The board of directors of Taiwan-based LED chipmaker Tekcore has approved plans to form a new sales and distribution venture with South Korean LED maker Seoul Semiconductor and its subsidiary Seoul optodevice, according to a report by Digitimes.
The joint venture will initially be capitalized at NT$60m (US$2.03m), with the South Korean firms and Tekcore contributing 51% and 49%, respectively.
The cooperation should allow Tekcore to develop overseas business markets and receive patent licensing for white LEDs, the firm says. Seoul Semiconductor had previously also formed a strategic partnership with Taiwan-based LED chipmaker Huga Optotech.
Seoul Semiconductor and Tekcore have done businesses together for the past 10 years and, due to the strong growth in LED TV backlight applications, Seoul Semiconductor became Tekcore’s largest client in 2010, accounting for just under 20% of revenue, according to Tekcore.
In addition to the South Korea market, the new venture aims to bring LED lighting products to the USA, Europe and Japan, according to Digitimes. Seoul Semiconductor and Tekcore are scheduled to sign a partnership agreement and begin the company registration process in the second quarter.
The partnership should also help Tekcore to secure long-term orders, increasing Seoul Semiconductor revenue contribution to 30%, it is said. As a precedent, when Huga, Seoul Semiconductor and Seoul Optodevice established a joint venture in 2009, Huga saw the proportion of its total revenue coming the South Korean companies jump from just over 10% to 20–30%.
With the market penetration of LED TVs expected to rise to 40–50% in 2011, Seoul Semiconductor (which supplies LEDs to Samsung Electronics) has looked to strengthen its relations with Taiwan-based LED chip makers. In particular, as Samsung LED ramps up in-house production and enters the LED lighting sector, Seoul Semiconductor will be more aggressive in improving its product development capability and management of upstream suppliers and downstream clients, says the report.
Tekcore posted NT$2.438bn in revenues for 2010, up 94% on 2009. Although profit in fourth-quarter 2010 was affected by a drop in capacity utilization, full-year net income reached a record NT$350m (US$11.82m).