Taiwan’s LED Chipmakers Inundate in Contracts in spite of Undercutting Threat from Mainland China

Recently, LED chipmaker San’an Optoelectronics Co., Ltd. from mainland China is attempting to lure customers away from Taiwan’s suppliers with fairly low price, however, contracts are still flooding to Taiwan’s LED chipmakers Epistar and Formosa Epitaxy Inc. for Q3.

San’an has risen quickly over the past two years to prominent position in the LED chip making sector by poaching engineers from Taiwan’s chipmakers, including Epistar and FPI. Although the mainland Chinese chipmaker has sent samples to Taiwan’s assemblers for verification, they said San’an’s chips are still underperforming as compared with Taiwan’s chips.

According to industry executives, it attributed the situation mostly to much higher price/performance ratio of Taiwan-made chips than that of chips made in the mainland. Besides, Taiwan’s LED chipmakers lead their mainland Chinese competitors by two years in terms of technological sophistication.

As a result, in spite of threat from mainland China , Taiwan’s LED chipmakers are still positive about their business.

Chairman Alpha Wu of assembler Unity Opto Technology pointed out that his company is pushing Epistar for delayed chips to keep up with the company’s humming production.

Epistar executives said contracts from assemblers like Unity have inundated their company’s production capacity in the recent two weeks.

FPI executives said immense orders from Unity and backlight module maker Luemns of South Korea have left their company’s production lines no idle capacity. They said the orders will keep the company’s lines busy until the fourth quarter.

Unity’s Wu pointed out that chips from the mainland’s manufacturers, including San’an, are still uncompetitive in pricing and unreliable in quality.

Some Taiwanese assemblers said the mainland’s chipmakers can hardly convince Taiwan’s assemblers to use their products as the chipmakers, in most cases, have set up integrated production mode in cooperation with the mainland’s LED assemblers and application-product suppliers, making the mainland’s assemblers threatening to Taiwan’s assemblers as soon as they grow full-fledged with the money made by the chipmakers from Taiwanese assemblers.

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