China-based LED chipmaker Sanan Optoelectronics may enter Taiwan's LED supply chain in third-quarter 2012. The firm has been certified by packaging houses such as Everlight and Unity Opto, said industry sources. Sanan has been quoting low prices comparable to Epistar, added industry sources.
According to Lee Biing-jye, chairman of Epistar, the rising competition from China-based firms will likely impact prices. Also, the impact from China-based firms depends on applications. If Taiwan-based epitaxial wafer firms focus on China or low- and medium-power LED tube lights, then the impact will be more significant, said Lee.
Industry sources noted that Sanan has had financial support from the government's subsidy programs. Nevertheless, the significant investments have been depleting the CNY4 billion (US$629 million) of capital previously obtained, hence Sanan plans to accumulate more capital in second-half 2012. Taiwan-based supply chain players believe if Sanan cannot obtain capital successfully, the firm will not last two years. The support from the China government is crucial.
With subsidies of CNY1.9 billion, Sanan reported net profits of CNY936 million in 2011. However, recent financial reports indicated inventory levels reached CNY970 million in first-quarter 2012, added industry sources.
China-based LED Chipmaker Sanan aims to compete with Taiwan-based Epistar
