High power LED chips used in core components tend to account for over 50% of raw material costs, and can seriously impact LED package prices. Currently, high power LED chips have been in the control of European and U.S. manufacturers. These products are manufactured in small volumes, and are retailed at high prices. The products also tend to only have a single raw material source, which has long bothered Chinese LED package manufacturers. Whether it is developing sample LED chips or mass production, the delivery periods can be extremely long. High prices have also continued to limit ceramic package production scale. In recent years, technology limitations and potential patent infringement risks have caused large Chinese LED chip manufacturers to focus on small power LED chips. Unable to meet high power LED chip market demands, LED package manufacturers almost completely rely on high power LED chip imports. This greatly limits vendors negotiation power against foreign manufacturers when it comes to high power LED chip import volume and quality.
In addition, Taiwanese LED manufacturers control LED chip and matching eutectic bonded ceramic substrates. Prices, delivery time, poor services, and communication issues have also plagued Chinese LED package clients. Many Taiwanese manufacturers insist on prepayments before shipping products, and it is very difficult to return products. This has been challenging for LED package manufacturers that are accustomed to delaying payment.
These key raw materials come from a single source, and has forced Chinese package manufacturers into a bad negotiation position. Even though Chinese manufactured phosphor powder, silicon glue, and other raw material prices have dropped, key LED chip and substrate prices have remained the same. This is very different from low to mid power LED light source price drops. High raw material prices, and failure rates have resulted in China’s high ceramic package costs and at a disadvantage compared to large international manufacturers. Additionally, consumers do not trust these products reliability. Lack of recognition for Chinese products, and single ceramic package light sources have made it difficult to promote these products.
4. Emerging EMC package trend integrates mid and high power LED package
The emergence of EMC technology has also made the industry question the future of ceramic packages. EMC lead frames used in mid-power LEDs have been more and more popular, mainly since mid-power LEDs have become mainstream products since 2013, spurred by high LED lighting demand growths, increasing direct-type LED backlight wattage. EMC leadframes have been a major focus in the industry, and have high heat resistance, UV resistance and high current conductivity. The product is also small, and yellowing resistant and mainly targeting the 0.5W~2W. This is a huge threat to ceramic package in the high power market.