Go Scale Capital’s ultimate motive for acquiring Lumileds is to list the LED chip company on the Chinese bourse, a Commercial Times report cited Epistar Chairman B.J. Lee saying at a recent company shareholder meeting.

If Lumileds becomes a listed company in China, it will have a greater capital advantage, and the market impact will be far greater than listing the LED company in a foreign market, analyzed Lee. Potentially, the rival LED chip maker will have an opportunity to acquire greater market share in China, he added.

The China-based investment fund acquired an 80% stake in Philips LED component business, Lumileds, in late March this year. However, how the investment firm will cope with the large scale acquisition remains a challenge, since Go Scale Capital is largely financed by the Chinese government.

Most industry insiders believe Go Scale Capital will acquire Philips 600 LED patents through its investment in Lumileds, and be able to expand its export market. This will solve Chinese LED manufacturers obstacles of lacking patents, and their inability of exporting their products as a result. Past patent licensing agreements signed between Lumileds, Cree, Toyoda Gosei, Nichia and Osram reveal the patent licensing process can be fairly complicated. Renegotiating patent licensing in a short period can be very difficult, allowing Lumileds ample opportunity to snatch up market shares during this .

According to Lee, Go Scale Capital’s acquisition of Lumileds for US $3.3 billion was fairly expensive, but the company has its own plans of listing the company on the Chinese bourse. Go Scale Capital has capital advantages in the Chinese market, in comparison the impact of listing Lumileds on the U.S. market is relatively small. The LED industry is concerned that Lumileds will eventually become a patent dealer, resulting in further LED price drops.