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Taiwanese LED Makers Aggressively Expanding in Light of Bright Future

2010/04/13 | By Philip Liu

Taiwanese LED (light emitting diode) firms are vigorously expanding capacities, to capitalize on the huge market potential that is evident in light of the growing popularity of LED TV and LED lighting.

Huga Optotech Inc., a leading LED-epitaxy wafer maker, for instance, has successfully completed a cash capital increment plan via private placement which received enthusiastic reception, enabling it to raise US$112.5 million of fresh fund, almost equivalent to its paid-in capital.

Bright Led Electronics Corp. also received excessive subscription to its capital increment plan, which generated US$59 million of fresh fund, also equivalent to its paid-in capital of US$61 million.

A number of other local LED firms have also recently carried out capital increment plans successfully, including Formosa Expitaxy Inc., Unity Opto Technology Co., Ltd., Tekcore Co., Ltd., and Epistar Corp.

From early 2009 up to now, domestic LED industry has raised some US$625 million of capital, the highest for the industry ever.

The market potential of LED has also attracted the attention of major electronics firms on the island, many of which have bought into LED firms, including Hon Hai, AU Optronics, Inventec, Lite-On, United Microelectronics Corp. (UMC), and Taiwan Semiconductor Manufacturing Corp. (TSMC). TSMC, for instance, has invested US$40 million in BridgeLux, a epitaxy-wafer maker in the U.S., thereby gaining a seat on the company's board of directors. Some have set up their LED subsidiaries, such as AU Optronics.

Some local electronics firms have even set their sight on the market across Taiwan Strait.

Epistar, for instance, has teamed up with Lite-On and a Chinese home-appliances maker in setting up an LED firm in Changzhou of Jiangsu Province at cost of US$120 million, in addition to joining hands with UMC for investing US$16 million in an LED plant in Shandong Province. Powerchip, a memory-chip maker, has also resolved to invest US$15 million in establishing an LED firm in Xuzhou of Jiangsu Province.

One major factor behind the vigorous investments in LED is the growing demand generated by the growing popularity of LED TV, or LCD (liquid crystal display) TV using LED as back light, since the second quarter of 2009, thanks to the merits of compact size (thus thinner screen), low power consumption, and higher color saturation, compared with traditional LCD TV which uses CCFL (cold cathode fluorescent lamp) as the back-light source.

Samsung debuted LED TV in 2007 and the product caught on in the second quarter of 2009, becoming one of first batch of industries to recover from global recession. Global sales of LED TV is expected to hit 36.5 million units, 20% of the total LCD TV sales of 170 million, and the figure will rise to 184 million by 2015, for 72% of penetration rate, according to DisplaySearch, an industry research body.

Penetration rates of LED for computer products are also increasing rapidly. By the end of this year, 84% of notebook PCs on the global market will embrace LED-backlit screens, up from 61% at the end of 2009, while LED-backlit monitors will see their market share rise to 17% by year end, compared with 5% a year earlier, which will jump to 44% by 2012.

Investor interest in LED has also been whetted by the rapid expansion in the demand for LED lighting, due to growing environment-protection awareness and continuous price drop, at a rate of around 30% a quarter.

As a result, market players foresees tremendous growth potential for the global LED market, now reaching only US$8 billion annually, in the coming years. Taiwan stands in a good stead to tap that potential, thanks to its well-established LED component industry, which ranks first place worldwide in output volume and second place in output value, trailing only Japan. Output value of Taiwan's LED industry hit US$1.5 billion in 2008, for 20% of global market share.

Epistar, for instance, is the world's largest red-light and the third largest blue-light LED epitaxy supplier, boasting over 50% global market share for LED TV back-lit device. Among the world's top five LED firms, it is the only one specializing in upstream epitaxy production, with 1,100 patents including those still pending, firmly consolidating its global status.