13 April 2010


Taiwanese LED makers expanding to meet backlighting demand

Taiwanese LED firms are expanding their manufacturing capacities to capitalize on the huge market potential from the growing popularity of LED TV and LED lighting, according to a report in the Taiwan Economic News.

LED chip maker Huga Optotech Inc has completed a cash capital increment plan via a private placement, enabling it to raise a further US$112.5m. This is almost equivalent to its paid-in capital, which was boosted from US$76.2m to US$110.7m early last December, including US$16.61m from selling a 4.9% stake in the firm to Taiwan’s Inventec Corp (the world's fourth-largest notebook PC maker) as well as issuing convertible bonds worth about the same amount to existing shareholder Everlight Electronics Co Ltd (Taiwan's largest LED packaging firm).

Huga said at that time that it was preparing to add 39 new metal-organic chemical vapor deposition (MOCVD) systems to its production lines, expanding LED chip manufacturing capacity to 2 billion units a month, targeting blue and green LEDs at the booming market for LED backlights, especially for liquid crystal display (LCD) TVs.

Fellow LED chip maker Bright LED Electronics Corp has also received excess subscription to its capital increment plan, which generated US$59m in new funding (also nearly equivalent to its paid-in capital of US$61m). Other Taiwanese LED makers that have also recently increased their capital include Formosa Expitaxy Inc, Unity Opto Technology Co Ltd, Tekcore Co Ltd, and Epistar Corp. From early 2009 up to now, Taiwan’s LED industry has raised US$625m in capital, its greatest amount ever.

The market potential for LEDs has also attracted some major electronics firms in Taiwan — including not only Inventec but also Hon Hai, AU Optronics and Lite-On, as well as the world's top two silicon wafer foundries Taiwan Semiconductor Manufacturing Corp (TSMC) and United Microelectronics Corp (UMC) — to buy into LED firms. Others, such as AU Optronics, have established LED subsidiaries.

Some local firms have set their sight on the mainland China market. For example, in March LED epiwafer- and chip-maker Epistar Corp teamed with Taiwan-based LED packaging firm Lite-On Technology Corp and a Chinese home-appliances maker to establish an LED manufacturing plant in Changzhou City, Jiangsu Province, with a total investment of US$120m. Meanwhile, Epistar and UMC plan to build a joint 50:50 LED epiwafer plant in China’s Shandong Province, with Epistar producing epiwafers and UMC focusing on downstream applications. The first phase of the plant has a registered capital of US$16m. Also, in early March, Taiwanese DRAM memory chip maker Powerchip Semiconductor Corp said that it is investing US$15m to establish an LED epiwafer and chip manufacturing plant in Xuzhou, Jiangsu Province.

A major factor behind the investments in LEDs is the growing demand generated since second-quarter 2009 by the growing popularity of liquid crystal display (LCD) TVs using LED-based backlighting (i.e. ‘LED TV’), due to the merits of their compact size (and hence thinner screens), low power consumption, and higher color saturation, compared with traditional LCD TVs that uses CCFL (cold-cathode fluorescent lamp) backlighting sources.

Samsung debuted LED TVs in 2007, and the product caught on in second-quarter 2009, helping it to become one of first industries to recover from the global recession. Global sales of LED TVs are expected to reach 36.5 million units (20% of total LCD TV sales of 170 million) in 2010, and rise to 184 million by 2015 (72% penetration), according to market research firm DisplaySearch.

Penetration rates of LED-backlighting of computer screens are also increasing rapidly: from 61% at the end of 2009 to 84% by end 2010 for notebook PCs, and from 5% at the end of 2009 to 17% by end 2010 then 44% by 2012 for monitors.

Investor interest in LEDs has also been whetted by the rapid expansion in demand for LED-based solid-state lighting, due to growing environment-protection awareness and the continuous drop in pricing (at a rate of about 30% per quarter), according to the report in the Taiwan Economic News.

As a result, market players foresee tremendous growth potential for the global LED market in the coming years, from US$8bn currently. The report reckons that Taiwan is well positioned to tap that potential, due to its well-established LED component industry (which ranks first worldwide in output volume and second in output value at US$1.5bn in 2008, for a 20% global market share, trailing only Japan).

Epistar, for example, is the world’s largest red LED and third largest blue LED epiwafer supplier, with more than 50% global market share for LED TV backlighting devices. Also, of the world’s top five LED makers, Epistar is the only one specializing in upstream epitaxy production (with 1100 patents, including those still pending).

See related item:

Notebook PC firm Inventec buys 4.9% stake in LED maker Huga

Search: Huga Optotech LEDs