Sanan Optoelectronics yesterday released the contract announcement that its wholly-owned subsidiary, Anhui Sanan Optoelectronics Co., Ltd. (Anhui Sanan) on July 17 signed a sourcing agreement with Shenzhen MTC Lighting Co., Ltd. (Shenzhen MTC), a wholly-owned subsidiary of Shenzhen MTC Co., Ltd. According to the agreement, from the date of signing of the agreement for the coming year, the Shenzhen MTC will purchase total amount of RMB 500 million of LED chips from Anhui Sanan, this amount accounts for about 15% of Sanan sales revenue in 2012.

An official from Sanan said that Shenzhen MTC is one of leading companies in domestic LED packaging industry and this partnership agreement marks Sanan has become the major supplier of LED chips for Shenzhen MTC. He also said that this year, LED market began to improve, especially in the second quarter of strong growth in demand for LED products. In this company, over 130 sets of MOCVD equipments are all in production.

"There are indications that the LED industry this year has been significantly getting better," the official told reporters of the China Securities Network. The continued low prices in the past few years, significant cost reductions throughout the industry, will obviously enhance the LED market penetration rate in lighting industry. For the LED market in the second half of this year and even next year, he seemed very optimistic, "I think the industry has warmed up, which may last for several years." While for the chip prices, the official cautiously said that the chip prices have been stable after a drop in this March, and rising chip prices is not a good thing for the warming market.