Can China Take Over LEDs? SunSun Makes Its Case

A few months ago, I asked an executive from a Chinese manufacturer of LED streetlights what made his fast-growing company different from the thousands of lighting fixture makers popping up all over the country.

Simple, he said. He bought his LEDs -- the chips inside the street lamps that actually produce light -- from Cree, the North Carolina-based chip maker.

While China has colonized solar and pretty much every other heavy industry, the country still lags, according to many, when it comes to solid state lighting. Simply put, Chinese LEDs, and lights made with Chinese LEDs, don’t have a great reputation. Chinese LEDs and bulbs costs less, but anecdotes and word-of-mouth comments often tend to focus on inadequate light output, poor color rendering and other issues.

Part of the problem comes from the complexity of making solid state lights. The quality of an LED depends on the epitaxial, or crystal growing, processes employed to turn a lab-manufactured sapphire ingot into a wafer that can be chopped up into chips. The engineers who know how to do this are relatively small in number and most of them work in Germany, Japan and the U.S. (Yes, many of the complaints about Chinese LEDs come from western companies.)

Making light fixtures also requires know-how in optics and design. Lunera, a Silicon Valley startup, was co-founded by a guy that once worked as a lighting designer for Annie Liebovitz. You don’t meet a lot of people in solar whose work showed up regularly in Vogue.

Will it change? Sure, over time. And that’s why GSR Ventures, which specializes in Chinese investments, has plunked $10 million into SunSun Lighting, which makes LED bulbs. SunSun has a 9-watt bulb that puts out as much light as a 60-watt bulb. The company’s secret sauce revolves around its PowerXplore technology, electronics which help drive light and boost overall efficiency.

The big hurdle facing SunSun remain the intangibles. Will the light bulbs produce enough light? Will the light be a warm, white light or will it be a cool blue, sort of like the light that might emanate from the business end of an alien medical probe? Will the lights last? Will Home Depot sell them, or will they get scared away by fears about returns and people confusing them for solar panels?

And how will they compare against bulbs like the liquid-filled LED bulb coming from Switch toward the end of the year that will cost $25?

And who is making the LEDs? Even Western companies advertise, Intel Inside-like, when they employ Osram or Cree LEDs.

Believe me. Light bulbs look simple, but in the past year I’ve tested a heck of a lot of bulbs. They all have different personalities. Many are great, even for the price, but some certainly suck.

Then again, the selling point here may be electronic engineering. SunSun could ultimately become a component supplier to bulb makers, i.e., it could sell PowerXplore technology to others who would have to worry about placating finicky American consumers. Switching business models, if possible, would help the company limbo under a lot of the issues above.

Think of it. In a "horizontal" lighting market, you could have established companies make the LEDs and some phosphors, Chinese, Korean and/or Taiwanese companies produce the supporting electronics and phosphors, and someone from the West design bulbs and lamps with Chinese or Taiwanese contract manufacturing backing them up.

GSR is also an investor in ShineOn, which makes LED packaging, a crucial (yet faceless) component for LED bulbs. We profiled them a few months ago. ShineOn recently raised $51.5 million from Accel, Mayfield, GSR and others.