Colorstars Group's Comment on Competitors and Industry Peers
We sell our products globally primarily to lighting distributors selling LED lamps
and lighting fixtures for commercial lighting. As forecast in the Next Generation
Lighting Industry Alliance (“NGLIA”) report, we expect this market
to grow rapidly, especially as incandescent and fluorescent lamps are replaced
by LEDs in commercial lighting because of energy savings, greater design flexibility,
the elimination of pollutants, greater ruggedness, longer lifetimes and lack of
catastrophic failures.
According to the NGLIA, an industry consortium involved in solid-state-lighting
(“SSL”) working in cooperation with the United States Department
of Energy (“DOE”), the size of the domestic market for lamps (light
bulbs), ballasts, lighting fixtures, and lighting controls is about $12 billion.
Globally, this market is about $40 billion.
According to the NGLIA, the total electrical energy used for lighting equals
the output of about 100 large power plants (More than 3X this amount is needed
to produce the electricity). The cost of this electricity is about $55 billion
(2003).
The NGLIA also notes that, incandescent lamps, by far are the least efficient
of the common lamp types, consume electrical energy equal to the output of more
than 40 large power plants (according to the NGLIA website atwww.nglia.org/documents/SSL-Benefits.pdf
). According to the DOE, lighting accounts for 8% of all energy consumption
in the United States and 22% of electricity nationwide. LEDs have the potential
to reach 200 lm/W, compared to the efficacies of incandescent lamps at 15 lm/W
and fluorescent tubes at 90 lm/W. If solid-state lighting replaced all existing
lights, the DOE estimates customer savings of $115 billion by 2025 and a 10%
reduction in greenhouse emission gases (according to the NGLIA website at www.nglia.org/about.html).
The NGLIA believes that the energy saving prospect for the use of SSL systems
is significant. They estimate that when SSL reaches certain efficiencies, the
U.S. will save annually the output of about 30 large power plants, or about
6-7% of our country’s total electrical energy usage. This will result
in a savings of $17 billion in annual electrical costs (at 2003 rates). They
also note that the accompanying environmental benefits are substantial, and
include a reduction in carbon dioxide emissions of 155 million tons, and about
a million tons in combined nitrous oxides and sulfur dioxide (according to the
NGLIA website at www.nglia.org/documents/SSL-Benefits.pdf).
Competition in the market in which we sell our products is primarily based on
price and the frequent introduction of new products to the market using the
latest available technology. Our outsourced manufacturing operations in Taiwan,
as well as the location of our research and development staff in Taiwan, allows
us to take full advantage of a well-developed infrastructure of high-technology
companies and well-trained engineers in the SSL industry.
Our principal competitors are Revolution Lighting Technologies, Inc. (NASDAQ:
RVLT) and Lighting Science Group (OTC: LSCG) in U.S.A., Philips and Osram in
Europe, and Toshiba, and Panasonic in Japan. We also expect increased competition
from major traditional lighting companies such as General Electric (NYSE: GE),
Westinghouse, and Acuity Brands who have or are developing LED lighting products.
We believe that we can compete successfully with our competitors because of
lower manufacturing costs and the close proximity of our research and development
operations to one of the world's most advanced high-tech centers – Taipei
– Hsinchu, Taiwan - which offers a supply of highly-trained engineers
and the latest in SSL technology.