The influence of the technological regime on the global light-emitting diode industry: lessons from innovative leaders and latecomers

Abstract

The light-emitting diode (LED) sources have become the first efficiency recommendation and one of the top sustainability measures in building a sustainable economy and eco-friendly society. The emergence and rapid development of latecomers to low-carbon LED technology in Asia has shifted the oligopolistic structure that had been appropriated by the first-movers in the US, Europe and Japan. It is thus critical to understand the innovation trajectories and influential factors for reinforcing the development of the global LED industry. This study highlights the variations of technological regime in dominant firms, demonstrating that the eco-innovations in the global LED technological regime is built sequentially, by product innovation of international leaders through technological appropriation (i.e. intellectual property rights), process innovation of Korean and Taiwanese latecomers through production capability, followed by various diffusion modes integrating with Chinese and other latecomers through market and production competition in the global LED industry. Three policy imperatives are then elaborated.

Keywords:

• light-emitting diode (LED)
• eco-innovation
• technological regime
• innovation
• patents
• Taiwan
• Korea

Notes

1. Even though the production volume in China is increasing significantly, the majority of its LED output is applied to lower value-added (i.e. low brightness) products, such as toys and Christmas lights, and is concentrated on its huge domestic market to avoid infringing intellectual property rights in the global market.

2. In other green industries, such as solar PV, biofuel and wind technologies, intellectual property rights have not been an impediment in the technology transfer process, since the competition in these sectors is sufficient to prevent a single company, or a few, from creating a lock on the technology with patents (Barton, 2007; De la Tour, Glachant, & Meniere, 2011; Kirkegaard, Peoples, Angus, & Unkovich, 2011). However, the high-brightness white LED sector is one of the exceptions, in which intellectual property rights (especially patents) are crucial in the technology transfer process.

3. Based on Schumpeter (1934, p. 66) and Romer (1990), process innovation is defined as new and improved production methods (usually through specialisation and mechanisation) of increasing the productivity factor, while product innovation refers to new markets and sector reorganisation that are introduced with new products.

4. Nichia found that when blue light from an InGaN dye passes through a thin phosphor coating (the patented YAG phosphor), a portion of the blue light is down-converted to yellow light. This yellow light mixes with the remaining blue light from the InGaN dye to create bright white light.

5. The manufacturing process of LED upstream epi and chips is identical to that of semiconductors. Therefore, with the semiconductor sector being well developed in Taiwan and Korea, the accumulated resources in terms of manpower, capital and technology have readily diffused into the derived sectors such as LED (Hu, 2011).

6. To secure the downstream applications in emerging markets such as China, the world’s top 10 LED players (especially the Taiwanese and Korean LED latecomers) are aggressively expanding their production activity as well as forming strategic alliances with local Chinese firms. Therefore, the increased market share over the year is significantly augmented by their Chinese joint venture factories. In this way, Chinese latecomers are able to gain an opportunity to catch up and to overcome the technological gap, in terms of patent protection, by taking Taiwanese and Korean innovative fast-followers as proxies to enter the global LED industry.

7. The 14 fast-followers are selected based on production share, taking more than 4% of the global market share during 2005–2009.

8. The 10 LED specialized companies are Nichia, Osram Opto Semiconductor, Cree, Philips Lumileds, Samsung LED, Seoul Semiconductor, Epistar, Optotech, BridgeLux, and GELcore.

9. CII represents the cited number of patents in a company i from previous five years in the USPTO; this shows how frequently the company’s patents were used as the foundation for other inventions.

10. To further explain, “epi-wafer” is the first class and top quality product in wafer manufacture. The second class wafer is “prime wafer”, “followed by “test wafer” or “monitor wafer”.” Epi-wafer thus requires a higher level of sophisticated technology capability.