YuanRong Photoelectric Technology (YuanRong) announced recently that its wholly owned subsidiary YuanRong Health Technology (temporary translation, the company does not have an official English name) has signed a global strategic partnership agreement with HKI Group to develop Deep UV (DUV) LED technologies, reported Chinese media Sinai.

Under the agreement, HKI Group will be procuring 5 million DUV LED chips from the YuanRong subsidiary in 2016 for disinfection applications. The LED chip maker has agreed to prioritize supplying HKI Group with LED chips that meet the requirements outlined in the contract.

Average InGaN (blue) LED chip prices on the market have plunged to below RMB 0.1 (US $0.02), but DUV chip retail prices in the market can be more than 400 times higher at above RMB 40. Based on these rough estimates of chip prices, it can be estimated the strategic partnership agreement is worth RMB 100 million and above, and will no doubt generate an impressive revenue in 2016. It should be noted the report's price figures are not based on chip spec or equivalent sizes of InGaN LEDs and UV LEDs.

YuanRong entered the DUV LED chip and module industry after acquiring a controlling stake in Chinese UV-LED manufacturer Jason in November 2015, reported Sinai. The company subsidiary YuanRong Health Company has been especially promoting DUV LED chips and modules for health applications, and has been expanding in medical care, health and disinfection distribution channels. The subsidiary comprises the company’s health industry and management structure.

HKI Group on the other hand is a renowned international home appliance, electronic appliance, plastics manufacturer. The two companies strategic partnership in DUV LED health applications will create new profitability growth.

DUV LEDs are viewed less explored niche market with fewer competition in the industry, with main application markets in disinfection, sterilization, and water purification, medical, military and encrypted telecommunications. The product’s unique properties and advantages has made it especially popular in white goods, such as humidifiers, refrigerators, air conditioners, washing machines, air purifiers, water dispensers and others will all use UV LEDs for disinfection. Sinai cited an unknown source statistic that China’s home appliance market will increase 4% to reach a market value of RMB 767.5 billion during first half of 2015. Assuming DUV market penetration reaches 5% in the white goods market application sector will generate a market value close to RMB 100 million and above, signifying its market potential.

Previously, YuanRong announced its subsidiary Jason set a new record for high power output DUV LED chips, and had reached 280 nanometer wavelengths.  Many leading Chinese water purification brands including Micoe, Qinyuan, Beijing Origin Water Technology, Angel Group and others have used YuanRong’s DUV LEDs in their products.