San'An Huacanqi Layout High-End Market, LED Industry Patent War Continues To Upgrade

The patent conflicts among the leading enterprises in the LED industry continue to escalate and compete for the high-end market.

A few days ago, Huacan optoelectronics Co., Ltd. (300323. SZ, hereinafter referred to as "Huacan optoelectronics") released a semi annual report, which shows that it will continue to invest in and actively develop the next generation technology and new products, including micro LED chip process and related transfer technology, UV LED, compound semiconductor power devices and other future strategic R & D projects, Further layout of high-end product technology and market application.

The key to compete for the high-end market lies in the accumulation of core patent technology. Prior to that, the patent dispute between Huacan optoelectronics and San'an optoelectronics Co., Ltd. (600703. Sh, hereinafter referred to as "Sanan optoelectronics") has attracted the attention of the industry. In September 2020, Sanan optoelectronics sued Huacan optoelectronics for patent infringement. One wave is not smooth, another is rising again. On August 7, 2021, Huacan optoelectronics countercharged Sanan optoelectronics for infringement of its patent. The counterattack of Huacan optoelectronics means that the patent dispute of LED industry continues and escalates again. Up to now, the dispute between the two sides is still inconclusive.

According to the statistics of trendforce, in 2020, Sanan optoelectronics and Huacan optoelectronics ranked first and second in the revenue of Chinese LED chip manufacturers. Regardless of the outcome of the lawsuit, the dispute between industry first and industry second will affect the pattern of the whole LED chip industry.

Mini and micro LED products are in a critical period of competing for customers- Visual China

Counterclaim or settlement

The counterclaim of Huacan optoelectronics is interpreted by the outside world as "ending the lawsuit with litigation", and the patent war may end with reconciliation between the two parties.

According to public information, Huacan optoelectronics sued San'an optoelectronics for infringement of two core patents, namely "high voltage light emitting diode chip" and "light emitting diode epitaxial chip and its manufacturing method". Huacan optoelectronics required Sanan optoelectronics to stop manufacturing, promise to sell and sell the products infringing the above patent rights, destroy all the equipment and related molds used to produce the infringing products, and compensate Huacan optoelectronics with a total economic loss of 80 million yuan.

In September last year, Sanan optoelectronics "took the initiative" and filed two patent infringement lawsuits against Huacan optoelectronics for "nitride semiconductor light-emitting devices and their manufacturing methods" and "semiconductor light-emitting devices and semiconductor light-emitting devices". Similarly, Sanan optoelectronics requires Huacan optoelectronics to stop manufacturing, promising to sell and sell applications that infringe the above patents, and destroy all equipment and related molds used to produce infringing products, and compensate 80 million yuan. One year ago, the above-mentioned cases have not been finally judged.

On September 10, Zhou xueteng, partner of Beijing Zhengxin law firm, was interviewed by the reporter of 21st century economic report "Patent cases are highly technical, complex judgment system, diverse types and forms of infringement, and it is difficult to calculate the amount of compensation. In addition, patent litigation will start technology appraisal, patent invalidation procedures and other complex factors according to the needs of the case. If both parties decide to solve the case through litigation judgment procedure, the case can not be closed in a short period of time."

In the patent dispute between Huacan optoelectronics and San'an optoelectronics, it is not difficult to see that the patents chosen by them are "similar", and the claim amount is also 80 million yuan. "This is a common and effective litigation strategy, and the patent war may end in a compromise between the two parties. Huacan optoelectronics counterclaims with similar technical patents. If these two patents are valid and enough to constitute a technical barrier or cause losses to Sanan optoelectronics, the lawsuit may accelerate the settlement of both parties," Zhou xueteng said.

Patent disputes in the LED chip industry are inevitable, and most of them are settled by giants to form a patent alliance, which will further improve the degree of industry concentration.

In Zhou xueteng's view, LED chip industry belongs to the upstream industry of LED products, mainly refers to the epitaxial manufacturing of LED luminescent materials and chip manufacturing. At present, Japan, Europe and the United States are the first echelon in the global market. However, the R & D of LED chip industry in China started late, which can not avoid the technology introduction and cooperation in international and domestic markets.

As the leader of LED chip market, Sanan optoelectronics and Huacan optoelectronics have accumulated a large number of core patent technologies. According to public information, by the end of the first half of this year, Sanan optoelectronics had 2423 valid patents, including nearly 600 international patents and 1678 authorized patents; Huacan optoelectronics has more than 1000 domestic and foreign patents and 712 authorized patents.

"Affected by the head effect, large enterprises have more resources and more patents, which increases the cost of obtaining patent licenses for small and medium-sized enterprises, and also increases the risk of intellectual property infringement." for potential patent disputes, Zhou xueteng suggested that enterprises should actively promote the introduction and cooperation of patents, through patent transfer or effective authorization, More effectively promote the independent R & D capability of enterprises and form a benign development mode in innovation and cooperation.

Seize the market

Some people in the industry believe that the patent war between San'an optoelectronics and Huacan optoelectronics is actually a business war in the market competition, and it is also to compete for the high-end market represented by mini / micro LED products.

According to the report of trendforce global LED industry database, driven by automotive LED, mini / micro led, commercial display and invisible light, it is estimated that the global LED market value this year will reach US $16.53 billion, with an annual increase of 8.1%. Among them, mini / micro LED is the second largest growth momentum, with an annual growth rate of 265%. With the rapid improvement of its scale penetration and cost advantage, the emerging display application of mini / micro LED will become the second largest application market next to ordinary lighting in the next five years.

At present, mini / micro LED products are in a critical period of competing for customers. Huacan optoelectronics and San'an optoelectronics are also unable to avoid a new round of "competition".

Huacan optoelectronics, as a leading enterprise of mini led, has invested in this field on a large scale in recent years and has carried out forward-looking layout. According to the historical annual report of Huacan optoelectronics, Huacan optoelectronics began to develop Mini LED chips in 2016, launched the first generation of products in 2017, and achieved large-scale production and shipment in 2019 and 2020. At present, Huacan optoelectronics has completed the development iteration and production guidance of a new generation of mini led RGB products, and some mini LED backlight products have been shipped in batches. At the same time, we have continued to cooperate with well-known customers at home and abroad to develop micro LED products. The chip process capability of multi structure and multi size specifications has been continuously improved. The small batch shipment has been applied to the micro LED display prototype of multiple terminal customers, realizing the small-scale mass production of 6-inch micro led high-specification substrate.

Sanan optoelectronics is also actively laying out high-end product tracks, continuously adjusting the product structure, and has made new progress in the field of mini / micro led. According to the interim report released by Sanan optoelectronics on July 30, in the mini led part, the company has carried out cooperation with many well-known downstream customers in the world in the fields of mini led import TV and display, and the shipment volume is increasing month by month. In the micro led part, Sanan semiconductor and TCL Huaxing established a micro led joint laboratory to focus on the research and development of micro LED display technologies such as chip, transfer, bonding, colorization, detection, repair, drive, compensation and module. At present, the two sides have jointly developed a 4-inch igzo glass based am microled display laboratory product.

Chuancai Securities pointed out in its research report that the LED industry has strong cyclical rotation, the industry prosperity is led by the introduction of new products, and mini / micro LED may drive the LED industry into a new rising period. "Generally speaking, the competition pattern of LED chip industry is in the process of change, and the market demand has been transformed into the driving force of technological innovation. Now it is a critical period for the head companies to compete for high-end market share."

In fact, the first layout of mini / micro LED chip R & D has shown some achievements. Huacan optoelectronics and San'an optoelectronics, which were originally weak in performance growth, have ushered in performance growth points. According to the public data, the net loss attributable to shareholders of listed companies was 31.7923 million yuan in the first quarter, which was 57.69% lower than that in the same period of last year, and its revenue was 711 million yuan, up 56.97% year on year. In the first half of 2021, Sanan optoelectronics realized 6.114 billion yuan of operating revenue, with a year-on-year increase of 71.38%, and its operating performance was greatly improved.

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