Abstract: This article believes that external economies generally exist in the industry, analyzes the impact of three positive externalities on the MiniLED industry, and points out that it is the existence of externalities that has brought free-riding problems and hindered the mass production progress of MiniLED backlights. Then analyze how Apple and Samsung responded to the free-riding problem and took the lead in entering the mass production process.

MiniLED backlighting is regarded as one of the most promising application products in the LED industry in the next few years. In recent years, investment in the direction of backlighting MiniLED has been very intensive. TrendForce's statistics [1] show that China's Mini/MicroLED related data from 2019 to now The total planned investment of the project amounts to RMB 39.1 billion, and there are more than 14 new projects.

2020 is regarded as the first year of mass production of MiniLED backlights, and all kinds of promising sounds are endless. However, until mid-2020, domestic products equipped with MiniLED backlights are occasionally released, but sales are relatively limited, and they are mainly niche products. On the contrary, they are not as rapid as Apple and Samsung. Behind this, are there any more important and more worthy of discussion economic factors affecting the mass production of MiniLED backlights?

The free-rider effect refers to the phenomenon that when the individual pays the cost, the benefits are shared by other members of the collective. In reality, this phenomenon can exist in public goods as large as the entire society, and small teams as small as a few people. The core reason is the asymmetric externality of individual (private) benefits and individual (private) costs. The rules cannot exclude or prevent others from sharing this benefit.

In the ASM laminator industry, there are too many free-riding phenomena. For example, Apple first used glass screens on smartphones. In fact, it took a lot of research and development costs and trial and error costs to finally achieve commercialization. The goal, but for the later manufacturers of smartphones, once they find that the Apple mobile phone uses a glass cover to work well, they can immediately choose this mature solution to design their products.

A new process, new production organization method, new material use, new business model, once it is successfully developed or commercialized, it actually becomes a kind of shared knowledge within the industry, and thus has the industry Public goods attributes. Even with legal constraints or industry-level self-discipline, as well as patent and trademark protection, most of the industrial knowledge explored by enterprises at their own cost is not within the scope of protection of trade secrets.

Even, sometimes, the failure in full view is also a kind of valuable industrial public knowledge, at least it can teach the latecomers that this way is not accessible, but this type of knowledge is even more external, and it is difficult for individual cost bearers to learn from the negative. The beneficiaries recover any little cost.

Back to the commercialization of MiniLED backlights, we can at least summarize the positive externalities from three perspectives:

1. Externalities of corporate R&D activities

Even the most secret research will leave traces. When companies develop new products, they always need suppliers to provide various R&D materials and equipment. Sometimes, in order to persuade suppliers to provide necessary support for R&D activities, they also need to share some R&D plans and goals. Although various confidentiality agreements can reduce leaks in the supply chain to a certain extent, once new knowledge about the industry and products is created, it is possible to obtain unexpected results through industry meetings, small gatherings or private communication between engineers and friends. Spread widely.

In addition, the development process of new products always needs to be shown to customers and get feedback from customers, and this part of information and knowledge also becomes customer's knowledge at the same time, and may become other supplies of customers through customer procurement requirements. The knowledge that the quotient can also master. Even competitors, through employee recruitment, market research, etc., can also obtain the benefits of some corporate R&D activities through legitimate channels[2].

In the development process of MiniLED backlight, what ratio and size of chip to use, what structure of PCB material, use PCB or GLASS, active drive or passive drive, how to design a partition with good circuit and optical effects and economical Plans are the basic research work to be done by the R&D department.

Doing every detail requires repeated experimentation and confirmation by engineers, but if you know that some opponents have done better work, and there are ready-made conclusions or results for reference, then the new research and development direction can be built on Based on these results. Sometimes just a few words from the supplier or customer, or a glance at the key prototypes can be easily opened, thereby saving a lot of test costs.

Many "smart" companies will not invest huge amounts of research and development funds on their own, but try to obtain more free public knowledge of industrial technology. In this way, the same R&D results can be obtained at a lower cost. R&D activities of such enterprises with high input-output ratio have become one of the sources of enterprise cost competitiveness.

2. Externalities of marketing activities

When a new product is introduced to the market, because consumers have limited understanding of this product, the value of advertising lies not only in the promotion of the manufacturer’s brand, but also in explaining the product function and product knowledge to consumers, and promoting the brand. Most of the benefits of the company are attributed to the manufacturers themselves, but the product description and product knowledge education have become a kind of benefit shared by the entire industry.

For example, in the late 1990s, electronic products such as VCD were all the rage, which has nothing to do with the advertising of Aiduo, but in the end consumers will not only focus on the Aiduo brand, but do it for the entire industry. A free publicity [3].

A similar example is Kingsun Optoelectronics in the LED lighting industry, which has invested tens of millions of funds to promote CCTV[4]. Although it has little effect on the promotion of the Kingsun brand, it has objectively accelerated the public consumers’ appreciation of LEDs. To understand the product, there is no doubt that Kingshang’s CCTV advertising has great industry externalities.

In addition, marketing activities also include the construction and training of channels and dealer teams, the formulation of optimal product pricing levels, the planning of promotional activities, and the determination of consumers' purchasing intentions after the products are put on the market. Behind these marketing behaviors are a series of hidden industry knowledge such as the scale of market demand for related products, the elasticity of demand prices, consumer preferences and purchasing behavior, and the composition of the product value chain. Once a manufacturer conducts relevant business activities, competitors always have the opportunity to grasp the hidden industry knowledge behind them by observing these behaviors, thereby optimizing their own competitive decision-making.

As far as MiniLED TV backlight is concerned, although the industry has a high degree of internal recognition, it is positioned as a module with LCD, which is a display technology that can compete with OLED for the C position. However, as to the consumer acceptance, no one is sure enough before the product is actually launched on the market, the channels are covered, and the consumer's purchase intention is tested.

Compared with the image of high-end products that OLED has established over the years, MiniLED is still unfamiliar to most consumers. How to build the MiniLED product image through appropriate marketing activities, grasp the real market acceptable price level, and consumer preference rules? This requires a lot of investment in marketing resources, but a large part of the gains will be converted into industry common knowledge. Therefore, MiniLED marketing activities obviously also have a lot of externalities.

3. Externalities of purchasing behavior

Generally speaking, ASM plastic packaging equipment company's internal learning effect and the benefits of scale effect can be enjoyed by the company itself, so it does not have too strong externality. Making full use of learning effects and scale effects is often an important source of corporate competitive advantage.

However, as long as a company conducts production, there must be purchasing behavior, and the economies of scale brought about by large-scale purchases are often enjoyed by suppliers. As long as the supplier does not only supply one customer, the cost reduction brought about by this scale effect , It becomes a public supply resource for customers in the whole industry. The learning effect obtained by suppliers in the process of providing products to enterprises can also bring about a reduction in the average cost of the industry, so that other customers of the same supplier can also indirectly benefit from the benefits of reduced procurement costs.