Recently, Taiwan’s No.1 LED chipmaker Epistar Corp. entered into alliance to tap LED lighting market with Delta Electronics Inc. Both companies’ executives have confirmed reports related to their cooperation on the lighting business. Delta has pledged to buy its partner’s chips.

Delta executives pointed out that Delta has its own LED-chip R&D team, but it will use Epistar’s legalized chips and work with it to develop formats for the lighting products.

Epistar still leaves two vacant seats in its director board to be filled. Industry watchers predict the two vacancies would be eventually filled by Delta’s representatives from Delta’s recent aggressive moves to invest in LED businesses including Helio Optoelectronics Co. and Edison Opto Corp. Epistar would be Delta’s first investment in LED chip-making sector once it will have taken the two seats.

Epistar has declined to comment on such board seats to be filled by Delta reps for its very sensitivity. Lite-On Technology Corp., Delta’s nearest rival in power-supply industry, is holding a major stake in Epistar and one of its major customers.

Delta recently launched 14 LED luminaires, the largest number of LED lighting products that a Taiwan manufacturer has ever introduced. Delta announced it had landed orders from the United States and Europe and will begin producing the lighting products late this quarter or early next quarter.

Delta executives pointed out that Taiwan manufacturers must be able to slice a bigger share of global LED lighting market since the island is the world’s biggest supplier of LED diodes in terms of quantity.

Epistar now runs seven epitaxy-wafer factories and has NT$20 billion (US$606 million) in market revenue, making it an attractive investment target for Delta as holding a 10% stake in the company costs only around NT$2 billion (US$60 million). An epitaxy-wafer factory now costs around NT$3 billion (US$90 million) in investment.