Showing confidence in the future of LEDs, ams Osram is embarking on a nearly one-billion-dollar expansion of its Kulim, Malaysia site, where it will build an LED and micro LED production facility alongside the €370 million plant that Osram opened some four years ago.
To help support the project and hone its focus on chip-level operations including LEDs, lasers and sensors, the Premstaetten, Austria company will continue selling off general lighting operations.
Ams Osram executives confirmed that the Traxon Technologies architectural and façade business is indeed up for sale. Until now, the future of Traxon within ams Osram was unclear.
The company made the announcements yesterday, coinciding with an online Capital Markets Day of afternoon presentations to financial analysts.
In a press release, ams Osram said the Kulim investment “is expected to amount to up to approximately €800 million ($873 million) over the next 18–24 months.” The €800 million is more than twice the €370 million that raised eyebrows back in November 2017, when Osram (as the company was then called) opened the modern Kulim facility.
The new plant will make LEDs and micro LEDs out of 8-in. wafers, a step up from the 6-in. wafers that went into effect when Osram first opened the state-of-the art factory in November 2017. Larger wafers can be more economical because they yield more chips.
The 2017 opening came prior to ams’ long and winding acquisition of the much larger Osram, a transaction that closed in July 2020.
Not long after the former Osram opened Kulim, a market downturn had struck Osram and other lighting companies. By November 2019, amid its checkered courtship of Osram, ams indicated that it might not even keep the then-underutilized Kulim plant open should it succeed in its Osram bid.
Yesterday, ams Osram recalled that troubled time. In one slide during its presentation, the company noted that in “mid-2019, when ams made its offer to acquire Osram, Osram’s business plan would not sufficiently load Kulim with profitable business.”
But the outlook has clearly changed. Ams Osram CEO Alexander Everke recently cited a strong market for LED chips in AR and VR (the “metaverse”), horticulture, UV-C disinfection, and other segments. He referenced those sectors again yesterday and also alluded to the market for LEDs in general lighting and in various automotive uses including headlights. The company also has high hopes for micro LEDs, a technology generally regarded as still a couple of years away from full commercialization.
While ams Osram is making and selling its own LEDs, it is also possible that it is making them on an outsourced basis for other LED providers. LEDs Magazine has asked if this is the case. We are awaiting the company's response.
Ams Osram first signaled a Kulim expansion last November. Yesterday it provided more detail, although it did not immediately indicate what the capacity or output of the new Kulim facility will be.
In a related move, the company said it is closing down its 44-year-old, 12-building LED site in nearby Penang, and replacing it with a new single-building facility with an “optimized layout” in nearby Batu Kawan.
The company will continue using its Regensburg, Germany LED site, which also now picks up vertical cavity surface-emitting laser production as part of various factory closings and shifts across ams Osram’s portfolio, which include sensors and lasers (like VCSELs) as well as LEDs. LEDs hopes to report on some of these other moves as we learn more.
Meanwhile, in another slide during its presentation, ams Osram indicated that it hopes to divest Traxon — the architectural and façade lighting group — by the end of 2022. The same slide said the company hopes to sell its Clay Paky entertainment lighting group and its Digital Systems Eurasia group within the same timeframe. Digital Systems Eurasia makes lighting electronics and LED drivers.
Those sales will mark the latest in a string of divestitures, which most recently included the planned sale of its finished headlamp business in the automotive sector.
Sell-offs have also included, among others: horticultural lighting specialist Fluence by Osram, which is a leader in cannabis lighting; illumination and smart lighting company Digital Lumens; the company’s North American LED driver and light engine operations; and a lighting components factory in Plovdiv, Bulgaria.
LEDs is rounding up more information from ams Osram’s Capital Markets Day, and will report on any additional insights we gain.
MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).
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