Epistar Corp, Taiwan’s biggest LED chipmaker, Tuesday said that it is optimistic over the next quarter’s prospects, as demand for LED chips used in new applications such as LED TVs keeps growing, reports the Taipei Times.

The company plans to expand capacity by 5 to 10 percent this year, with production ramping up by the end of the year, Epistar’s chairman Lee Biing-jye said in an interview during a cross-strait cooperation seminar of the light-emitting diode (LED) industry.

Demand has rebounded over the past three months from March, driven by inventory restocking. And the company’s production utilization is approaching 100 percent as supply and demand reached parity earlier this year.

“The third quarter looks quite good,” Lee said. “New demand for LED TVs, netbooks and general lighting is growing faster than we expected. That will make the shortage [of LED chips] worse through the rest of the year as there will be limited new capacity coming out,” Lee said.

Epistar and its peers on the island have been ramping up production since March or April, but supply is expected to remain limited as it usually takes 9 to 10 months to ship the first batch of chips, Lee said.

He also forecast limited rise in revenues in the coming months, due to capacity limitations and little chance of a price hike.

Lee said the company was concerned about potential double booking by customers amid the shortage and risks of a downward adjustment in the outlook for netbooks and mobile phones, the main consumers of LED.

Epistar posted losses of NT$107 million (US$3.3 million) — its second straight quarterly losses — compared with a net income of NT$154 million in the same period last year.

The two-day seminar on enhancing cooperation between LED companies in Taiwan and mainland China could bring more opportunities to local firms.

“We aim to help local LED firms get easier access to China’s LED market, which is expected to spend NT$70 billion on its program to replace fluorescent street lamps in more than 20 cities in China over the next three years,” said Johnsee Lee, president of event co-organizer Industrial Technology Research Institute.