Suppliers in Taiwan are boosting production of vertical LED chips, expecting the type to be the mainstream component for high-power LED applications in coming years. They are optimistic they can catch up with international leaders such as SemiLEDs, Osram and Cree.

The increasing emphasis on the category is largely driven by its many advantages over transverse or lateral counterpart. Vertical LED chips can be classified according to substrate and emitted color. For the first, there are GaN, GaP and ZnO. The second category has red, green, blue and UV.

The shift to vertical variants is one of the steps Taiwan manufacturers are taking to boost margins and fortify the island’s position in the LED chip industry. They are also improving products’ heat dissipation, power consumption and luminous efficiency to strengthen competitiveness. In terms of shipments, many expect Taiwan to overtake market leader South Korea. By year-end, the island’s output is forecast to exceed the latter’s 31.3 billion projected volume. Taiwan will have 42.1 million LED chips in 2012, growing almost 28 percent YoY, while South Korea will have a 17 percent increase rate.

The key demand drivers are LED lighting and backlighting applications. For the latter, small and medium panels, laptops and desktop monitors will remain the major adopters until 2013. Although orders from consumer electronic products are slowing, companies expect requests from the lighting industry to continue rising.

The same trend is expected for Taiwan’s LED epitaxy industry, which includes wafers and chips. The production value is forecast to reach about $2.4 billion this year, climbing 25 percent YoY, according to the Photonics Industry & Technology Development Association.