Neo-Neon Holdings Ltd. will spend around US$30 million to open an LED chip production facility in Yangzhou, China, according to an article on Taiwan Economic News.

Neo-Neon, a lighting company listed on the Hong Kong exchanges, has signed an agreement with authority of an industrial zone in Yangzhou, according to reports of Hong Kong’s local media. Neo-Neon is reportedly to plan to carry out the investment plan in three phases, with each phase tooling metal organic chemical vapor deposition (MOCVD) chambers for an output of 20,000 two-inch epitaxy LED wafers a month.

Neo-Neon announced that the first-phase production lines would be operational in June next year and the second-phase production lines would start production sometime in the second half of next year. Tooling of third-phase production lines will begin in 2011. The chips produced would be supplied to Neo-Neon’s own LED lighting affiliates as well as other companies, Chairman Ben Fan said.

Fan estimated global supplies of the chips for TV backlights would be outpaced by demands next year, leaving a huge shortage to be filled. He noted Samsung sold out all of the three million LCD TVs it produced last year at a fast clip and plans to build 30 million of the TVs throughout this year. The 2009 TVs, he warned, could use up all chips and lead to supply shortage.