Osram to Invest in Future of Lighting

Osram said in a press release about quarterly earnings that the company would continue investing in the lighting market, which is shifting towards semiconductor technology. The company plans to sell its ailing general lighting, conventional lamps business and is still apparently seeking offers to purchase the business.

Osram announced an investment of about €3 billion for new technologies and applications by 2020. Of the €3 billion, Osram said it intends to spend about €2 billion on research and development and expansion into new markets. Additionally, the company plans to invest €1 billion in the construction of a new LED chip production facility in Malaysia.

“With a focus on profitability, flexibility, and entrepreneurship, following a phase of strategic realignment, we are now launching the ‘Diamond’ innovation and growth initiative. This means we are switching the focus to sustainable growth, benefitting even stronger from the potential offered by semiconductor-based technologies,” said Olaf Berlien, CEO of Osram Licht AG.
“Diamond” includes Osram’s investment of around €370 million for a new LED chip plant in Kulim, Malaysia for the company’s Opto Semiconductors (OS) segment. Additional planned expansion measures will total about €1 billion by 2020.
Osram contends that the Malaysian plant will be largest 6-inch LED chip production facility in the world. Osram noted that LED chip production is the largest revenue generator in the area of opto semiconductors. The company said that current volume of LED chip sales was about €5.7 billion.

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The company anticipates revenue growth rates of about 7.5 percent annually until 2020. Osram said that through synergies and of scale the company can also reduce its costs in other market segments such as automotive lighting and applications for mobile devices.

Osram revealed that it is also planning additional investments in the Specialty Lighting (SP) segment to rollout of new technologies. The company expects the use of lasers and OLEDs in automotive lighting will bring in about €1.1 billion in 2025.

Osram’s recently created Lighting Solutions & Systems (LSS) segment plans to offer integrated solutions and expand the company’s electronics and software expertise. Over the next two years, the Lighting Solutions & Systems (LSS) segment also plans to create new electronic ballasts and light management systems.

“Investments in research and development have paid off for the company in the past by taking it to a clear number 1 position in the automotive sector and leading to groundbreaking applications with opto semiconductors. Through the intended increase in research intensity, Osram wants to further strengthen its technical expertise for semiconductor-based technology and extend its market position,“ said Osram CEO Olaf Berlien.