China based San’an Optoelectronics (San’an Opto) has signed a three year cooperative agreement with Honglitronics on June 24 in hopes of increasing domestic market share in the LED market. 

According to the agreement, Honglitronics will purchase RMB 280 million (US $44.8 million) in chips from San’an Opto during the first year. The amount may fluctuate ±15 percent depending on changes in market conditions. In December following the first year, the two parties will negotiate the type of products for purchase and their amount for the following two years. 

At present, San’an Opto’s MOCVD units are at full capacity. With LED market penetration rate estimated to grow this year, San’an Opto has taken a series of stabilization measures in response to strong market demand. The cooperation with Honglitronics will be conducive to furthering Chinese market segmentation and increasing the company’s product market share, laying the foundation for the company’s future development goals.