LED patent dispute 'keeps prices at an artificial high'

17 Jun 2002

Four major suppliers of InGaN LEDs are embroiled in costly and time-consuming lawsuits with each other and excluding others from the market.

Exclusive from Opto and Laser Europe magazine.

The ongoing patent dispute over InGaN LEDs between US firm Cree and Japanese companies Nichia, Toyoda Gosei and Rohm is preventing other businesses from entering the market and is keeping device prices artificially high, according to market analysts. In the last month, Cree has filed another patent infringement lawsuit against Nichia; Rohm has withdrawn its complaint against Nichia; one of Nichia's lawsuits against Cree has been thrown out; and a Tokyo high court has reversed a decision that rendered one of Toyoda Gosei's patents invalid.

Chris Redl, director of equity research at UBS Warburg in Tokyo, said: "These lawsuits are time-consuming and are keeping new entrants out of the market.

"In the meantime, prices for InGaN-based devices are staying at an artificially high level and the leading suppliers are generating huge profits. This has funded further expansion, which in turn will make it more difficult for potential competitors to enter the market in future." He made his comments in this month's issue of Optics.Org's and OLE's sister publication Compound Semiconductor.

"If the lawsuits are resolved soon, the cost per lumen for InGaN-based LEDs should drop rapidly as other manufacturers enter the market, allowing these products to penetrate new market segments," said Redl.

Bob Steele, director of optoelectronics at US market analyst Strategies Unlimited, agrees. He said: "In Taiwan there are as many as 10 companies waiting to get into this fast-growing market, but they have not done so because of these disputes." Steele believes that, while the annual market growth for GaN LEDs has been high at around 70%, growth could have been even greater had other firms been able to enter the market.

"The prices of GaN LEDs are artificially high at the moment. Compared with conventional LEDs, they can cost up to 10 or 20 times as much. Their price is about three or four times that of other high-brightness LEDs."