LED makers to expand production capacity in 2004

Taipei, Dec. 1, 2003 (CENS)--To meet the increased demand for blue and white light emitting diodes (LEDs) used in cellular phones, Taiwan's upstream and downstream manufacturers of LEDs will largely expand production capacities by twofold to threefold next year.

The firms that have plans to expand output next year include such upstream chip manufacturers as Epistar Corporation and Formosa Epitaxy Inc., and the downstream packaging firms such as everlight Electronics Co. and Bright LED Electronics Corp.

Despite their planned production expansion, these firms don't have any plan to raise fund because they have made handsome profits so far this year and have enough cash to support their capital expenditures.

Although the upstream chip manufacturers have made concrete plans to expand output next year, they might encounter the problem of insufficient land for expansion.

Formosa Epitaxy currently is capable of rolling out 30 million LED chips per month and plans to raise the amount to 45 million by the end of this year. The company anticipated its monthly production capacity will shoot up 366% to reach 140 million by the end of next year.

The firm also plans to expand its monthly output of wafers to 10,000 pieces in the first quarter of next year from present 7,500 pieces. The company said it has recently employed some talented specialists from the semiconductor industry to help reduce defect rates. The firm targets to boost monthly output to 35,000 wafers within the next three years.

Although Epistar has set a goal to increase monthly output to 200 million LEDs by the end of next year, the company is worrying about the acquisition of needed land to meet its output expansion. The firm is capable of rolling out 80 million LEDs per month. To boost output, the company currently has adopted four shifts per day and commissioned some contract manufacturers to produce some of its products.

Epistar said it will spend NT$500 million (US$14.7 million at US$1:NT$34) in capital expenditure next year to facilitate its production expansion. The company said it would have NT$1.5 billion (US$44.11 million) in cash in the first quarter of next year because of its acquisition of fresh funds from issuing exchangeable corporate bonds.

Bright will raise monthly packaging output to 100 million and 150 million LEDs in the first and second quarters of next year, respectively, from present 60 million. Thanks to the production expansion, the company said its single-month revenue will reach NT$270 million (US$7.94 million) in the second quarter of next year.