By Kim Yoo-chul
OCI, the world’s second-biggest maker of polysilicon widely used in solar panels, hopes to deal with the prolonged downturn in the global solar energy market by focusing on the light-emitting diode (LED) industry.
The Seoul-based outfit said Sunday that it had signed a deal with Nasdaq-listed GT Advanced Technologies (GTAT) to bolster its endeavors in the market for sapphire ingots, a critical material in the manufacture of LED chips.
Under the agreement, OCI plans to use equipment bought by GTAT to produce value-added sapphire ingots through cutting-edge heat exchange method (HEM) technology.
``With technological help from GTAT, OCI has already started exporting various sapphire ingots sized from 2-, 4-, to 6-inches to our customers in Taiwan, China and Japan,’’ OCI’s public relations office head Park Sang-bae said.
Park said OCI is heavily investing in strengthening its global presence with the hope that the business for sapphire ingots will help it diversify its business portfolios.
``By 2015, OCI aims to take up a 20 percent global market share in sapphire ingots, which will catapult us to become the world’s No. 3 manufacturer of the material,’’ Park said.
The announcement came after the demand for LED lighting began showing signs of improvement from early this year.
Analysts in Seoul said last year was the ``turning point’’ for LED lighting, while stressing its popularity will continue to rise as quality and performance such as lighting intensity improve.
``The one key point is that there is more demand for LED products from customers seeking energy-efficient solutions and that’s another reason why we will further ramp up production of sapphire ingots,’’ Park said.
LED products use 80 percent less electricity than conventional bulbs, and they are longer lasting and easy to use.
With the threat of natural disasters such as earthquakes and tsunamis, governments in Asia and private sectors are closely working together to reduce energy consumption.
OCI seems to be upbeat because of the advanced technology of HEM.
``HEM produces large-sized sapphire ingots more efficiently. Compared to conventional technology, HEM is cost-effective and far better in terms of production yield,’’ it said in a statement.
Yet, it remains to be seen whether investors share the upbeat sentiment as OCI has struggled on the Seoul bourse of late due to scale-back plans by major solar panel makers including Hyundai Heavy Industries (HHI), Samsung SDI and Solar.
Also, Germany ― the world’s biggest solar energy market, is planning to cut feed-in tariffs, the rate paid to owners of solar energy installations in the country, by at least 20 percent from April, which is more bad news for OCI.
``The possibility of a subsidy reduction in Germany is further darkening the outlook for polysilicon makers,’’ said Ahn Sang-hee, an analyst at Daishin Securities in Seoul, who has come up with a ``neutral’’ recommendation on OCI.
Ahn said the outlook is affecting investment appetite in OCI, but wouldn’t comment on the updated business plan for ingots.