For Bridgelux, LED Opportunities Lie in China

FEBRUARY 13, 2012 | By Ucilia Wang for GigaOm

Like much in the greentech world these days, the road to opportunity seems to lie through China. California-based LED lighting startup Bridgelux announced on Monday that it's getting $25 million from Kaistar, a joint venture between two public Chinese companies, Epistar and Kaifa, and Bridgelux plans to use the funds for research, development and manufacturing of LED chips and packaging for light fixtures.

Bridgelux has now raised a massive $220 million in private funding. In previous years Bridgelux was on the short list for an IPO, but the public markets have been difficult for greentech IPOs in recent months.

Bridgelux said Kaistar will not only bring money but also manufacturing expertise to help boost the company's growth in the LED lighting market. Epistar makes LEDs for general lighting, as well as cell phones, TVs and other consumer electronics. Kaifa provides contract manufacturing services in areas such as LEDs, meters and hard disk drives and is largely owned by China Electronics Corp., a big state-owned information technology firm.

Lining up a Chinese manufacturer should help Bridgelux's long-stated intention to expand into China. The company opened a factory in its hometown of Livermore in 2010 but also said at the time that it was eying China as a potential location for its next manufacturing operation. The benefits of China are about both low-cost manufacturing and also the Chinese cities' willingness to bankroll LED installations to promote domestically made LED lights.

Commercializing LED technology takes a lot of money. If companies are vertical manufacturers, they have to make LED chips and figure out the ideal combination of materials, chip design and mass production. Gallium-nitride is the semiconductor compound for creating the bright white light that LEDs are known for, but it can be grown on different base materials and mixed with proprietary formulas of phosphors to create the desirable performance.

Bridgelux has been working on growing gallium-nitride on silicon because silicon is cheaper than the more common substrate materials of sapphire or silicon carbide. While production costs could be lower, the LED's performance also could suffer. Improving the efficiency and longevity of gallium-nitride-on-silicon LEDs could be one of the company's key challenges.

The privately-held Bridgelux, founded in 2002, has raised around $220 million since inception, the company said. Bridgelux's other investors include Chrysalix Energy Venture Capital, DCM, El Dorado Ventures, Harris & Harris Group and VantagePoint Venture Partners. Bridgelux has designed LED chips for commercial and residential uses, including landscape lighting.

Another California-based LED chip developer, Soraa, last week announced its first product - a bulb for spotlighting merchandise in shops - after having raised more than $100 million.

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