LED epitaxial wafer and chip maker Epistar Corp of Hsinchu Science-based Industrial Park, Taiwan is expanding production capacity for aluminum gallium indium phosphide (AlGaInP) LED chips and nitride-based blue-light LED flip-chips, reports Digitimes.

The first quarter of the year is an off-season period and the capacity expansion is preparing for demand in the second quarter, according to Epistar’s president Jou Ming-jiunn.

Epistar continues to modify metal-organic chemical vapor deposition (MOCVD) systems – originally used to make blue LED chips – for producing AlGaInP LED chips, Jou notes. Epistar aims to extend its AlGaInP-based infrared LED chip applications from security surveillance to VR (virtual reality), AR (augmented reality) and iris recognition in 2017, he adds. Consequently, AlGaInP LED chips are expected to rise from 25-30% of company revenue in fourth-quarter 2016 to over 30% in 2017, Jou says.

In addition, Epistar has improved yield rates for flip-chip chip scale package (FC CSP) blue LED and will expand production capacity in 2017, Jou notes. Epistar expects Samsung Electronics, LG Electronics and China-based LCD TV vendors to increase adoption of flip-chip blue LED for backlighting, he adds. In addition, after Apple adopted FC CSP LEDs for the iPhone 7 camera flash, other smartphone vendors are expected to follow suit in 2017, Jou says. The flip-chip blue LEDs is expected to rise to more than 10% of revenue in 2017.

Despite suffered a net operating loss in 2016, Epistar hopes to return to profitability in 2017 through adjusting production capacity and product mix, Jou states.