At the conclusion of last year’s Innovation Awards at the Taipei Optoelectronics Exhibition, an invention shown by Innovative and Superior Technology, Inc. (ISTI) stunned the world’s top three lighting companies. So impressed were they that the president of one of those companies hopped on a plane and flew right to Tainan to visit ISTI and sign a technical cooperation agreement.

In the future, the LED lamps that this major lighting company produces all over the world will employ the module developed by ISTI. For each lamp sold, ISTI will earn a royalty fee.

Until now ISTI has been a tiny, unknown company. How was it able to steer the attention of a top global company that spends over 10 billion euros a year in research and development toward its own patented technology?

In today’s rapidly changing LED industry, lighting giants are actually quite happy to work with a small company and make use of its existing R&D and designs.

Philips, for example, currently employs a strategy for developing LEDs in which it either acquires existing vendors or works out technology licensing arrangements with smaller firms, in order to shore up its position in the lighting field. “The technology in this industry is simply progressing too fast. It’s impossible to do everything yourself the way we used to,” notes Edward Po, general manager of Philips’ lighting division.

Relying on R&D and cooperation with major international companies gives a small LED company like ISTI explosive potential for growth. Currently counting just ten employees, the company made just NT$3 million in 2006, but sales are expected to mushroom to NT$25 million this year.

Having passed certification last year by Giant, the world’s largest bicycle manufacturer, this year ISTI will begin distributing LED headlights to 23 countries around the world. Over the next two years the company expects to generate around NT$85 million in intellectual property royalties and module sales. And when the lighting market is factored in, by 2009 it is expected to achieve up to NT$600 million in revenues.

The instrumental figure behind these patents is a man named First Chen, ISTI company president and CEO.

Technological Solutions

Despite their energy-saving environmental friendliness, LED bulbs project spotty light that does not lend itself well to reading. Nor are they as bright as fluorescent lights, since they are bright at the center and dimmer at the sides of the bulb.

After graduating from National Cheng Kung University, First Chen headed straight to Taipei, where he worked for Matsushita before returning to Tainan to work at an industrial design company. During more than a decade of work experience, he developed a way of thinking that is different from the standard Western experimental method. Combining material properties and photonics design, he captured light waves at the edges of the spectrum and drew them back within the range of visible light. With this breakthrough, the light fixture module he developed successfully solved the two main difficulties vexing major lighting manufacturers.

At the same time, the invention of this new lighting module design helped significantly reduce the cost of LED lighting fixtures. Just one half the number of LEDs now produces even higher candle power, and has no problems dissipating heat.

First Chen positions ISTI mainly as an R&D house. Prepared with lighting module patents up through the third generation, the company is equipped to enter licensing negotiations with major global firms, thereby expanding its scope and making inroads into the module sector.

First Chen’s corporate plan is based on a clear SWOT (“Strengths, Weaknesses, Opportunities, and Threats”) analysis. The biggest demand for LED applications comes from replacing conventional lighting, a field in which the most important factor is still exerting influence over sales channels and major lighting companies like Philips, Osram, and GE.

In order to retain a steady position in the industry in the future, ISTI must not only continue its efforts in intellectual property, but also get behind modules with higher margins, shipping modules directly to major customers. “Modules are a niche for Taiwanese vendors. Whoever seizes this sector the most quickly and gets on line with the major companies is positioned to win,” offers Dr. Li-Ling Lee, deputy director of the Air-Conditioning, Refrigeration, and Power Technology Division of the Industrial Technology Research Institute, breaking down how the momentum of the entire industry plays out.

ISTI faces both significant opportunities and challenges on the road to becoming a dominant LED design module company. Managing rapid growth and continuing to extend its intellectual property reach will test First Chen’s resolve moving forward.

Translated from the Chinese by David Toman

Chinese Version: 讓ＬＥＤ專利在世界發亮