Osram expands capacity with new LED assembly plant in China

May 25, 2012 // By Christoph Hammerschmidt
German lighting systems manufacturer Osram AG has signed a contract with the Wuxi New District Administrative Commit-tee to build a new assembly plant in the Chinese province of Jiangsu. LED chips will be packaged in housings at the new backend facility starting in late 2013; with the Regensburg and Penang (frontend) plants exclusively continuing to make the actual LED chips.

The new assembly plant is intended to strengthen Osram's access to China as the world's largest market in the lighting industry. In the face of sharply rising demand for LED-based products, Osram has opted to set up a further plant in Wuxi to augment the capacity of its chip plants in Regensburg, Germany and Penang, Malaysia. The new plant is scheduled to be up and running by the end of 2013. It will be able to accommodate up to 1,600 employees when fully operational.

The new backend facility at Wuxi near Shanghai will install LED chips manufactured in the frontend plants at Regensburg and Penang in their housings. The plant will also augment the Penang production by manufacturing general, automotive and industrial lighting products for key segments of the Chinese market. The plant's added back-end LED capacity will enable the company to capitalize on China's fast-growing market and support the two plants in Germany and Malaysia. "We have attained a leading position in the semiconductor sector over the course of about 40 years. The facility in China marks another step forward in extending this lead," said Aldo Kamper, CEO of Osram's Opto Semiconductor business unit.

Market researchers at IMS Research have predicted strong growth for opto semiconductors such as LED components and laser diodes with average growth rates of around five percent worldwide in the coming years. The fastest growth is expected to come in China during the same period, with an average growth rate of ten percent. This growth potential extends beyond components. According to a market survey conducted by McKinsey, the rapidly growing Asian region today already accounts for around 35 percent of today's global general lighting market. This share is expected to increase to 45 percent by 2020.

Forecasts predict the Chinese market alone, worth over €8 billion today, to more than double by 2020. In fiscal 2011, Osram generated about one fifth of the Group's revenue