Epistar Partners With China Electronics to Tap LED Application Market

Taipei, Oct. 6, 2010 (CENS)--Epistar Inc., currently Taiwan's No.1 LED chipmaker, has decided to invest US$70 million to set up a joint venture in cooperation with China Electronics Corp. (CEC) to turn out epi wafers, chips, light sources and lighting products for uses in CEC's LCD panels, monitors, television sets and lighting.

CEC is the mainland's No.1 state-run information-technology conglomerate, which owns around 50 subsidiaries including 14 publicly held companies, such as Kaifa Technology Co., Ltd., Nanjing Panda Electronics Co., Ltd., and TPV Technology Ltd.

People familiar with the investment plan pointed out that Epistar and CEC will hold an equal 45% stake in the joint venture, leaving the remaining 10% to an LED venture co-held by Epistar, TPV and Everlight Electronics Co., Ltd.

The Epistar-CEC venture will be outfitted with 30 metal organic chemical vapor deposition (MOCVD) chambers in the initial stage and another 30 afterwards.

This is Epistar's biggest investment case in the mainland in recent years. Industry watchers pointed out this investment and the company's recent cross-licensing of patented technologies with Toyoda Gosei (TG) will help elevate the company onto global LED stage.

Industry executives estimated the investment will help Epistar achieve the goal of increasing sales by at least 50%, to NT$30 billion (US$937 million ) next year, in light of CEC's massive demands. TPV, for instance, is estimated to ship 70 million LCD monitors, making it the world's No.1 subcontractor of LCD TVs. Also, CEC plays a crucial role in the mainland's LED-lighting policy.

Institutional investors estimated Epistar's after-tax earnings at NT$2 per share and its gross margin at 38-40% for last quarter thanks to a successful product portfolio strategy.