It’s reported that Taiwan’s DRAM chipmakers and backlight-module makers had announced aggressive investments in LED epitaxy-wafer production last year in anticipation of bright market future, touting to add a total of 100 metal organic chemical vapor deposition (MOCVD) machines to the Taiwan industry. However, their optimism has been dampened by the global economic crisis, which has hamstrung consumer spending of various sectors including high-tech products like LED, DRAM and LCD TVs. Now, these manufacturers have put their bold LED investment plans on hold in light of tight finances caused by economic downturn.

Hit by the downtrend, LCD makers and DRAM chipmakers prefer to hold cash in hand. Industry insiders pointed out an epi-wafer maker originally pledging to add 12 MOCVD machines to its production line had recently slashed the number to only five and Lextar, an epi-wafer maker of the AUO Group, had procured only two machines.

The manufacturers including ProMOS Technologies Inc., PowerChip Semiconductor Corp., Chi Mei Optoelectronics Corp. and AU Optronics Corp. have opened LED subsidiaries to enter into epi-wafer manufacturing. Some industry watchers think the expansion slowdown is helpful in easing oversupply problem. Taiwan is the world’s No.1 LED-chip supplier in terms of volume with its world’s largest MOCVD capacity. They estimate supply of the chips to start to go down next year. Industry watchers also estimate economic recession to make hostile takeover of existing LED makers easier in consideration of huge slump of market values of these manufacturers. Epistar, for instance, has seen its share price drop to only NT$29.2, putting its market capitalization at only US$557 million. The company has 171 MOCVD machines, which cost over US$606 million in investment spending.