In the face of natural resources being gradually depleted by humans, and the average temperature of the Earth gradually increasing, governments around the world are actively engaging in the development of green energies as well as incorporating equipment that is even more energy-efficient. LED lighting is highly efficient, environmentally friendly, power saving, flicker free, and has a long usage life, making them a popular option for replacing traditional incandescent light bulbs, which has driven up the prospects for the LED lighting industry. In 2014, output of the global LED lighting industry was approximately US$17.8 billion, representing 68% growth compared to 2013, with penetration rates exceeding 20%.With prices for LED lighting equipment are rapidly dropping, the range of applications for LED lighting will continue to grow. According to a study conducted by LEDinside, the scale of the global lighting industry in 2015 will reach US$8.21 billion, out of which LED lighting applications could account for up to US$25.7 billion, thereby reaching a market penetration rate of 31%. It is worth noting that the use of LED light bulbs in automotive lighting is increasing and could become the second largest market for LED lighting applications.Home lighting industry enters a price war, with vendors turning to industrial and commercial applicationsWith support from governments around the globe, product prices continuing to drop, and consumers demanding energy-conserving products, demand for LED lighting is set to dramatically increase. According to ITRI's IEK research center, by 2019, the LED lighting market will reach US$72.6 billion, accounting for approximately 47.7% of the global lighting market. Europe, which has always pursued environmental protection, is still the market with the highest demand for LED lighting, accounting for approximately 23% of the global market. In addition to the home LED market continuing to show strong demand, the commercial lighting and outdoor construction lighting markets are also continuing to grow.The world's second largest LED lighting market is China, which will account for up to 21% of the overall market. With continued strong demand, China could become the world's largest market for LED lighting within 1-2 years. However, China is also the primary manufacturer of global LED lighting products, and with a large number of vendors competing with each other, prices are already rapidly dropping, which has also forced the prices of LED lighting equipment to drop globally.According to the secretary-general of the Taiwan LED Lighting Industry Alliance (TLLIA), Hong-Ching Hsiao, with LED lighting technologies continuing to improve, the luminous efficacies for LED lights are the same as those for traditional compact fluorescent lamps (CFL), while the usage life of LED lights are 3 times those of CFLs, which means that LED lighting has officially entered a stage of practical application. However, due to over production, many vendors are starting to engage in price wars. The price of a 60WLED light bulb has already dropped to US$10, with the price of 3W LED light bulbs dropping to CNY1.45 (US$0.23). This type of blind and negative competition is undoubtedly bad and short-sighted, and is detrimental to the healthy development of the LED industry in the long run.Compared to the Chinese market (which is caught in a price war), the US and Japanese markets (which are currently ranked 3rd and 4th globally), have global market shares of only 19% and 9%, respectively. However, since their home markets began incorporating LED lighting relatively early, they have recently been developing toward the commercial lighting industry. With continued support and subsidies from the US government, market demand for high-quality LED lighting equipment continues to grow. Vendors are also willing to obtain certification in order to be able to obtain government subsidies, while the strongest commercial market demand is in the replacement of LED light tubes (surpassing demand for LED light bulbs).Japan was the first country in the world to use LED lighting, and with penetration rates for the home market exceeding 90%, its LED vendors are shifting their focus to the commercial and industrial lighting markets. Currently, there is a trend for chain stores and schools to start incorporating LED lighting equipment. As for industrial and outdoor lighting, smart lighting technologies developed by individual vendors emphasize the ability to provide suitable lighting under different usage scenarios and conditions.Wen-Gui Chang, senior manager at Infineon, says that since the ceiling in large warehouses are relatively high, it is difficult for the infrared sensing technologies used with traditional CFLs to effectively sense the movement of people, and therefore cannot meet the requirements of smart lighting. The same problem exists for outdoor lighting. In comparison, lighting solutions that use LED light bulbs combined with radar-based sensing technologies allow LED lights to switch on and off more accurately, resulting in better control of precious energy resources.New opportunities for high profit margins in automotive LED lightingWith the entrance barrier for the production of LED lighting equipment continuing to decrease, the global market has found itself caught in price competition. Samsung Electronics announced in 2014 that it would reduce its LED lighting business and terminate its overseas LED tube light business. Philips, on the other hand, has chosen to develop new applications for the health care market, such as blue medical LED lights for curing psoriasis, which can help patients with mild and moderate psoriasis control their conditions without any side effects.In addition to the aforementioned special applications, many vendors have selected to enter the high-profit-margin automotive LED lighting space. LEDinside research manager, Li-Sun Lu, says that although vendors have obtained certification for automotive LEDs, the barrier for entering the supply chain has been relatively high. However, with compound growth rates possibly reaching 9% (the compound annual growth rates for exterior automotive (daytime) running lights as well as near/far distance headlights may be even higher, reaching 21% and 48%, respectively), major vendors are rushing to enter this emerging market and it is unlikely that price competitions will appear any time soon.Traditional headlight designs for cars have primarily focused on illumination, in recent years however, headlight design has become an integral part of the overall design of the vehicle, with headlights trending towards small sizes and having a wide range of styles, which is why the choice of light sources has switched from traditional light bulbs LED light bulbs. Wen-Gui Chang believes that in addition to being small in size, LED light bulbs are also power-saving and have long usage lives, which help extend the usage lives of relative components in the car, allowing the quality of the overall vehicle to be increased.In the past, LED light bulbs could only be found in luxury cars. In recent years, benefitting from improvements in the yields of high-power LED light bulbs as well as rapid drops in terms of unit price, LED lighting has gradually spread from high-end vehicles to mid-range vehicles as well, allowing the exterior automotive lighting market to steadily develop. LEDinside estimates that the value of just the near/far distance headlights and fog light segments of the LED light bulb market will reach US$313 million by 2018. As for daytime running lights, benefitting from regulations in various countries, compound growth rates will reach as high as 21% in the next 5 years.The Zhaga standard ushers in the era of interchangeable componentsIn spite of the scale of LED lighting applications become larger and larger, incompatibility issues between LED modules and LED drivers from different brands have resulted in lighting equipment specifications having to change whenever an LED lighting equipment vendor switches suppliers, which has caused many problems. In order to solve this problem and be able to produce products with standardized specifications, the global lighting industry has formed the Zhaga Consortium to produce a set of interface standards for LED lighting equipment for LED component vendors to follow.Zhaga's goal in promoting standardized designs is to prevent a small number of vendors from monopolizing the market by intentionally changing product specifications, and to allow components such as LED modules and LED drivers to be interchangeable. This way, lighting equipment vendors can focus on the external design of their products, while COB array manufacturers can focus on providing differentiated (in terms of cooling features or lighting quality, for example) LED components, instead of having to spend time and energy on connection specifications between components.Musa Unmehopa, secretary general of the Zhaga Consortium, says that many lighting equipment vendors want the LED lighting standards (such as those for the mechanical dimensions of relative modules, the locations of electrodes, and light emitting surface diameters, etc. ) to be produced as soon as possible. In the long term, these standards will help reduce the costs of LED lighting equipment production as well as accelerate the penetration of LED lighting. In the specifications already released by the Zhaga Consortium, six rectangular or square modules have already been defined, with the PCB dimensions being 12 x 15mm, 16 x 19 mm, 19 x 19 mm, 20 x 24 mm, 24 x 24 mm, and 28 x 28 mm, respectively. Other detailed parameters that have been defined include the location of the LES center, the size and location of the electrodes, as well as the position point for heat dissipation measurements.The benefits of the Zhaga standards may not be immediately apparent, but in the long run, they will help the LED lighting industry develop in a healthier and more robust direction. Once LED component vendors and lighting equipment vendors are able to focus on their respective aspects of the ecosystem, the penetration rate of LED lighting will accelerate, thereby helping to reduce the rising of temperatures on the planet.Common certifications for LED lighting equipmentCE certificationCE is a mandatory certification label. Products that wish to circulate freely on the EU market must have the "CE" label, regardless of whether they were produced by a vendor from within the EU or by a vendor from another region.MET certificationThe MET certification label is used in the US and Canada. Products that have obtained the MET label have passed relative tests and comply with US as well as Canadian standards, allowing those products to enter these two markets.CSA certificationCSA is Canada's largest safety certification institution as well as one of the world's most well-known safety certification institutions. It can provide safety certification for mechanical, construction material, electronic, computer equipment, office equipment, environmental protection, health care, fire safety and prevention, sports and exercise, as well as entertainment products.GS certificationGS certification is a voluntary certification based on the German Product Safety Act (GPGS) and in compliance with the EU's EN standards or Germany's DIN industrial standards. IT is a German safety certification label that is recognized throughout Europe.Zhaga's goal in promoting standardized designs is to prevent a small number of vendors from monopolizing the market by intentionally changing product specifications, and to allow components such as LED modules and LED drivers to be interchangeable.Photo: Zhaga

The photonics industry has a significant influence on future industrial development of both Taiwan and the world. According to data from the ITIS project initiated by the technology division of the Ministry of Economic Affairs, of Taiwan industries or products ranked among the world's top three in 2014, production of crystalline-silicon solar cells including overseas manufacturing reached 9,972MW, 22.1% of the global market.Production of large TFT LCD panels (10-inch or larger) topped US$23.616 billion in value, 24.55% of the global market, and production of small to midsize TFT LCD panels (under 10-inches) totaled US$7.431 billion, 26.73% of the global market, both of which ranked No. 2 in the world. OLED panels had a production value of US$223 million, 3.79% of the global market. Touch screen production reached US$5.97 billion in value, 20.9% of the global market. LED components generated a US$3.2 billion production value, 19.1% of the global market, ranking number 3 worldwide.According to statistics from Photonics Industry and Technology Development Association (PIDA), total production value of the Taiwan photonics industry reached NT$2.467 trillion (US$67.4 billion) in 2014, about the same level as 2013, accounting for 12% of the global photonics industry value of US$576.6 billion. Ranked by production value, TFT LCD panels, touch screens, LCD components and materials, solar cells, and precision optical components and lenses were the top five industry sectors. In terms of production growth, LED lighting, solar energy crystalline-silicon materials, precision optical components and lenses, LED components, and phototherapy held the leading five positions.Slowing growth of display panelsPIDA estimates Taiwan panel production will total NT$917.696 billion in 2014, a decrease of 1.4% on year. This shows the Taiwan display panel industry has reached a plateau in 2014 and expansion will slow down with only flat growth going forward.Looking forward to the global display panel industry in 2015, PIDA thinks the makers will speed up the introduction of new panel technologies and materials, including the innovative LTPS and IGZO display technologies that are gradually being adopted in mainstream display products. The development of ITO replacement material is also well underway. In addition, embedded touch panel technology will become more popular. For example, On/In-Cell embedded touch panels that only display panel makers were capable of producing now start to appear in smartphones with 5-inch or smaller screens.High definition display panels will soon become market mainstream. Regardless of the size, HD or FHD is the way to go for large, midsize, and small display panels. Demand for 4K UHD TV will be the main force driving growth of large size display panels and growth of small to midsize panels will come from FHD tablets and smartphones.The distribution of the display panel industry will likely see significant shifts in 2015. Consumer purchasing power on the rise in the China market in addition to expansion of China-based panel makers will most definitely cause changes in the distribution of panel makers' market shares worldwide.If the markets for smart mobile devices and wearable devices are able to grow significantly, display products for tablets, smartphones, and wearable devices will become more affordable and popular, which will influence the display panel industry, indicated PIDA.The display panel industry is one of the two trillion and twin star industries in Taiwan and therefore is of great importance for the overall industrial development in Taiwan. However, the Taiwan display panel industry will face potential problems including stagnating growth discussed above, upstream and midstream suppliers struggling with challenges from China makers, and the lack of strong local brands capable of driving up demand as in the case of Korea.New applications of LED are essentialThe Taiwan LED industry still holds a leading position globally. In particular, the merger between two major LED epitaxial wafer and die makers, Epistar and Formosa Epitaxy, in 2014, Everlight's production expansion plan, and international leader Cree's investment in Lextar all boosted the Taiwan LED industry's worldwide visibility. It is estimated the Taiwan LED industry will see 10% and 14% growth in 2014 and 2015 respectively, especially dominating the handset and LCD backlight markets.In terms of competitor performance, competitiveness of products quoted in Japanese Yen is on the rise thanks to the deeply depreciating yen in the past two years. However, between Nichia and Toyoda Gosei, one saw an increase but one saw a decrease in 2014 revenues. As a result, the Japan LED industry is estimated to only show 1% and 5% growth in 2014 and 2015 respectively.As for the Korea LED industry, development is closely related to the local display and smartphone industries. Therefore, the recession that these industries are experiencing has also impacted the revenue performance of the Korea LED industry. It is estimated the Korea LED industry will exhibit a 3% decline in 2014 and a mere 2% growth in 2015.The China LED industry has the most eye-catching expansion in the world, with particularly rapid development in mid power LED for illumination. Also because of increasing availability of independent supply of LED components, the China LED industry stands out from the rest of the world that can only deliver a single digit growth rate or even show decline, which is putting pressure on Taiwan LED makers.With an increasing number of LED applications for illumination, China is very competitive globally in the transition from traditional lighting to LED lighting. According to PIDA, the illumination markets around the world are still dominated by leading international brands or regional makers so Taiwan has little presence in the global lighting market, which is disadvantageous to the long term development of LED package and module industries.PIDA is of the opinion that the Taiwan LED industry has to form strategic partnerships with international brands and thereby increase opportunities for LED applications. Furthermore, based on the current development achievement, the Taiwan LED industry should concentrate on some niche products with tremendous potential, such as UV and IR LED products, to enhance differentiating features and make development breakthroughs.Development of precision optical components is closely related to smart handheld devicesProduction value of precision optical components by Taiwan makers reached NT$97.7 billion in 2014, nearly 20% growth compared to 2013, and benefiting from smartphone brands continuing to introduce new products. In terms of product technology, 8 Megapixel is standard spec of smartphone camera lenses while high-end phones have been equipped with10 Megapixel lenses. Other features such as slimness, large aperture, and image stabilization are crucial to grabbing orders from leading smartphone makers.However, not all optical component makers are able to deliver impressive performances. According to PIDA, among individual makers, only Largan was able to penetrate into the supply chain of various global smartphone brands, therefore showing stunning revenue growth. For example, Largan revenues expanded by 54% in the first half of 2014, accounting for 44% of the total combined revenues of the top ten makers. Profit margins were an astounding 90%. Revenues of the other nine companies, which posted a loss of US$713 million dollars, only increased by 4% in the same period. Although the situation improved in the second half of the year, it is still likely that the strong will continue to get stronger.Moreover, the point-and-shoot camera market is shrinking because of the escalating popularity of smartphones, which has even threatened interchangeable lens camera sales. For example, global leading digital camera maker Canon is expected to show respectively 19% and 38% decline in shipments of interchangeable lens cameras and point-and-shoot cameras in 2014.Digital camera makers and their outsource manufacturers of lenses have been experiencing pressure and have to undergo active restructuring in order to maintain growth. In response to Largan's continuing expansion, even makers focusing on the smartphone market may need to penetrate into other emerging optical application markets. Examples of this include Ability Opto-Electronics Technology and Optivision Technology cutting into the supply chain of China leading brands, tier-2 brands, or white-box phones, and therefore having room for capacity expansion.Furthermore, with the economy in emerging countries taking off, demand for in-vehicle video keeps growing. Calin Technology, H.P.B. Optoelectronics, and Altek are among makers that got a head start in this market. Other applications such as lenses for robot vision and automated optical inspection are also potential development areas for optical component makers.Photovoltaic industry raises competitiveness through mergers and acquisitionsUnder the influence of the US-China anti-dumping investigation in 2014, the Taiwan photovoltaic industry showed an 8% decline in the fourth quarter of 2014 compared to corresponding period in 2013. However, PIDA thinks the influence from the investigation is mitigating due to the high growth in the first half of 2014.In fact, the Taiwan photovoltaic industry still presented a positive growth in the total production value in 2014, reaching NT$170.1 billion, up 11% from 2013. Upstream crystalline-silicon materials showed the highest growth of 26% on year thanks to rising global demand. Solar panels had a total production value of NT$104.9 billion, taking up the largest share among photovoltaic industry segments, 62% of the solar energy production value in Taiwan. Solar cells sustained the most impact from the anti-dumping investigation and delivered a 7% yearly increase, slightly lower than the overall industry growth rate.Looking forward, PIDA expects most Taiwan makers will act aggressively on merger deals as a way to cope with the rapidly changing solar energy business and price slashing competition with China makers. For example, Sino-American Silicon Products (SAS) not only merged with Sunrise Global Solar Energy in addition to Aleo Solar, a German high-efficiency monocrystalline module producer, but also invested in downstream solar panel manufacturer, Accu Solar, at the beginning of this year. SAS plans to expand production capacity of monocrystalline solar cells to 850MW.Furthermore, Motech Industries has also announced a merger with Topcell Solar International, after which Motech will have an approximately 3.0GW production capacity. If including the capacity of Motech's Kunshan plant, to expand from 600MW to 1GW, Motech's total production will surpass the world's No. 1 maker Hanwha Corporation (3.28GW) and No. 2 maker Yingli Solar (3.0GW) all at once. Motech's monocrystalline solar cell production will also ramp up from 200MW to 450MW.ICT suppliers are penetrating into biophotonics marketAccording to PIDA, the Taiwan biophotonics industry generated a production value of NT$46.6 billion in 2014, which is expected to increase to NT$57.5 billion by 2017, a 7% CAGR. In terms of sector distribution, photo sensing accounts for 47% of the production value, medical imaging 23%, and phototherapy 30%.As biophotonics is still at an early stage of development, high growth can be expected in the future with CAGR estimated to be 6-7%. Contact lenses in the phototherapy sector will show the most obvious growth with production value increasing from NT$12.2 billion in 2013 to NT$13.8 billion in 2014, up 13% on year.There will be more and more ICT suppliers investing in the biophotonics market for the high profit margin and opportunities arising from consumables for daily disposable contact lenses. PIDA thinks product features will be deciding factors for the outcome of the competition. If ICT suppliers are able to make breakthroughs in healthcare, medical technology, or other biomedical fields, the biophotonics market can also be a star in the making for the photonics industry.