The move to make flat-screen computers and television sets brighter is leading liquid-crystal-display makers in Asia to focus on a new application of an old technology: light-emitting diodes, or LEDs.

LEDs consume less power than the current mainstream backlight technology, called cold cathode fluorescent lamp, or CCFL. They also take up less space and are more environmentally friendly because they don't contain mercury.

To ensure adequate supply of LEDs for use as next-generation backlights in LCD panels, companies such as AU Optronics Corp., Chi Mei Optoelectronics Corp. and Chunghwa Picture Tubes Ltd. are acquiring stakes in LED makers.

Analysts and company executives say that trend may accelerate in coming years as consumer demand for higher-quality computer and television screens grows.

"We believe LED technology is promising," said Chen-Lung Kuo, Chi Mei's vice president of global sales and product development. "So far, it's too expensive to become the most popular backlight, but more and more LCD makers are trying to demonstrate that they have LED backlight technology." LEDs can cost up to three times as much as CCFLs.

In May, Chi Mei, of Taiwan, acquired a stake of less than 10 percent in Taiwanese LED maker Formosa Epitaxy Inc. Rival AU Optronics followed in August with a 25 percent stake in LED maker Light House Technology Co., while Chunghwa Picture Tubes Chief Financial Officer James Wu said recently that his company made an investment in an LED company that he declined to identify. Samsung Electronics Co. has long had a stake in Korea's biggest LED maker, Samsung Electro-Mechanics Co.

"LCD makers want to be assured of stable supply, have design flexibility and control ... and get a share of a growing market," said Jagdish Rebello, director and principal analyst at market-researcher iSuppli Corp.

Some analysts have speculated that LG.Philips LCD Co. may be next, saying the South Korean LCD maker could invest in a local LED maker to strengthen its technology. One analyst said a deal with Kosdaq-listed Lumimicro Co. is possible. A spokeswoman for LG.Philips LCD declined to comment, while a spokesman for Lumimicro said he wasn't aware of any talks between the two companies.

Chang-Eyun Yu, an analyst at BNP Paribas Peregrine in Seoul, said LCD makers are moving to make an investment in LED makers because they believe LEDs may become a critical component in the coming years. "LED is the ultimate solution for panel makers to differentiate against competitors in the high-end LCD market." said Mr. Yu. "If it's a critical component, you want to somehow make sure that you have the high-performing quality products without any difficulty in sourcing when the market is in short supply."

He said that while more LCD makers may move to invest in LED suppliers, partnerships that don't involve capital ties also are likely. Chi Mei spokeswoman Loreta Chen said the Taiwanese LCD maker has started mass producing LED backlights for 19-inch monitor panels from the fourth quarter and is already selling monitor panels using the technology. "As for TV panels, we already have the LED technology and product ready, but we still need to watch market needs to decide the timing of going for mass production," she said.

Market-research firm iSuppli predicts LED backlight units will be used in about 30 percent of LCD screens by 2010. "Even this moderate penetration rate represents a $3 billion market for LEDs," said iSuppli's Mr. Rebello.

The price gap remains a challenge for LED technology, though. "LED has a lot of upside to CCFL but you still have to get the cost down," said Ross Young, chief executive of U.S. market researcher DisplaySearch.