED products can save energy by as much as 80%

80%

60%70%

80%

90%Street

lights, 187.1K 12% Tunnel

Indoor, 662.3k , 42%

40%50%

60%

20%

30%

40%

50%

60%

70%, 12% Tunnel Lights, 16.5k

, 1%

, 42%

0%

10%

20%

Roadway Lamps Tunnel Lamps Landscape Lighting

Indoor LightingLandscape, 720.4k, 45%

Application Fields Distribution Energy-saving in different applications

Breakthroughs in Technologies

World first Si substrate GaN LED chip

Already industrialized

Effi f hit li ht k i t 90 l /WEfficacy of white light packaging at 90 lm/W；

First domestic 280nm deep ultraviolet LED module

0.65mW at 20mA; ;

1.2mW at 40mA

Efficiency of industrialized chips: 100lm/W

Shanghai World Expo used 1.03 Billion LED chips, interior lighting adopted 80% LED

Beijing-Hangzhou Grand Canal installed 65000 LED Lamps, awarded “City, People, Light International Awards”

d lp second place

Investment

150

80

120

160100million RMB

Total investment to surpass 30B

RMB (4.55B USD) in 2010 10

30

80

0

40

80

Main area: Epi & Chip, surpass 15B

RMB (2.28B USD)Over

Investment, 23%

Under-investment

Material Epi Packaging Application

Over 1/3 traditional lighting

i t i LED t

%15%

companies entering LED sector Structural Investment

Over-heating, 43%

Matching Demand,19%

CSA survey showed concern on overheating investmentCSA survey showed concern on overheating investment

Listed Companies

Listed companies in stock market10 with core business in LED2 went IPO in 2010 (NationStar & Change Light)Total to surpass 20 in 3 years

Newly listed companies involved in application and packaging will account for more than 50% by 2013Price/earning ratios of LED listed companies are 3 to 7 times higher than average

146109

64

19406080

100120140160

19

02040

Company 1 Company 2 Company 3 Shanghai-Shenzhen 300

I dIndex

LED Listed Companies P/E

Industry LayoutNorthern RegionNorthern RegionConcentrated&Leading in R&D, particularly in Epi&Chip

Concentrated&Leading in R&D, particularly in Epi&Chip

Yangtse River DeltaYangtse River DeltaYangtse River DeltaStrong investment in all industry

Yangtse River DeltaStrong investment in all industry

All eyes are on Guangdong region

Pearl Delta Region The Fujian Triangle

all industry segments

Pearl Delta Region The Fujian Triangle

all industry segments

region

The Fujian TriangleFocus on upstream, large epi & chips

Fast developing, largest scale, concentrated in

k i d

The Fujian TriangleFocus on upstream, large epi & chips

Fast developing, largest scale, concentrated in

k i dp p

supply capacitypackaging and applications

p psupply capacitypackaging and

applications

Intellectual Property

As of December 31 2009，LED related patents totaled 28,912，with 59% on applications and 13% on packaging

4000

4500

2500

3000

3500

4000

Facility9%

Material8% Driver&Elec.

1000

1500

2000

Chip4%

9%

Application59%

Epi2%

5%

0

500

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Packaging13%

LED patents distribution

Number of patent applications by year

LED patents distribution

Standards & Testing

With the coordination & participation of CSA:Eight national standards (TC224 on Electrical Lighting SAC)

Establishment of standards system

Nine industry standards (SSL Standard Working Group of MIIT)

Multiple regional specificationsSix national and nine industry standards implementedy p

Under the leadership of CSA:Seven SSL technical specifications for LED products

Establishment of testing systemFour national SSL testing platforms established, two

in preparation;Over twenty regional testing platforms;SSL products testing results release platform on CSASSL products testing results release platform on CSA

website (http://testing.china-led.net/)

Five rounds of testing results released for LED luminairesfor LED luminaires

Outline

1. Status & Trends

2. Opportunities & Challenges

3. Development Strategies

Opportunities

Energy-saving & Environment ProtectionBy 2015 LED luminaire efficacy 120 lm/W; assuming 30% market penetration; saving electricity 100B KWh annually; reducing emission by 150M tons;

mercury-free, flicker-free.

Sustainable Economic Growth Cultivating Emerging SSLEconomic Growth

Lower energy consumption in full lifecycle than conventional products

g g gStrategic IndustriesLarge scale & driving effects

Upgrade traditional industries Hi h l i i

SSL

High employment opportunitiesLow investment intensity & riskBecoming The Global Top Three

Huge market potential: fast urbanization, 45% global market of consumer electronics; the largest market of automotive;Rich natural resources: Ga (78%) In(70%) rare earth(40%-Rich natural resources: Ga (78%), In(70%), rare earth(40%-50%) in the world;The world’s largest manufacturer of traditional lighting

Challenges

Lack of Large Scale Companies：Most companies are SMEs & scatteredIndustry bases need more concentration (14 bases, 21 showcase cities)

Fast ExpansionTechnology &

Ecosystem DevelopmentFast ExpansionHigh Growth Rate

Under-developed EcosystemInsufficient Tech Support

Need more national-level coordination & synergyStandard & testing systems are not completeBusiness models and market environment

Core technologies breakthroughInnovative applications & system

integrationPublic awareness, talent development

gOpen and internationalized R&D platform

About CSA

Founded on 12 October, 2004Value: Cooperation & Win-Win, Innovation & DevelopmentPlatform as Public-Private Partnership for China SSL industryp y175 members of leading Chinese SSL companies & research institutes from the entire industrial chainMissions:Missions:

Industry• Support government policy and strategy on

energy & high tech industries

CSA

• Manage innovation and industrialization platform Via PPP

• Coordinate technical specification and standard

AcademiaGovernment

CSAdevelopment• Establish IP Strategy Alliance• Define and implement national talent

development plan

About CSA

Major Works:Participated in strategic studies and researches for the foundation of China’s SSL Technology Roadmap (Currently making 12th Five Year Plan for China SSL)Boosted the development and implementation of industry standardsOrganized the “China SSL Innovation Contest” for promoting public awareness and involvements in National SSL ProgramS t d CHINA LED NET ( hi l d t) & <Chi S lid St t Li hti >Supported CHINA LED NET (www.china-led.net) & <China Solid State Lighting> MagazineProviding Consulting Services to SSL Industries and Govt.Involved in significant national lighting projects, Beijing Olympic Games and 2010Involved in significant national lighting projects, Beijing Olympic Games and 2010 Shanghai World ExpoRegional & International Collaboration: Lighting Africa etc.

MOU with MOE, GhanaLighting Africa Conference With Sandia National Lab With KOPTI, Korea

Outline

1. Current Status & Trends

2. Opportunities and Challenges

3. Development Strategies

Create Innovation Chain

Tech. Integration

Standardization

Intelligent Sys.Building

Core Tech.Research

ProductDevelopment

Industrialization973 Plan

Building

Global Fundamental Research

Public Technology Innovation Platform

863 Plan Brand!National Key Technology

R&D Program973 Plan

gyTesting, Standards & Certification Platform

Cultivate The Market

Municipal Lighting Project SSL Showcase Projects - MOST

Phasing-Out of Incandescent Lamps & Energy Saving

Apr.2009

g p gy gLamps Promotion (PILESLAMP) - NDRC/UNDP/GEF

“M P ti EMC Ad ti d E i

Oct. 2009

“Measures on Promoting EMC Adoption and Energy-saving Industry Development” - NDRC/MOF/PBC/SATApr. 2010

“Notice on Applying for SSL Products Showcase Projects” - NDRC/MOHURD/MOTAug.2010

Strategies: Main Breakthroughs

Breaking “Hardware-Software” Bottlenecks• “Hardware” Technology: MOCVD, Key Materials

• “Software” Environment: Professional Talents, Innovation Business Models, and Value Chain Formation

S f h lSoftware technologyHardware technology 

• Upstream Epi-Chips: Independent Innovation Enlarging Scale &

Strategies: Unblocking Two BarriersUpstream Epi Chips: Independent Innovation, Enlarging Scale & Raising Level of Fabrication

• Downstream Applications: Policy Guidance, Standardization Implementation, Systematic Planning, Scale of Operation & Branding

So

Ps

Bio

Network

Customer

needs

ociological

sychological

ological

Light Source

Optics

Controllers/

Drivers

Sensor

ActuatorDrivers Actuator

Application / Segment layers Technology layersApplication / Segment layers Technology layers

Prof.G.Q. (Kouchi) Zhang, Feb. 2010

Strategies: Two Wheel Drive

2. “Two Wheel Drive” Strategy

Government-Guided & Market-Driven

Original-Innovation & Application Showcasing

Reinforcing Leader Enterprises & Solidifying Enterprise Clusters

Green Manufacturing & Cycling Economy

Strategies: Open Integration

Combining Policies’ Synergistic Force

G idi l t fl d t hift• Guiding proper elements flow and segments shift

• Eliminating cross-regional malcompetitions or duplicated constructions

Integrating Ind str Reso rcesIntegrating Industry Resources

• Global Resource Integration with Open Perspective

• Enhancing Cross-Strait Technology Exchange & Industry Cooperationp

Market oriented

Ownership of core IP

Roadmap

International IP Cross-licensing

Brand strategy

International standard

Global market

Lm/w

Market fostering200 Mature product

Market fostering

Alliance strategy

Application

General Lighting

150integration

Localization of key

i t d100

equipment and materials

50Domestic devices

Chip and device

localization

2005 2010 20202000 2015White LED appears

Power chip: 80% imported

Policy — Emerging Strategic Industries

Sept. 2009, “Measures on SSL Energy Saving Industry Development”

Promote cross-strait cooperation--Close collaboration on SSL R&D, industrialization

and showcase projects;--Four MOU to solidify Cross-strait SSL cooperationSept. 2010, “Decision of the State Council on

Accelerating the Cultivation and Development of Emerging Strategic Industries”

Bio-tech

New

Information

Tech.

Advanced

Materials

AdvancedEquip. &

Manufacturing

New Energy

Vehicles

EmergingStrategicIndustries

New Energy

Energysaving

Environ. Protection

SSL

E t bli h i t ti l R&D l tf t th

International Cooperation

Establish open international R&D platform, strengthen common key technology R&DStandards research and development with Intl. organizations P t I t t i Chi l l d JVPromote Investment in China: solely owned or JVFacilitate Build manufacturing sites Talent education and skill trainingForm a win-win ecosystem with full respect to IPRTake active role in regional developments: "Lighting Africa”Joining global efforts, initiating International SSL Alliance (ISA)

Establish on Oct.16th, at China SSL 2010 Forum

International SSL Alliance,

China SSL AllianceOptoelectronics Industry Development Association

Korea Association for Photonics

Industry Development

Illuminating Engineering Society of Australia and New Zealand Industry Development

Taiwan Optoelectronic Semiconductor Industry Association

Scope of Activities:

International SSL Alliancep

• Strategic Research Agenda & Global SSL Industrial Roadmap• Initiate and coordinate global showcases, to attract public awareness• Eco-system development (Talent, education & training, etc.)• Facilitate dialogue and cooperation on standardization & testing methods• Public relation, awareness and promotion of SSL

Working GroupsWorking Group Supervising Director

WG1: A strategic research agenda and global SSL industrial roadmap,

F. Quan and M.W.Shin

WG2: To initiate and coordinate global showcases

L. Wu, B.J. Lee

WG3: Eco-system development (talent, education and training, etc.)

M.W. Shin and F. Quan

WG4: To facilitate dialogue and cooperation on standardization and testing

W. Julian and B. J Leep g

methodsWG5: Public relations, membership of ISA, awareness and promotion of SSL

L. Wu and W. Julian

International SSL Alliance

Examples of Demonstration

Harbin Ice Sculpture Fest with SSLHarbin Ice Sculpture Fest with SSL

S Li h i i XiS Li h i i EMC Street Lighting in XiamenStreet Lighting using EMC

The Mega LED Display in 60th Anniversary

In Tiananmen Sqaure

Earthquake Rebuilt City using LED Lighting

Examples of Demonstration

Opportunities for Collaboration

Exchange Successful Stories and Lessons LearnedStandardization & Interface SpecificationsDemonstration Projects Management and Quality ControlDemonstration Projects Management and Quality ControlGovernment’s Roles in Policy-making and PromotionSuccessful Business Models (EMC, CDM, BOT …)Sustainable DevelopmentSustainable Development

SSL Industry Integration and CooperationOff-grid Lighting Programs …Joining ISA on Developing Global SSL Roadmap and DemonstrationJoining ISA on Developing Global SSL Roadmap and Demonstration Projects etc.

Global Opportunity Global Challenge

谢 谢！谢 谢！

LED Li ht th

Global EffortLED Lights the

future！future！

ThankThank LED Lights the futureYou！LED Lights the future.