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Cree-San’an JV to impact Asian LED supply chain

Cree-San'an JV to impact Asian LED supply chain

By BizLED Bureau

Apr 28, 2017: Cree’s joint venture with China’s largest manufacturer of LED epitaxial wafers and chips San’an Optoelectronics Co Ltd, has stirred the LED industry. The joint venture was signed to manufacture and deliver to high-quality, mid-power lighting LED packaged products.

According to LEDinside, after losing market share in the mid-power LED segment, Cree is keen to tap this market to secure the leading position. The development will also result into changes in patent cross-license pacts between the world’s top five LED manufacturers, which will also impact the Asian LED supply chain.

Under the pasct, Cree will own 51% of the joint venture, while San’an will own the resr 49%. The new joint venture is called Cree Venture LED Company Ltd, which will be located in Hong Kong, The new company will manufacture mid-power packaged LED components. The joint venture will give Cree the opportunity to expand its LED portfolio. Cree will also get royalties from the joint venture on its patent portfolio. San’an will also benefit from the joint venture as it will utilize Cree’s sales channel to boost its mid-power business.

According to LEDinside, mid-power LEDs have become a mainstream product in the LED package sector. The market growth is strong in past three years. It is projected that mid-power LEDs will comprise 47% of the global lighting market in 2017. The market value for LED chips in general lighting will reach US$6.127 billion in 2017.

After the US blocked Philips’ sale of Lumileds to Asian buyers, it is unlikely that a similar deal will get the green signal. Cree’s silicon carbide technology is also widely used in military and aerospace applications, which can raise national security concerns.

Thus, forming a joint venture is the best option for Cree and San’an. With this joint venture, Cree will ramp up production capacity, while San’an can leverage Cree’s patent portfolio to extend its international reach.

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