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Market Insight

Barco invests in Chinese LED manufacturer

September 16, 2019

Charlotte Jones Charlotte Jones Associate Director – Research and Analysis, Cinema, IHS Markit
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Projector manufacturer and visualisation firm, Barco, has announced a strategic deal with Chinese firm Unilumin, a major LED manufacturer. As part of the collaboration, Barco intends to acquire a minority stake in the company through a share transfer agreement.  The shares will be acquired from Unilumin CEO, Mingfeng Lin, for approximately €54 million in return for approximately a 5.0% share of the company, subject to regulatory approvals. The deal opens up a cost-effective and high-quality supply of LED components for Barco as well as more efficient production capacity, while Unilumin gains access to Barco’s pedigree of LED and image processing capabilities.

Our analysis

The link to the cinema industry was first picked up by industry experts and online news bulletin Celluloid Junkie, citing a public statement to jointly commit to target Cinema as a core market from Unilumin. In terms of launching an LED product aimed at the cinema market, Barco already has LED capability, plus the strategic industry connections, but the collaboration would further enhance its ability to produce a mass market product. The figure is relatively substantial so this is not just a speculative investment. Barco, already has strong connections in China, through its joint cinema venture known as Cinionic, in combination with CGS and ALPD, although that venture is focused on laser solutions and has not been linked with LED or other cinema products.

While the deal brings obvious synergies for both companies in the rapidly developing LED market, the effectiveness of the deal for the cinema industry is less certain for now.  Barco is one of the primary projector vendors in the global theatrical market, in which over 50% of all new shipments are recognised as laser, whether laser phosphor or RGB laser.

A move by Barco or any existing projector vendor into an LED display market for cinemas would provide a boost to current LED Cinema uptake, by giving the technology wider validation, and by consequence Samsung’s screen, the only company with a commercial offering. Samsung first launched an LED solution in the cinema market in July 2017 with over-optimistic targets for growth, but the market has been slower to adapt with cost remaining one of the stumbling blocks.

The total number of LED screens in commercial cinemas has reached around 37 in two years of operation based on data to H1 2019. The numbers are behind Samsung’s initial aggressive targets but as the first and only contender offering a new disruptive technology it was always likely to take time to build acceptance as well as improve product specification. For example, Samsung now has three models based on size of screen for Onyx, its LED brand exclusively for cinema.

A viable competitor to the market, whether Barco or another existing projector manufacturer such as NEC or Sony (who also have LED capability through consumer markets) could provide a strategic push towards wider industry adoption, and increase the credibility for non-projection based technology (coming from an existing stakeholder) and ultimately drive competition in cost and performance. Contrarily, the more credible the LED entrant, the better it is for this technology overall, and the better for Samsung even if it is added competition.

Barco itself hasn’t made any formal connection between its strategic collaboration and commercial cinema products, and maybe it is too early to release a roadmap as products and technologies have yet to be developed. While other projector manufacturers may also be trialling their own initiatives, any solution will take time to come to market. All existing projector manufacturers for cinema (Barco, Christie, NEC and Sony) have a foot in LED technology and manufacture.

Ultimately, it has yet to be seen whether LED has a major future as a display technology in cinemas and Barco is probably using the initiative as a possible route to market should wider demand or a viable market develop. Barco is traditionally a leader in developing technology solutions, however, so it could be that it is already further down this road then it is ready or willing to share.

 

Organization
Barco
Research by Market
Media & Advertising
Category
Cinema
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