China-Based Sanan Optoelectronics Upgrads Its Technology Through Recruiting Experts

China-based LED chipmaker Sanan Optoelectronics has been quickly upgrading its technology through recruiting experts from Taiwan-based makers and expanding production capacity. Sanan is close behind first-tier Taiwan-based makers in terms of technology, and has offered prices below production costs for its LED chips to compete, according to Taiwan-based makers.

Recently, China-based LED firms, such as Sanan, have been attracting Taiwan-based engineers with higher pay. Sanan has been mass producing LED chips to differ itself from other China-based peers and Sanan's technology is rapidly catching up to Taiwan-based makers, said industry sources.

On the other hand, said industry sources, Sanan has been able to catch up quickly due to help from the Taiwan-based engineers it has recruited. But if these engineers do not have the knowledge to continue upgrading chip technologies and Taiwan-based makers continue to innovate and make improvements, the technological gap between China- and Taiwan-based LED chipmakers in the high-end market will gradually widen.

Taiwan-based LED firm Epileds reported third-quarter gross margin of 19.3% with falling revenues, while Formosa Epitaxy reported third-quarter gross margin of 7%, much higher than the 2% reported in the second quarter. Formosa Epitaxy noted that the growth in gross margin was due to increasing demand for backlight products. Nevertheless, due to low price, it has been difficult for gross margin to reach over 10%. The firm reported net loss of NT$34 million (US$1.16 million).

Genesis Photonics reported third-quarter gross margin of 15% but due to non-operating loss, the firm reported third-quarter net loss of NT$377 million. Tekcore reported net loss of NT$177 million for the third quarter of 2012.

*Figures are not consolidated