Opportunities for OLED Lighting in Asia02 Nov 2011 • by Natalie Aster
The whole of Asia must be considered a major opportunity area for the OLED lighting business. Most of the countries in Asia are experiencing high economic growth and their manufacturing sectors are—generally speaking—moving to increasing levels of technological sophistication, both in terms of the products they supply and the kinds of manufacturing technology they deploy:
The economic trends in Asia imply both expanding markets for OLED lighting in the form of larger middle classes that may be exactly the kind of consumers who buy the products of which the early wave of OLED lighting may consist. All of the fast-growing economies in Asia have enjoyed vibrant construction markets, a very positive sign for the future of OLED lighting. However, in many countries it remains to be seen for how long many of these property booms are sustainable.
Increased sophistication of the semiconductor industry in non-Japan Asia implies that OLED lighting could find a successful manufacturing home in Asia as it begins to reach volume production. China is now focusing on building up its facilities to manufacture much more sophisticated products than in the recent past and other countries—Indonesia and Vietnam—are also anxious to develop new semiconductor industries. Meanwhile, Japan is quietly building a competent and comprehensive OLED lighting industry.
Each country, of course, has its own demographics, its own opportunities and different timeframes for realizing those opportunities, as well as particularities in terms of market needs and the regulations impacting the OLED lighting market. Each country also has a different story with regard to the size and sophistication of its indigenous OLED manufacturing sector and how that sector is likely to evolve going forward.
OLED Lighting in Asia - 2011
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Opportunities for International Business in the OLED Lighting Space
OLED lighting is likely to develop in Asia under the powerful influence of national industrial policies that strongly favor domestic suppliers for domestic markets:
- This is especially obvious in the case of China, whose current five-year plan is specifically intended to promote high-tech industries in China, with OLED lighting products almost certainly considered as one of the industries likely to receive support in this way.
- In Korea a focus on specifically Korean standards in high-technology industries in the past has tended to make it difficult for foreign suppliers to enter this market. There are no specifically Korean standards for OLED lighting at the present time. However, Korean Standards (KS) have been developed for LEDs and, once again, this may be indicative of the directions that standardization of OLED lighting finally takes. There is a plan to make the Korean KS standard for LEDs part of the IEC process of international standardization for LEDs.
Finally, we note that the luminaire industry in any country is strongly dependent on local tastes and so tends to favor domestic suppliers or at least suppliers with a domestic presence.
Materials, Equipment and Licensing: More Open Borders
Where such barriers to entry appear to be less important is where materials' licensing arrangements or equipment is involved. Here, the market seems to be much more open and opportunities easier to capitalize on. It is true that some local governments in China have provided support for companies that produce equipment in their localities, but generally speaking, OLED lighting firms buy their equipment from whoever has the best equipment at the best prices:
- In recent news a Korean OLED plant that was about to go on stream, has had to delay because of shipping delays by a Japanese equipment company impacted by the consequences earthquake and tsunami in that country.
- Universal Display in the U.S. has signed a technology and licensing agreement with Moser Baer for OLED lighting panels. Universal Display will provide Moser Baer with OLED materials and technology assistance. This follows the two companies' joint project to design and build a white OLED lighting manufacturing facility in the U.S. This project was awarded $8.3 million from the U.S. DOE (total cost will be around $20 million)—and the first pilot line is scheduled to be online during 2011.
- UDC has been selling its materials to multiple Asian companies in the OLED displays and lighting space. Among the firms to which UDC supplies OLED materials are NEC Lighting, Panasonic, Showa Denko and Sun Fine Chem.
Opportunities for Crossborder Alliances in OLED Lighting
In addition, formal crossborder alliances impacting the OLED lighting space are not uncommon and may become more common in the future. Perhaps the most important one at the present time is the alliance between GE in the U.S. and Konica Minolta in Japan. GE is one of the so-called "big three" lighting companies and is aggressively pursuing R2R OLED lighting manufacture. GE's relationship with Konica Minolta has the goal of bringing OLED lighting products to market.
The power of brands and design: Finally, it is worth noting the power of brands in this space. Some of the most important international consumer electronics brands are moving into the OLED lighting space and this will help them gain market share in the OLED lighting market worldwide. Many of these brands bring with them established marketing channels primarily for consumer electronics products (rather than lighting products).
Yet another direction for international cooperation is in design. While U.S. firms have long made use of European industrial designers, the novelty of OLED lighting may open up new possibilities. Thus, KM has hired Mexican design studio Agent to produce two concept lights.
Taiwan/China: For cultural reasons, if for no other, Taiwanese LED manufacturers have built ties to LED manufacturers in China, where they can capitalize on the low cost of Chinese labor and Chinese government subsidies.
That said, we note that Taiwanese-Chinese collaboration in the advanced lighting space may go beyond simple manufacturing arrangements. For example, Taiwan's ITRI and the Beijing National Electric Light Source Quality Supervision and Inspection Center have signed a mutual agreement for cross testing of LED products. Under the agreement, LED products tested by ITRI can be exported to China. Such arrangements may not survive the current nationalism inherent in Chinese technology policy. There again, if such testing arrangements cut both ways, pragmatism might dictate the survival of such arrangements.
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