It's a long way from Taiwan to the kangaroo paddocks of Canberra, Australia, and even farther to the stately Georgian terraces of Bath, England. Yet in those unlikely backdrops, two high-tech Taiwanese startups have chosen to locate their advanced research and development on light-emitting diodes (LEDs). LEDEX and Arima Optoelectronics are aiming at the a nascent worldwide market for bright-blue, green, and white LEDs.
The tiny, low-powered, long-life LEDs are up to 10 times more efficient at converting electricity into light than incandescent bulbs, and they last up to 100 times longer. For traffic lights and a few other uses, LEDs are already economically viable. But until manufacturers can produce them in large quantities, they'll remain too expensive to replace conventional bulbs in general use.
If their research deals work out as hoped, they could give Arima and LEDEX a leg up in a highly lucrative new business. Bright-blue LED technology -- which also makes green and white LEDs possible -- could open a slew of new lighting markets for LEDs -- from automobile displays and traffic lights to large-area electronic billboards, such as the Nasdaq display in New York's Times Square.
PATENT PROTECTOR. Why did the Taiwanese opt for the long-distance R&D? Bright-blue LEDs were first developed in 1993 by Japan's Nichia Chemical, which has built a wall of patents around its invention and has vigorously defended its rights ever since. Thus far, Nichia has concentrated on suing big fish, such as Japanese rival Toyoda Gosei, which also manufactures electronics parts. But at least a dozen Taiwanese companies fear that they, too, soon could become the targets.
So Arima, headquartered near Taipei, and LEDEX, based in the southern city of Kaohsiung, moved their labs to England and Australia, respectively, and quietly began mass production of bright-blue and -green LEDs last year. The two companies hope to become leaders in the field -- and avoid legal trouble with Nichia -- by patenting their own LED technology. The patents would also put them in a stronger position if they have to negotiate cross-licensing deals with their much-bigger Japanese rival.
The research deals the two companies have forged show how crucial academic ties can be in determining who wins in today's advanced high-tech markets. They also show how lesser-known universities in out-of-the-way locales can build up pockets of world-class expertise in key new technologies. Rather than cut expensive pacts with big U.S. schools, Arima and Ledex turned to less-known up-and-comers that have mustered first-rate optoelectronics groups: the University of Bath in England and Australian National University in Canberra, respectively.
CONNECTIONS. Old-school ties were key in forging the deals. LEDEX Vice-President Alan Li had journeyed from mainland China to win his Doctorate at the Australian National University, becoming an Australian citizen and changing his given name from Gang to Alan in the process. LEDEX President Tony Wu is the son of the chairman of Yuh Chen Group, a multibillion-dollar Taiwanese conglomerate with interests in construction, hotels, and real estate. He's also an Australian passport holder with a Master's degree from the University of Sydney.
Arima made contact with the University of Bath through Wang Nang Wang, a Taiwanese-born professor of physics there. Wang went to school with Stephen Lee, chairman of Arima Optoelectronics' billion-dollar parent company Arima Computer, which designs and manufactures notebook computers for Compaq.
LEDEX and Arima are not only producing the new LEDs but trying to advance the technology on their own. Arima's collaboration with the University of Bath is now in its third year. In the project thus far, Wang says, "we have produced 14 manufacturing-friendly patents" for making blue LEDs.
BLUE LASER. After being recruited by LEDEX in 1998, Li quickly demonstrated that he could make bright-blue LEDs, then oversaw the design and equipping of a $35 million plant to manufacture them. He has also come up with three LED patents, with applications for four more in the pipeline. "The patent issue [with Nichia] doesn't affect us anymore," claims LEDEX President Wu.
LEDEX now plans to extend the collaboration by establishing a full-blown R&D facility in Canberra. To be known as BlueLab, the plant will target the development of a blue semiconductor laser, a hugely important component designed for increasing the capacity of next-generation DVD players and CD-ROM drives.
Thus far, only a few companies are making blue lasers, and even then only in sample quantities. So the market is still up for grabs. Wu expects to invest about $10 million in the Canberra facility. Says Wu: "We think that by using Taiwanese experience of mass production combined with Australian expertise [in optoelectronics], we can become a really outstanding, unique company." Indeed, in the coming LED wars, academic connections could be a secret weapon for both LEDEX and Arima. By Bob Johnstone in Canberra, Australia