Hong Kong-listed TPV Technology will reportedly work with Taiwan-based LED chip maker Epistar to set up an LED epitaxy wafer production plant in China in order to secure LED supply.
Market sources indicated that TPV will need 150 million large-size panels in 2011. With increasing market share for LED backlighting products, it will be necessary for TPV to secure stable LED chip supplies, and Epistar is expected to expand its existing plant in Xiamen, China in order to install MOCVD machines.
Both Epistar and TPV have declined to comment on the rumor but both would not deny the possibility.
TPV president Jason Hsuan noted in a previous visit to Taiwan that in addition to cooperation with panel makers such as AU Optronics (AUO) and Chimei Innolux (CMI), TPV will continue to strengthen its cooperation with other Taiwan-based suppliers and specifically mentioned Epistar.
As TPV, LED packager Everlight Electronics and Epistar announced in June 2010 to set up a LED packaging plant in Fuzhou, China, TPV now only lacks LED chip production capacity in the company's business arrangement in the LED industry.
Epistar responded that the company will not rule out the possibility for cooperation if the overall demand from TPV can fill up a whole production plant.
In additional, TPV expects the global LCD TV market to increase by 30% on year in 2010 despite the strong pressure for inventory digestion in China's LCD TV market. TPV is expected to ship a total of 70 million LCD monitors and LCD TVs.
The sources added that estimates within TPV expect demand for large-size panels to reach 150 million units.
Volumes of LED chips use in a monitor backlight units (BLU) are about 50 chips, and about 200 chips for a 40-inch LED-backlit TV, the sources said. Based on TPV's shipment goal for LCD monitors of 55 million units and 150 million units of LCD TVs in 2010, the overall demand for LED chips may not be able to fill out a whole production plant. However, with TPV fast expanding its capacity amid the growing China market, the two companies might announce cooperation at the end of 2010.
Epistar's current business layout in China is gradually expanding, including the epitaxy wafer plant in Changzhou with Lite-On Technology, which is scheduled to start production in the second quarter of 2011. The plant will have 10 MOCVD sets in the initial period and may expand to 30 sets in the future in response to market demand.
Moreover, Epistar has also invested US$8 million to acquire a 50% stake in a LED affiliate of United Microelectronics Corporation (UMC) in Jinan.