China encourages foreign investment in LED production
China is strengthening its position as a major global manufacturer of LEDs. In recent months, several leading international suppliers have invested in the construction of factories in the Pearl River, Yangtze River and Minjiang River Delta regions, Bohai Bay Rim Economic Region, and even in some parts of Middle Western China.
“China will become important to the global LED industry this year,” said Zheng Haowen, director of the National High-Tech Enterprise Development LED Professional Committee, addressing a seminar at Global Sources’ systems design and component sourcing event, IIC-China. “The total foreign investment in the sector is projected to exceed $8.8 billion, a substantial increase from about $1.5 billion in 2009.”
To encourage international businesses to set up production facilities in mainland China, local governments have established policies for subsidizing the cost of construction. The district of Nanhai in Foshan, Guangdong province, for instance, has a $146 million to $293 million financial assistance fund. This was put up in October 2009 to support the development of the semiconductor lighting industry in the area.
One result of this endeavor is that USbased SemiLEDs poured $350 million into a new production facility in the district. The factory, Xurui Optoelectronics, will incorporate the company’s patented vertical LED on metal technology in manufacturing wafers and higher-powered chips.
Full-scale operations for the initial stage are projected to start in October 2010, with a monthly capacity of 20 million 1x1mm LED chips. Once all three stages of the project are completed in 2013, output per month is expected to reach 380 million units.
Yangzhou in Jiangsu province has a similar policy. The city government is setting aside $351 million to $366 million for subsidizing MOCVD machine procurement. The fund will be available by October 2011. Through this policy, Yangzhou will shoulder $1.5 million for each unit purchase. Depending on the specifications of the equipment, an MOCVD machine can cost about $4.4 million.
Taiwan-based Formosa Epitaxy has been quick to take advantage of this measure. The company has partnered with Unity, AmTran and South Korea’s LG to establish a $150 million LED epitaxy manufacturing facility in the mainland city. Jiangsu Canyang Corp. is expected to have a monthly output of 1 billion LED chips once it becomes fully operational in May. The ICs will be used largely as backlights for LCD panels.
Other local governments are implementing similar strategies as well. After the National Development and Reform Commission announced the latest industrial guidelines in October 2009, various city officials have increased their efforts to support growth in the LED sector. Shenzhen in Guangdong will be setting aside $14.6 million each year from 2009 to 2011 to help spur the industry’s development in the city.
Shanghai’s Putuo district, meanwhile, doled out $57.5 million to the high-tech industry special fund for 2010. Cree in the US and Osram from Germany are building LED production facilities in Huizhou and Foshan, both in Guangdong.
Epistar is taking the same route as well. The Taiwan-based chipmaker is cooperating with LED packaging house Lite-On and a mainland-based home appliances supplier to set up a $120 million factory in Changzhou, Jiangsu. It also formed a joint-venture company with UMC and invested in a $16 million LED factory in Shandong province.