Last year, LED business has a candidate to the nation’s new growth engine
Korea’s top 3 Led makers, Samsung LED, LG Innotek and Seoul Semiconductors, are predicted to exceed revenue of KRW 1 trillion in total.
Last year, LED business has a candidate to the nation’s new growth engine. But, the recent record in revenue gives strong confidence that the business is likely to become one of the major industries in Korea. Despite the growth, many experts still point out that there should be aggressive investment in the parts and material sector of the LED industry in order to develop it more competitive in the global market.
On November 15, industry insiders said that Samsung LED posted revenue of KRW 183.2 billion in the third quarter of this year, up 24% from a quarter earlier. In the first quarter of this year, the LED division of Samsung Electro-Mechanics, the former organization of Samsung LED, posted KRW 80 billion in revenue. Considering this number, Samsung’s LED business has more than doubled only in six months. The accumulated revenues from the first quarter to the third quarter reach KRW 410.2 billion, sending the annual revenue to KRW 600 billion.
According to the estimates of securities firms, LG Innotek is predicted to post revenue of KRW 299.1 billion in its LED business, breaking its record in annual revenue. Compared with last year when it posted revenue of KRW 175.1 billion, the LED business has grown more than double. The LED business posted KRW 48.8 billion in 1Q and KRW 60 billion in 2Q. Then, it exceeded KRW 70 billion in 3Q. Seoul Semiconductors also raised its revenue outlook to KRW 450 billion at its 3Q conference call. As it posted revenue of KRW 132.9 billion in the third quarter, renewing its record high in quarterly revenue. The company raised the revenue goal for three times this year alone.
Therefore, the three LED makers are predicted to exceed KRW 1.3 trillion in annual revenue in total. Only in a year, since the LED market blossomed, the industry generates more than 1 trillion in revenue. Last year, the three makers’ revenue totaled KRW 631.2 billion. The rapid growth of the Korean LED business stems from the growing LED TV sales by Samsung Electronics and LG Electronics. The explosive growth in LED TV business has raised the demands for led chips, particularly for LED back light units, and encouraged LED makers to make more investment in R&D activities. Then, their advanced LED chips contributed to the development of a new LED TV by TV makers, creating a virtuous circle in the LED industry.
Despite the strong growth in generating revenue, the Korean business still needs to enhance their technological competitiveness, particularly in LED manufacturing equipments and materials.
The metalorganic chemical vapor deposition that the three LED makers in Korea are using is all imported from the US and Germany. There has been no case among the Korean manufacturing equipment makers to supply the equipment to the domestic LED makers. As Samsung and LG made continuous investment in the mass production process for LED products, they are just waiting the supply of the equipment for a longer time than before since they cannot find other suppliers for equipment. Particularly, in fluorescent agents—Seoul Semiconductors have maintained bloody disputes for patents against Nichia—and incapsulants, final product makers have no choice other than import from foreign makers. Yoo Yung-moon, chairman of the Society of LED Solid State Lighting, said, “The LED business has a relatively complex structure in the supply chain. Therefore, it requires the synchronized development of the parts and material business. To this end, the government-level support should be provided to set up the national standards and promote the development of basic technology.”
Last year, LED business has a candidate to the nation’s new growth engine |
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