The Strategic Cost Management analysis of LED industry in Taiwan
Date Issued
2008
Date
2008
Author(s)
Huang, Bo-Syuan
Abstract
The Strategic Cost Management analysis of LED industry in Taiwans the global LED market grows rapidly, PIDA(Photonics Industry & Technology Development Association) estimates the global market size of the HB-LED will increase to US$10.6 billion in 2011, and the sales volume will be 8.8 billion units. As incandescent bulbs has been phased out by EU(European union) from 2007, the prospect of LED technology is thrilling.n 2006, the total production value of the Taiwan LED was NT$26 billion. Although Taiwan has been In the second position in the worldwide LED industry,, most of the companies don’t have technical advantage and the growth of the industry would therefore be constrained. Due to the high entry barrier for upstream LED epitaxial wafer manufacturing, LED companies in Taiwan have OEM relationship with leading European, Japanese and US. Patent infringement lawsuits have been common in LED industry, any court ruling against selling a patent-infringing product may strike the Taiwan LED industry. Therefore, It has been the important topic for discussion that how to improve the competitive advantage of Taiwan LED industry in order to compete with global leading companies. The objective of the present study is to apply Strategic Cost Management to Taiwan LED industry and explore the structural reasons underlying the industry development, especially patents.ased on field interviews and qualitative research on the broadly defined LED industries, we reached several conclusions: (1)Through merger and acquisition activities, the company can enlarge revenues and therefore afford high quality equipments and raw materials. Additionally, the company will also develop new product combination with higher profitability as well as larger capacity to acquire the purchase orders. The most important of all, the company will have enough capital to invest in R&D activities and recruit best engineers. (2)CCFL replacement by LED started with small-sized LCD backlight panels and start to migrate to large panels from 2007. For cost down and LED supplies, TFT LCD-panel makers would like to manufacture LED chips by themselves, However, the immature technical skills and possible patent infringement lawsuits make it unlikely to happen in the near future. (3)There are less than 10 key phosphor makers and only three MOCVD makers in the industry, and Taiwan LED companies heavily depend on foreign suppliers. Strategic group formation should be built within the industry to gain the bargaining power and benefit from get co-operation with global LED players. ased on the above analyses, we propose several pieces of advice for the LED industries in Taiwan:(1)It is necessary to form the strategic group within the industry by merging or acquisition. Thus, it can strengthen the overall competitive advantages and stabilize prices. (2) We expect the collaboration between TFT LCD-panel makers and LED companies instead of competition to create a win-win situation.
Subjects
LED Industries
TFT LCD panel maker
Patent
Strategic Cost Management
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