2010-3-22

3/22/2010 – Tapping into a growing demand for light-emitting diode general lighting across Asia, venture firm WI Harper Group has gone on an investment tear in the past month and the firm is still on the prowl for new investments.

New lighting technologies based on LEDs are gaining acceptance globally, but China in particular has launched a targeted program over the past year to promote the industry's growth.

In February 2009, China's Ministry of Science and Technology initiated a program that set a target of 2 million LED lights deployed in 50 cities by 2012, with 70% of the parts sourced domestically. By 2015 the target is to have LED lights comprise 30% of the domestic lighting market, up from a nominal share of the current market.

With those targets in their sights, the investors at WI Harper have set out to build a portfolio of companies that can address everything from component equipment to final lighting manufacturing, according to Managing Director YK Chu and Partner Lucas Wang, investors in the firm who spoke to Clean Technology Insight in an interview.

Earlier this month, San Francisco-based WI Harper said it backed the first institutional funding for Beijing-based integrated circuit manufacturer MaxIC Technology Corp., which supplies circuits that control the power flowing through an LED chip. The company also announced an investment in Testar Corp., which tests the quality and performance of LEDs.

The two investments double the number of LED companies in the firm's portfolio, according to Wang. "We believe right now the opportunities will come out of the downstream value chain in the packaging houses and lighting design guys," Wang said.

Other LED holdings in the WI Harper portfolio include SemiLEDs Corp. and NEOpac Group, which makes light engines and heating control technology for LED lights.

The firm's strategy with Taiwan-based SemiLEDs is one example of how seriously it takes the lighting market in China. Last year, SemiLEDs launched a three-phased plan to expand its base in the country.

In November 2009, SemiLEDs launched a new fabrication plant in Foshan, China, with an initial investment of $96 million. The plant will cost approximately $350 million to build, according to Wang, and the company expects it will be finished by October 2010.

The company said in announcing the factory that its initial monthly production capacity would be 20 million 1mm x 1mm LED chips per month, with investment and production expected to grow by three times within a period of three years.

Wang said that the decision to set up the plant, which is being established as a joint venture between SemiLEDs and its customers and the Guangdong provincial government, was taken for two reasons: to lower manufacturing costs and to ensure access to the Chinese market.

WI Harper has mostly stayed away from investments in other areas of alternative energy, investing in one solar deal and one wind investment, Jiangsu Chuangzhou CTC Technical Fabrics Co.

"We had a serious discussion about solar for the past two years," Wang said, but ultimately found the LED market to be more attractive. "We focused on LEDs because we already have a solid position among the semiconductor companies, and it was easier for us to approach the LED guys through the semiconductor guys."