Chinese LED Company Lattice Power Tries to Make Silicon-based LEDs

Chinese startup Lattice Power Corp. says it beat bigger and more well-known rivals around the world by creating a cheaper light-emitting diode technology, and has closed on $80 million in new equity funding to advance its production, the company's Executive Chairman Sonny Wu told Venture Capital Dispatch.

Lattice Power is making its LED chips using silicon carbide as its substrate material. Everyone else, including companies such as Philips NVPHG -0.16% and others, use sapphire, or silicon in the case of Cree Inc.CREE +0.80% Both materials are more expensive than silicon carbide, according to Pallavi Madakasira, an analyst at research firm Lux Research Inc., who studies the LED industry.

Many large manufacturers have tried to make silicon-based LEDs, Ms. Madakasira said, but no product of note, with low prices and comparable performance, has so far come to market in large volumes. Mr. Wu said Lattice Power is the one to have overcome the challenges others faced.

To help the company advance, Asia Pacific Resources Development led the Series D equity financing, with GSR Ventures, where Mr. Wu is managing director, Mayfield Fund and Crescent HydePark participating. The equity round may go up to $100 million, Mr. Wu said. He added that Lattice Power has access to $1 billion in a line of credit from a regional Chinese bank. He declined to name the bank.

Lattice Power, based in Nanchang, China, now has set its eyes on the U.S. to open a research-and-development center, as well as a manufacturing facility, Mr. Wu said. The site hasn't been selected yet. "We are leading the world with our technology, which is highly unusual for China," Mr. Wu said, adding that many companies in China are copycats.

Lattice Power will be able to draw on the Chinese line of credit to create a business in the U.S., he said. Lattice Power named James Haworth, former Philips executive, to lead the company's U.S. operations, Mr. Wu said.

The proof for Lattice Power's claims haven't yet been widely available, and the challenges the company and others like it face are great, according to Ms. Madakasira. "Lattice Power has put out a lot of PR on how they've expanded capacities," Ms. Madakasira said. But "we haven't seen any product releases. We haven't gotten our hands on any of it, nor do we know anyone who is using it."

The advantage of silicon carbide may not be as large as some of its proponents claim, Ms. Madakasira said. Even though silicon is cheaper than other substrates, it's much harder to use to make LEDs, by requiring an introduction of another material layer. "Even if you did start off with silicon," she said, "by the time you end up growing these buffer layers it negates the obvious cost benefits you get from a silicon."

In addition, she said, the quality of the light coming off of silicon-based LEDs is lower than from sapphire. Lattice Power, however, said its current LEDs have 150 lumens per watt, which is competitive with products from other manufacturers.

Osram Licht AGOSR.XE -4.02%, Samsung Group and Toshiba Corp ., which purchased technology from U.S. startup Bridgelux, are some of the companies that have spoken about having internal development of silicon-substrate LEDs. None have released any substantial products based on the technology, Ms. Madakasira said. The LED market totaled about $16.5 billion in 2012, according to Digitimes Research. It is likely to grow several-fold over the following decade, according to several research reports.

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