Taiwan-based LED chipmaker Tyntek has announced plans to invest 153 million yuan (US$4.94 million) to set up a LED production joint venture with the Fuzhou government in China.

Total investment for the joint venture will be 353 million yuan. First phase development will focus on LED epitaxy wafer and chip production, with plans to install 30 sets of MOCVD equipment and is scheduled to start production in December 2012. Second phase development is to install LED packaging equipment in order to gain market share in the backlighting and general lighting market in China.

Tyntek noted that capacity of the joint venture may expand to 100 MOCVD sets in 3.5 years based on the market situation.

Overall investments of Taiwan LED players in China totaled US$240 million in 2009 and increased to US$1.2 billion in 2010, of which investments for upstream LED epitaxy wafer and chip production reached almost US$1.1 billion.

Taiwan's LED industry value was about US$2.17 billion in 2009, accounting for 25% of the global LED industry and by the end of 2009 about 50% of Taiwan-based LED players' investment had moved to China. Taiwan's LED industry value is expected to reach US$2.7 billion in 2010, and about 60-70% of the investment will move to China.

The main reason for Taiwan-based LED players to actively invest in China is the subsidy from the China government amid significant market demand. Investors get 10 million yuan subsidy for each MOCVD machine installed, which is about half of the cost.

Taiwan LED players invested about US$240 million in China in 2009, and investment reached US$1.17 billion by the end of August 2010, according to industry statistics from China.