According to China Daily, SemiLEDs has invested $350 million (£233 million) in a facility that will produce wafers and high-power chips at a plant in Foshan, in the Guangdong province.
The head of the city's Foreign Trade and Economic Cooperation Bureau Zhang Jianhui believes Foshan is growing into a key centre for hi-tech industry and hopes it can create a "complete LED industrial chain" by 2012.
He said: "The LED lighting and photovoltaic industries are becoming one of the main forces driving our city's industrial growth."
The company is just one of many to invest in the area in recent years as numerous semiconductor and optoelectronics enterprises expand operations in the Pearl River region, which includes Foshan.
Furthermore, firms from Taiwan are said to looking to expand in China after a relaxation in regulations over foreign investment.
SemiLED is to produce the high-power chips and wafers using its patented "vertical LED-on-metal" technology.
