Business News | Sep 24, 2010

Toyoda Gosei Concludes Joint Venture Agreement to Develop, Manufacture, and Market LEDs in Taiwan

Toyoda Gosei Co., Ltd. and two Taiwanese companies formally agreed on September 20 to establish a joint venture in Taiwan to develop, manufacture, and market light emitting diodes (LEDs). The Taiwanese companies are Epistar Corporation, a leading manufacturer of LED chips, and Twin Hill Co., Ltd., a sales agent for Toyoda Gosei LEDs. This joint venture agreement combines Toyoda Gosei’s leading-edge LED technology with Epistar’s low-cost manufacturing capabilities to expand the partners’ LED sales in the growing market of illumination applications.

Since 2006, Toyoda Gosei has worked with Epistar and outsourced the production of some of its LED products to the Taiwanese manufacturer. Through this joint venture, Epistar and Toyoda Gosei will tap each other’s strengths to supply energy-saving, low-cost LED products, in order to contribute to worldwide environmental protection.

The joint venture, tentatively named TE Opto Corp., will contract Epsitar, currently Taiwan`s No.1 LED chipmaker, to make the chips, thereby adding growth momentum to Epistar`s sales.

The two companies projected the joint venture`s sales for fiscal 2011, which begins in April 2011 and ends in March 2012, at five billion Japanese yen (US$59 million at US$1:84 yen).

The joint venture, to be capitalized at 60 million yen, will be 51% held by TG and 40% by Epistar. The remaining 9% will be held by Twin Hill Co., Ltd., TG’s Taiwan dealer.

TG will hold four seats in the venture`s director board and its chairmanship and presidency. Epistar will hold two seats.

Epistar Chairman B.J. Lee noted that since TG has entered into cross-licensing agreements with the world’s leading LED patent holders the joint venture will assure packagers of chips free of patent disputes. He added that in the past Taiwan`s packagers were banned from selling their products to Japan because of disputed chips they use.

Lee pointed out that the joint venture will target LED-lighting manufacturers in Taiwan and mainland China as its primary customers.

Industry watchers estimated the joint venture would smooth the path for Taiwan`s packagers into international markets from the viewpoint of getting access to lower-priced and dispute-free chips.

Outline of the Epistar-TG Joint Venture:
Tentative Name  TE OPTO Corporation
Establishment Date November 1, 2010 (scheduled)
Establishment Location Taiwan
Capitalization  60 million Japanese yen
Shareholding  Toyoda Gosei 51%, Epistar 40%, Twin Hill 9%
Director Seat  Four by Toyoda Gosei, two by Epistar, and one by Twin Hill
Business Coverage  Developing, manufacturing, and marketing LED products
Short-Term Sales Goal Annual sales equivalent to about 5 billion yen by the fiscal year ended on March 31, 2012

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