Sources say that the reason China is being considered as the location for the establishment of the new manufacturing unit is because of the need to be close to the customer base. Also, it is important for the company to have the support of the local government. Delta Electronics already has a plant for its LED lighting Devices in Dongguan, South China, and so this area will be a preferred location to be a base for the joint venture that they are entering into, say sources at Delta.

This alliance signifies Epistar’s intentions to make further inroads into the LED lighting device arena and secure order commitment from an important customer. Epistar has been steadily expanding its foothold in the LED market. The group is currently operational with 290 MOCVD machines, and is also second in the global chipmaker positioning – having a 17 per cent of the total market share. In 2009, the company acquired stakes in Tekcore, Nan Ya Photonics and Huga Optotech – all fellow LED chipmakers.

Vertical expansion plans have Epistar considering jointly setting up an LED epitaxial wafer plant with packaging house Lite-on Tech in Changzhou, Jiangsu Province. The company has invested US$8 million in United Microelectronics Corporation (UMC)'s LED lighting subsidiary which is in Jinan, Shandong Province. In June, Epistar, Everlight Electroncis and TPV Technology entered into an agreement to build aLED chip packaging and light strip manufacturing facility in Fuzhou, Fujian Province.

Sources at Delta say that the company has both own-brand as well as ODM operations for LED lighting products. It is seeing a growing demand for LED light bulbs from Japan and will focus on China's street lighting market as well.