Opto Tech, Nichia expand cooperation on LED-chip production

Taipei, Aug. 12, 2004 (CENS)--Opto Tech Corp. will be able to make chips for light-emitting diodes (LEDs) based on Nichia Chemical of Japan's patents with diode epitaxy wafers licensed from Nichia.

The Taiwanese LED-chip maker announced the deal yesterday in Taipei. According to the company, Nichia will in principle license its patent to only one epitaxy-wafer supplier on the island and Opto Tech will be legal to make chips for Nichia-patented diodes on the licensed wafers.

The deal allows Opto Tech to sell its chips in Taiwan, mainland China and South Korea, which have adopted loosening patent policies. Although it was not a patent-licensing pact, Opto Tech has no patent-infringement problem. Its only obligation is to pay Nichia 3% to 5% of the revenue from sales of the chips for Nichia-patented diodes as royalty.

Local industry watchers estimated the LED-chip maker would have to pay Nichia NT$6 million-NT$10 million (US$176,000-US$294,000 at US$1:NT$34) on each NT$200 million (US$5.8 million) per month it acquires from the chips for the Nichia-patented diodes. However, Opto Tech estimated the production to push up its monthly revenue to NT$800 million (US$23.5 million) by the end of next year.

People familiar with the Opto Tech-Nichia deal pointed out that Opto Tech has been watching closely an epitaxy-wafer supplier, which is operating 15 MOCVD (metal organic chemical vapor deposition) machines and whose capacity will reach 15,000 wafers a month by the end of this year.

Opto Tech said its chips for Nichia-patented diodes will go to the market with Nichia's brand name, eliminating Taiwanese LED makers the pressure of violating Nichia patents by using disputed chips.

The island's institutional investors analyzed that Nichia is using the deal with Opto Tech to counter Everlight Electronics Co., Ltd. And Epistar Corp., which Nichia has accused of violating its patents.

Opto Tech also said yesterday that its another advantage for increasing revenue this year is its OLED (organic light emitting diode) displays, whose shipments have ramped up. This item has so far injected NT$60 million (US$1.7 million) a month into its revenue and is projected to increase to bring it a revenue of NT$100 million (US$2.9 million) a month by the end of this year.

Currently, Opto Tech is the only manufacturer of color OLED displays. It plans to add two more lines of the displays to its two existing lines next year. The company estimated the business unit to begin making money once its revenue reaches NT$200 million (US$5.8 million) and the timing to fall on second quarter next year.