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LED Manufacturers Scramble for a Place in the Mini LED Market as They Sense Rising Opportunities
Mini LED backlight for displays is rapidly gaining attention in the electronics market as major brands in consumer electronics such as Apple and Samsung plan to launch products featuring this technology. TrendForce forecasts that by 2024, the total value of the Mini and Micro LED market will reach US$3.9 billion and account for 18% of the total value of the entire global LED market. Hoping to capture new growth opportunities, many actors in the LED supply chain are now actively exploring applications related to Mini and Micro LED technologies.
Consumer Electronics Brands Are Shaping the Competitive Landscape of LED Companies
The major consumer electronics brands have made clear plans to launch devices featuring a display with Mini LED backlight in the near future. For the whole LED industry, the adoption of this display technology raises the prospect of a massive demand boom similar to the one triggered by the replacement of CFL with LED for display backlight. LED companies are doing what they can to establish themselves as providers of Mini LED solutions in the supply chains of electronic brands. Those LED manufacturers that are engaging in activities related to the development of Mini LED products include the major international suppliers (e.g., Nichia, OSRAM, and Seoul Semiconductor). Taiwan-based LED manufacturers such as Epistar, Lextar, and Everlight are formulating strategies for expanding into the Mini LED segment as well.
LED manufacturers in Mainland China certainly do not want to miss out on the immense opportunities. San’an Optoelectronics has not only formed a strategic alliance with Samsung to develop Mini LED products but is also sending out samples to Apple in hopes of inserting itself into Apple’s supply chain. HC Semitek is collaborating with Sharp and LG with the aim of supplying Mini LED chips for display backlight. Based on their recent activities, LED manufacturers in Mainland China are showing a strong desire to expand into the international market and compete for a share of the Mini LED segment.
Although the market for Mini LED solutions is very competitive with many entrants at this moment, there is the possibility that it may transform into an oligopoly once products enter mass production. After all, the LED industry was previously controlled by five companies (i.e., Nichia, CREE, OSRAM, Philips Lumileds, and Toyoda Gosei) that imposed their collective dominance by holding most of the key patents and arranging cross-licensing agreements with each other.
TrendForce therefore has invited companies across the LED supply chain to give their takes on current patent strategies and potential development trends in the Mini LED segment. Their insights will help provide a clearer understanding of the whole competitive landscape.
AT IP Management: Patent Market for Mini LED Is Poised for a Reshuffling
Henry Hsu, who is now the CEO of AT IP Management after working at ITRI and Foxconn, told TrendForce that many key patents on LED-related technologies are near or have already passed their expiration dates. Also, the five companies that previously dominated the industry through their control of IP rights can extend the legal power of only some of their patents into the Mini LED segment. On the other hand, many new technologies and their applications have emerged from the development of Mini LED backlight, and just as many new key patents will derive from them.
Hsu pointed out the LED market as a whole is still saturated with patents. Very few manufacturers can operate without obtaining technology licenses or making cross-licensing deals. Hence, the strategy for success continues to revolve around obtaining a sufficient number of patents on the fundamental technologies and entering cross-licensing agreements with competitors. Examples of fundamental technologies include those related to the uniformity of light emitted from LEDs, phosphor materials that increase purity of colors, micro-optical array, local dimming for display backlight, etc.
Hsu further asserted that concerns about patent infringement are just as serious in the Mini LED segment. What is different is the rising importance of certain technologies. Consequently, there is the likelihood that the patent market will go through a reshuffling. Besides the five major companies that hold most of the known key patents, Taiwan’s Epistar and South Korea’s Seoul Semiconductor have also amassed substantial IP rights and will therefore have a crucial position in the market for Mini LED solutions.
Epistar: Patents Represent an Entry Ticket Whereas Efficiency and Cost Are the Deciding Factors in the Competition
Through indirect sources, TrendForce has found out that Epistar has partnered with TG to supply Mini LED chips to a major customer based in the US. This news has thus provided a chance to interview Patrick Fan and Kuo Meng-chun, who are Epistar’s CEO and director of IP division respectively. During the discussion, they divulged some details about how the company is building up competitive barriers with technologies and patents.
Kuo stated that Mini LEDs are simply LED chips that have been shrunk down further in size. In general, Mini LEDs and conventional LEDs have the same structural design and manufacturing process. Therefore, most of the key technologies behind Mini LEDs are covered under the existing patents for conventional LEDs. However, there is no clear boundary that can define which patents specifically belong to which product segment.
Fan added that patents only represent an entry ticket into the supply chains of the major electronics brands. Since LEDs have undergone a very long period of development, the ability of the five dominant manufacturers to control the market through cross-licensing deals has faded with the expiration of some key patents. Fan contended that the market will unlikely turn into an oligopoly of a few companies as in the past. Especially in the Mini LED segment, entrants will have to focus on raising the efficiency of their products and optimizing their costs in order to succeed.
Epistar has secured a spot in the supply chains of both American and Korean brands because the efficiency of its Mini LED chips is well recognized in the market. While Epistar is facing aggressive competition from LED manufacturers in Mainland China, Fan said that gaining market share really depends on satisfying the needs of individual customers. Different customers or applications have their own specification requirements. For example, tablet displays have very high standards for power consumption, optical distance, etc. To meet these requirements, an LED manufacturer will have leverage its technologies to address issues such as facilitating heat dissipation through current spread and coating an insulating layer to enhance reliability. In this regard, Epistar already has a mature fabrication process and a comprehensive patent portfolio. The company has the capability to target customers that place a heavier emphasis on efficiency of products.
Refond: Coopetition for Mutual Benefits Is the Future Trend, and Patents Should Be Used Defensively
Pei Xiaoming, CTO of Refond, told TrendForce that the aim of patent acquisitions is to protect one’s rights and interests in the competition (thereby maintaining a certain amount of market share). Pei pointed out that most actors in the LED supply chain, regardless of their sizes and positions, agree with his view that patent strategies should be defensive rather than offensive. Intentionally provoking lengthy and costly litigations over IP rights is simply the wrong approach to the competition.
Pei also stated that any patent dispute can be eventually resolved in a reasonable manner with the preservation of all parties’ interests as long as the industry continues to operate on the basis of respect for IP rights and progress through cooperation. Hence, litigations over IP rights are not expected to become the norm in the future. More likely, relationships among LED manufacturers will be characterized as coopetition.
Pei further remarked that no Mini LED product has reached the stage of commercial production. LED manufacturers are still busily developing solutions, sending out samples for client testing, and seeking collaborations with electronics brands. The competition in the Mini LED segment has yet to reach the heated phase, so patent disputes are not noticeable for now.
Additionally, LED manufacturers are unsure about some parts of their Mini LED roadmaps, and the industry as a whole has yet to formally establish related technological standards. Therefore, the applicability and validity of many Mini LED patents are still under verification and thus not enforceable. In Pei’s view, some manufacturers are aggressively filing patents because they try to get recognized as technology leaders and thereby lock up some market share. Although obtaining IP rights is very important, Pei does not believe this activity is the sole determinant of success in the competition. He asserted that the cost-performance of products and the quality of services offered to clients are the deciding factors.
Refond has been engaging in the R&D of Mini LED products since 2016 and is among the pioneers of this field in Mainland China. As an innovation-focused company, Refond has developed an IP strategy that banks on new technologies and products. It currently has almost 50 patents on Mini LED backlight and displays using Mini LEDs as self-emissive pixels (or “Mini LED displays”). Anticipating that the growth of the Mini LED segment will soon take off, Refond will continue to commit funding and production capacity to the development of Mini LED products over the next several years.
With respect to strategic alliance, Refond maintains strong cooperative relationships with first-tier brands in China and the international market. The company is open to collaborations with any other companies, organizations, and agencies. Such alliances are formed in accordance with Refond’s own strategic needs as well as the demands of Refond’s partners. However, Refond has also mentioned two precondition for collaboration. First, the partnership will not have adverse effects on its interests, the interests of its clients, the public, and consumers in general. Second, the partnership will be working toward mutual benefits and the advancements of the whole industry.
Hongli Display: Cross-Licensing May Become the Development Trend of the Patent Market
Chen Yong-ming, General Manager of Hongli Display, believes that domestic and overseas participating players have placed emphases on the arrangement of intellectual property for Mini LED, though most patents are merely in the concept or preliminary technical verification phase due to the uncertainty of the current technology roadmap, and a conclusion regarding which patents are able to actuate enterprises onto the peak of the market is yet to be drawn.
Chen commented that the battle of patents in the existing stage comprise of larger significance in the status rather than the specific contents, and it is merely a strategy of suppression that enterprises implement in order to avoid price wars, which will continue to exist in the future.
However, Chen expressed that the corresponding patents for leading enterprises are also overlapped due to convergent progress in technical development, thus it remains likely for the final players to achieve a harmonious coexistence through cross-licensing and split most of the market shares, subsequent to the gradually recovered market. Lightweight players will not complain excessively when leading players are yet to perceive threats.
Having born in the era of Mini LED, Hongli Display is currently accelerating on the arrangement of intellectual property for Mini LED by having invested several millions of funds, which provided exceptional technical capabilities and mass production capacity for the company in backlight and vertical technology of Mini LED COB. Hongli Display is anticipated to invest nearly NTD$3 billion in the establishment of a 100-acre Mini LED industrial park within the next 5 years in order to respond to the exponential growth of the Mini LED market in the next several years.
In terms of cooperation between brands, Hongli Display has been in contact with major domestic and overseas display clients, where a number of leading display and end suppliers in the country in particular are currently working with Hongli Display on projects of product development, and have established profound partnerships. Chen stated that the company does not rule out the possibility of signing agreements of strategic partnership with clients who exhibit stronger willingness in cooperation in the future.
Lattice Power: Patent War Used to Seize Market Shares Will Become a Norm
Liang Fu-bo, General Manager of Lattice Power, believes that patent war has always been a weapon used to seize market shares, and has become a norm. The incident of patent infringement from domestic suppliers this year became the catalyst in the rapid acceleration of Mini LED application and promotion, which indicates that Mini LED has arrived at the rising volume phase, and signals that the particular product is on the verge of entering a pristine competitive stage.
The patent infringement incident in the country was a strategic offense from LED businesses who hoped to acquire additional market shares, where the protagonists have been changed from overseas to domestic suppliers, indicating that the domestic LED technology has gone through a substantial improvement.
Liang commented that Mini LED has become another field of ferocious competition subsequent to the matured technology and application of the LED illumination market. Judging from the existing technology roadmap and application solutions of Mini LED, the competition of Mini LED is expected to be fiercely competitive, and will require a profound concatenation between chip, packaging, and application suppliers, though it will impose difficulties for other entrants once the market structure is formed.
Lattice Power is relatively optimistic in the application market of Mini LED, and is currently assembling the emerging product of resource matching. In terms of patent arrangement, the company is protected by domestic and overseas technical patents for its silicone substrate vertical Mini LED chips. In addition, Lattice Power is considering the possibility of a production expansion due to the feedback from strategic clients on silicon substrate Mini LED products.
Kinglight: Patent Wars of Mini/Micro LED Will Become Frequent Visitors
Doctor Shao Peng-rui of Kinglight believes that the appearance of patent wars will become increasingly frequent in future warzones of Mini/Micro LED, and international suppliers will start to enhance on the awareness of patent protection, especially after major suppliers like TCL and Konka enter these markets.
Kinglight has been applying for relevant patents of Mini/Micro LED, including utility patents and utility model patents, though not for the purpose of seizing market shares using the weapon of patent, but to protect the company’s autonomous research achievements through the utilization of patents.
In terms of the possibility in patent alliance, Doctor Shao commented that Kinglight is currently focused on elevating its own capability, and the cooperation with other major suppliers in the future will come naturally when the company is transcended to a certain level of technical strengths.
AOTO Electronics: Patent Will Become One of the Symbols or Advantages for Industry Competition
AOTO Electronics believes that upstream chip suppliers have commenced a higher level of competition by picking up the weapon of patent, which is an inevitable trend for the industry in shifting towards a mature and healthy development, and it may be a good thing for the industry. From the perspective of the downstream sector, the active arrangement of Mini LED patents from international suppliers of Samsung, LG, and Sony, as well as domestic suppliers of TCL and BOE, has exhibited the determination of various major brands in making an impact to the Mini LED market.
Applying for patents and filing patent litigation are merely means instead of the final purposes, though patents are indeed important indicators in global competitiveness for businesses, especially in the technology field where technical capabilities decide if a supplier is able to enter the Mini LED market, and the arrangement of patents will determine how far a supplier will proceed in the Mini LED market.
Patent will become one of the symbols or advantages for LED industry competition in the future, however, it will not be a decisive indicator, since a domestic structure that places significant attention and emphases on technical patents has yet to be formed. Hence, the government and businesses should establish a foundation for patent protection that implements technology innovation and development of the country, propels preliminary awareness in patent protection for businesses, and strives to utilize legal measures on a certain degree to protect autonomously researched and developed innovative achievements.
AOTO Electronics has been studying the Mini LED technology since 2012, which embarked the path of patent arrangement for the company. As of now, AOTO Electronics has applied for 48 technical patents, 26 licenses, and 12 international licenses for the relevant technology of Mini LED in the world, and is in the midst of enhancing on the technical study and patent arrangement in the specific field.
AOTO Electronics avoid patent risks from 3 major measures: (1) implement evaluation on patent infringement and protection during the process of production and technology R&D, (2) grasp on the market status of patent arrangement through patent and non-patent database, and (3) establish designated patent management department for safeguarding relevant patents.
AOTO Electronics’ products have been successfully applied on the Nanjing Municipal Public Security Bureau, and have been shipped to the clients from multiples countries, including Japan, Switzerland, Australia, and the Netherlands. The company is also planning to invest more than RMB 70 million in the establishment of a smart Mini LED production base, and place the mass production of standard Mini LED products on the agenda.
TCL, BMTC – Patent Wars Derive Industry Emphases without Becoming a Norm
TCL, the existing leader in Mini LED, believes that the product is currently at an early stage, and the various technology roadmaps are yet to be stabilized, thus the market remains diversified. Under such market status, a patent war will trigger emphases in the LED industry, though it will not become a norm.
TCL’s Mini LED backlight products have entered the performance period, which explains the arrangement in Mini LED patents. However, TCL has disclosed that the company will be working closely with leading businesses from the industry chain in the future so as to avoid patent issues. TCL has initiated its cooperation of strategic development with San’an on the chip end, and will be unfolding strategic investment in migration and repair in the foreseeable future.
Coincidentally, BMTC also believes that patent war will not necessarily become a norm in the Mini LED market, though the company is also enlarging the relevant patent arrangement of Mini LED, and will continue to reinforce on the degree of protection on patents in the future.
BMTC has shipped bulk quantity of Mini LED display and Mini LED backlight products to major global companies, and the company is accelerating on the mass production of the 150um chip for Mini display.
Disputes of Patent between Leading Suppliers May Facilitate a Healthy Development for the Industry
Businesses in the past would initiate competition through traditional means of production capacity and prices, and the predicament within the industry will only exacerbate in the face of stagnant end demand. The dispute of patent this time has fired the first shot in the protection of domestic Mini LED patents, which may slightly alter the industry environment in gradually shifting towards technical innovation and protection on intellectual property rights in the future.
According to the analysis of TrendForce, industry competition should have never lingered on shallow dimension of production capacity and cost, where the transition of focus to technical innovation and R&D capability will benefit the positive development of the entire industry.
As AOTO Electronics mentioned, the dispute of patent infringement amongst upstream leading businesses this time is categorized as a higher level of competition, which may not be such a bad thing to the industry.
However, TrendForce also believes that the dispute on patents this time could derive new rules for the industry, where suppliers with patents may be shaped with new competitive advantages, and other suppliers of fewer patents or new suppliers may potentially face higher competitive barriers that will place them in a much more difficult situation. Hence, an escalation in the intensity of technical R&D, as well as an amplification in the overall strength, is the only survival method.