People familiar with Hon Hai's LED consolidation plan pointed out that the first case would likely happen between Hon Hai's Advanced Optronic Technology Inc. and Chi Mei Group's Chi Mei Lighting Technology Corp. They also said Hon Hai was considering to enter into alliance with LED chipmaker Epistar Corp. and buy into Japanese chipmaker Toyoda Gosei Co., Ltd.

Industry watchers expected Hon Hai would even likely incorporate Formosa Epixy Inc. and Unity Opto Technology Co., Ltd., both are partly held by Chi Mei, into its LED operations. Hon Hai is also likely to combine its LED lighting maker Foxsemicon Integrated Technology Inc. with other LED business under the group.

Industry executives suggested Hon Hai should team up with Epistar, Taiwan's No.1 LED chipmaker, in a bid to maximize consolidation strength. Epistar's prime shareholders now are United Microelectronics Corp. (UMC), Everlight Electronics Co., Ltd. and Wan Hai Lines.

Some industry insiders said that Wan Hai could possibly sell its 10% shareholding in Epistar to Hon Hai as long as the acquisition offering is satisfactory.

As Toyoda Gosei is among the world's top five LED patent holders, acquiring the Japanese company could be the most advantageous deal for Hon Hai in terms of cost efficiency, Taiwan's industry insider said.