History of Monopoly in Innovative Technology and Business Development

The Case of Blue LEDs from the 1980s to the 2000s

Abstract

This study aims to elucidate the history of commercialization of blue light-emitting diodes (LEDs) from the 1980s to the 2000s, focusing on the competitive relationship between Toyoda Gosei and Nichia Corporation, as well as on Nichia’s subsequent business development process. Blue LEDs, once considered unlikely to be realized within the twentieth century, were successfully commercialized in the 1990s and subsequently diffused across a wide range of applications, representing a paradigmatic case of innovation success. First, a review of the commercialization process reveals that Toyoda Gosei and Nichia, firms originally from industries unrelated to electronics, entered a technological domain from which major electronics manufacturers had withdrawn after years of unsuccessful efforts; ultimately, these firms achieved commercialization through intense competition. Second, this study highlights the approximately ten-year time lag between the development of various applications and the eventual market expansion of white LEDs created by combining blue LEDs with phosphors in mobile phone backlighting. However, prior studies have not sufficiently addressed the relationships among inter-firm competition, technological evolution, and the time lag in market growth. Accordingly, this study poses the research question, “Why did the commercialization of blue LEDs succeed?” It seeks to clarify (1) the impact of competition between Toyoda Gosei and Nichia on the commercialization process and (2) the process through which Nichia’s business development strategies led to market formation. These findings provide empirical evidence that a strong competitor can induce firms to adopt radically innovative technologies, thereby accelerating technological advancement. Furthermore, this study suggests that general-purpose technologies, including those long anticipated by society, may face significant obstacles to diffusion, including the need for complementary technological development for application creation, insufficient performance records, cost-effectiveness in the early stages, and biased resource allocation by monopolistic firms.