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Vertical Integration – Good for LED, Bad for Corn Chips

Time: 2015-03-13 09:26:19     Copyfrom: Senruite LED Lighting
Vertical integration is one of those corporate buzz words that no one really likes. It rings as a hollow pair of words that only people who spend a lot of time in corporate conference rooms can really appreciate. Here’s Jack Donaghy explaining the concept to Liz Lemon.
So why is this lighting blog talking about vertical integration? Well, I don’t often write about Cree on our World of Light. We represent over 70 manufacturers and few of them have the kind of marketing and media muscle Cree does. They are the only line we represent that advertises a light bulb during football games.
That said, I felt it was important to talk about what differentiates Cree in the marketplace for lighting fixtures. Especially when you could make the argument that the fixtures themselves are part of generally well-worn product categories like 2×2 basket troffers, 4ft strip lights and cobra-head style area lights.

There are lots of differences between Cree and its competitors. A 10 year warranty on its entire fixture line is one of them. Nearly 100 percent of its fixture and chip line built in the USA is another, but if I had to boil it down to one thing, it would vertical integration.

All vertical integration really means for us is that Cree works from the DNA up to build their fixtures in ways their manufacturers simply cannot. Cree builds the chips, diodes and heat sinks that will be the heart of the fixture. They see the chip and all other elements of the fixture as a complete whole, designed to perform the specific task that fixture is meant to carry out.

That’s fundamentally different from how other lighting manufacturers work. Cree’s primary competitors don’t build chips – they buy them from other chip manufacturers (Cree being one of them). That means that they are engineering their product line for someone else’s chip. That was the standard practice back when lamps and light fixtures were de-coupled think of a fluorescent tube and ballast in a troffer. It is very possible that you’d have up to three manufacturers in that fixture, one for each element. Today of course, an LED troffer is complete unit. The housing of the fixture acting as a heat-sink for the onboard LEDs. We all know that LED is ever-improving. That’s the primary advantage Cree has over other manufacturers, because they control the chip set they are never at the mercy of a chip supplier when it comes to innovation.

This is how Cree has developed new products with such stunning speed, entering different market segments in rapid succession with fixtures that are instant hits. Whether it’s the CXB High Bay, the LS Series, the new LED T8, the OSQ area light, the ZR Troffer, the KR Series Downlight, the XSP wall pack or the Smartcast system – all of which were released or re-designed in the last year.
Representing as many lines as we do, we understand that not all manufacturers are going to also be chip makers. It would be unreasonable to think otherwise. LED chip manufacturing is its own science. However, it is reasonable to say that integrating the process can lead to an incredible pace for innovation, demonstrated by the list and gallery above.

Now that the pack is catching up and LED is the light source of choice for most manufacturers, you might be tempted to think that all manufacturers are the same. That’s simply not the case. As their slogan says – Cree is LED Lighting. That’s why they’re always innovating, from the ground (or chip) up.