HC Semitek announced recently that it would be investing in total RMB 6 billion (US $915,625) in the construction of a new LED epiwafer, chip and production line in Yiwu Industrial Park, according to a report from Chinese-language China Securities.

The company has signed an agreement with industrial park officials to build the 2,333.34 acres fab, and plans to acquire construction permits within the next five years. The two organizations also agreed to jointly establish an acquisition fund, which will enable HC Semitek to merge other companies in the LED industry to form an integrated LED supply chain in the future. As of Jan. 4, 2016, HC Semitek has resumed trade on China’s bourse.

Under the agreement, the industrial park management committee agreed to provide HC Semitek no more than RMB 400 million in R&D subsidies, and RMB 1.2 billion preferential loan for a period of eight years. This is roughly equivalent to footing 20% of the LED project bill.

The construction of Yiwu Industrial park as a province level industrial area was approved in 2006, and in 2014 the Ministry of Industrial and Communications labelled it as a national industrial demonstration base. The park spans 192 square meters, and its industrial development area covers 91 square meters. Industries with an advantageous edge operating in the park include electronic devices, and new textile industries.

The industrial park’s management committee is also building a reputable international LED manufacturer production base, which will spur the integration of LED upstream to downstream industries, and attract them to congregate in Yiwu Industrial Park, which in turn would improve the park’s structure and quality.

The company’s expanded LED epiwafer, LED chip and industrial chain has mainly been centered around its renowned global LED manufacturing base. The recent subsidies would propel LED industry upstream to downstream integration, assist the company’s economics of scale and cost advantages. The recent subsidies would also improve the company’s core competitiveness and influence in the industry.

It is expected that the recent developments would strengthen HC Semitek’s LED supply chain integration, and boost its developments in the LED industry. Meanwhile, the Yiwu Industrial Park management committee has given the company R&D subsidies, preferential loans, and MOCVD subsidies, which will further assist the company’s developments in the LED industry.