US LED manufacturer Cree has partnered with Taiwanese electronics firm Lextar in a bid to reclaim market share from Asian LED manufacturers.
Under the terms of the deal, Cree will invest US$83 million in Lextar, and the two companies will cooperate on LED chip supply and royalty-bearing licenses for certain Cree LED chips.
According to the announced partnership, Lextar will supply sapphire-based LED chips to Cree, largely to be used in blue LED chips, but this cooperation may be expanded to include package or other end products in the near future.
According to LEDinside, a market research organisation with TrendForce, the intensifying price competition in the LED lighting market is making it difficult for US and EU manufacturers like Cree and Osram to compete with Asian manufacturers, which are backed by government subsidies.
Cree’s focus on high-powered LEDs which yield a greater profit margin, but cost more, is starting to lose its edge against the low-to-mid-power LEDs made by Asian manufacturers, which have a higher cost-performance ratio.
To boost its competitiveness, Cree has been cooperating with Taiwanese manufacturers since 2013 and has transferred OEM orders to strategic business partners including Lextar and Epistar.
Lextar has a production line that covers upstream to downstream products including chips, light sources, package, light modules and luminaires. It is a long-standing OEM for Cree and Osram.