Taiwan to Keep Lead in Global LED Market

Taiwan is expected to maintain its lead in the global rush toward the light emitting diode (LED) market in the coming years, thanks to a continuing influx of fresh funds. Some of the money is being used to set up new facilities, and some is going into joint ventures targeting the huge Chinese market.

Semiconductor Equipment and Materials International (SEMI) predicts that total investment in the Taiwanese LED industry will top US$600 million this year, the largest amount in the world, further consolidating the industry's leading status in the global market. In 2009 Taiwan boasted 35 LED factories, the highest density worldwide and accounting for 40% of the global total.

A number of heavyweight electronic firms are moving into the LED sector, including the Taiwan Semiconductor Manufacturing Co. (TSMC), AU Optronics, and Chimei Innolux Corp.

TSMC, for instance, is scheduled to complete the NT$5.5 billion (US$177 million at NT$31:US$1) first-phase engineering work for its LED R&D and manufacturing center by year-end and to begin mass production in the first quarter of 2011, possibly with technology licensed by Philips. TSMC plans to manufacture own-brand LED lighting sources and LED lighting engines on vertically integrated production lines which will also handle epitaxy production, packaging, and module making.

Other companies are setting up joint ventures with Chinese partners, with an eye on the huge Chinese market (bolstered by demand associated with the Chinese government's plan to replace existing streetlights in major cities with LED lamps). Moreover, some Chinese municipal governments are actively encouraging the development of the LED industry by subsidizing the MOCVD equipment needed for LED factories or directly investing in joint-venture LED producers.

The Epistar Corp., Taiwan's leading LED-chip supplier, appears to be most aggressive in its efforts to tap the Chinese market. On Oct. 4, the company's board of directors decided to invest US$70 million in an LED joint venture with the China Electronics Corp. (CEC) in Xiamen. The venture will produce epitaxy, dies, LED lighting modules, and other LED products to fill the needs of flat panel display (FPD) factories, monitor producers, TV factories, and lighting plants. This is Epistar's third LED joint venture in China, following one in Shandong Province and another in Jiangsu Province.

SEMI points out a major problem facing the Taiwanese LED industry: the lack of own brands. As a result, Taiwan may lose its second-place (after Japan) global ranking in terms of value to South Korea this year; the island will, however, retain its top ranking in terms of output volume.