Taipei, July 1, 2010 (CENS)--With emergence of LED-backlit LCD TVs and lightings spurring more need for LED chips worldwide, Taiwan`s top three LED chip makers, namely Everlight Electronics Inc., Epistar Corp. and Formosa Epitaxy Inc., have concurred that LED supply will surely lag behind demand till the end of this year due mainly to material shortages.

Not long before, swarms of institutional investors once dumped their stocks of Taiwan`s listed LED companies mainly because industry insiders` moves to drastically boost capacity made market observers pessimistically warn that supply of LED chips would exceed demand in the second quarter of the year and thus undermine these companies` profits.

However, the pessimism has turned into optimism among investors as new applications of LED, including LED-backlit devices and lightings, have helped to fuel need for much more LEDs than expected, especially when Taiwan`s major LED makers haven expressed their confidence of achieving banner sales in the year.

Formosa Epitaxy`s president F.R. Chien noted his firm has stepped up installing new MOCVD (metal organic chemical vapor deposition) equipment in factories to meet increasing downstream demand for LED, but still can`t satisfy all its customers due mainly to server deficiency of materials, like sapphire substrates.

Epistar`s president M.C. Chou also indicated that shortages of sapphire substrates and special gas have even forced some insiders to temporarily idle their MOCVD equipment, but to secure stability of material supplies. He also mentioned that the drastic shortages are expected to linger through the second half of this year, and are very likely to make global shipment of LED-backlit LCD TVs fail to reach 30 million units estimated by vendors in the year. Presently, the penetration rate of such new LCD TVs is 12.5% in the U.S. and 11% in China.

In the meantime, Robert Yeh, chairman of Everlight, who has massively delivered LEDs to Korean LED-backlit LCD TV vendors, also expects the shortages in the global supply chain of LEDs to last till the end of this year.

(by Steve Chuang)