With the great growth in LED TV backlighting demand in last year, lots of LED chip production capacity has been utilized, although the oversupply in the market has not yet been fully resolved, it has significantly reduce the gap between supply and demand, so manufacturers from Taiwan and Mainland have released news about expanding capacity, including Sanan, Silan Microelectronics and Aucksun, while Epistar and Lextar also are expanding chip production capacity by 25% to 33%, mainly betting on the rapid development of LED lighting in future, chip manufacturers are first expanding capacity to seize market share, but in the case that the LED industry is still volatile, capacity expansion becomes a bet on the market development in future.

As the penetration of LED TV will reach 90% this year, it is expected that LED TV demand will enter the naturally growing market, the demand growth rate of backlight is not as great as before from 2014 to 2015, the era that LED TV backlight grow rapidly will soon be over, so LED industry began targeting LED lighting market, and manufacturers from Taiwan and mainland have revealed news about expanding capacity in this year.

Mainland chip manufacturers such as Sanan, Silan and Aucksun have been reported to expand chip production capacity, Sanan have announced to increase capital of 3.3 billion Yuan, about 2.8 billion Yuan will be invested to restart the 2nd project in Wuhu and the rest will be used to supplement working capital. In terms of that Sanan has 141 units of 2-inch MOCVD machines (effective capacity approximately 130 units), when the newly added capacity is fully put into operation, production capacity of Sanan will double.

Taiwan chip manufacturers has not lagged behind mainland chip makers in expanding capacity, Epistar will expand production capacity at least 25% this year, it has increased capacity more than 10% since this year, and the expansion behavior is still ongoing, but Epistar said that its production capacity has already been fully utilized, the expansion aims to adapt to market demand.

Lextar also starts expanding chip production capacity in succession at the Suzhou plant this year, in view of that it has 70 to 80 sets of MOCVD machines, it is also expected to add about one-third of production capacity, but because the company operates in the one-stop production model, full chip production capacity is supplied to the internal product chain.