Speaking on the sidelines of a technology forum in Shanghai, Powerchip chairman Frank Huang (黃崇仁) said the new plant will benefit from Xuzhou’s geographic location and convenient transportation links after it becomes operational.

In March, Powerchip announced it would invest US$15 million at a third location in Xuzhou, which would produce LED EPI wafers and chips, core LED materials.

Huang said the company plans to invest a total of US$300 million in LED production facilities in China to help cushion the impact of a downturn in Powerchip’s core business — dynamic random access memory (DRAM) chip manufacturing.

Powerchip is one of many Taiwanese high-tech firms, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (聯電), that have invested in the production of energy efficiency or renewable energy products, such as LEDs and solar cells, and are also targeting the China market.

In the first half of the year, 925,000 LED TVs were sold in China, 10.6 percent of all flat panel TVs sold there during that period. The level of market penetration is expected to rise to 25 percent in the second half of the year, indicating that the LED sector will grow accordingly.

Last month, TSMC said it would raise capital expenditure for this year to US$5.9 billion from the previously planned US$4.8 billion and designate about US$100 million for business diversification, which the market believes will be directed at the LED and solar power sectors.

The global DRAM sector is suffering from declining prices because of weaker demand caused by the eurozone’s debt problems and the slowing pace of global economic recovery, market observers said.

Several Taiwanese DRAM makers, such as Powerchip, Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技), are migrating to advanced production processes in an attempt to cut costs and reduce the impact of falling product prices.