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China-based LED packager Hongli Zhihui has announced it has singed a pact with Taiwan-based LED epitaxial wafer and chip maker Epistar for 4-year supply of LED chips for making automotive lighting.
The LED chips to be supplied should enable automotive lighting products to meet local regulatory requirements in the markets where cars are sold, said Hongli, a top-3 China-based LED packaging service provider. Total value for the 4-year (November 2017-October 2021) supply will be around CNY500 million (US$75.4 million), with possible increases or decreases by 15% depending on market conditions.
To enable the cooperation, both companies’ executives will communicate monthly, according to Hongli. Epistar will provide new LED chip models for jointly development of automotive lighting products, and Hongli will offer test results of such lighting products for Epistar to improve its chip offerings.
Hongli will provide Epistar with LED chip demand forecasts and production details every quarter to facilitate the Taiwan partner’s production planning.
Hongli said the partnership can avoid patent issues, secure stable LED chip supply at reasonable cost, and obtain Epistar’s technological support.
To beef up marketing of LED automotive lighting products, Hongli has invested CNY230 million to acquire a 51% stake in an automotive lamp maker in Danyang, eastern China.
Adoption of LED automotive lighting in the China market is increasing and the demand is also being fueled by promotion of electric vehicles. The cooperation is expected to boost Epistar’s LED shipments to China’s automotive lighting.
Epistar expects revenues from such chips to account for 5-10% of 2017 consolidated revenues and increase about 20% on year.
LED automotive lighting products.
Photo: Michael Lee, Digitimes, November 2017
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