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Business | July 12, 2012

LED industry to face severe challenge in 2H12

According to LEDinside, the June revenues of Taiwanese listed LED manufacturers totaled NT$8.8 billion (MoM+1.12%, YoY-5.6%).
Benefiting from the climbing demand for consumer electronic appliances and the traditional lighting peak season, the LED industry’s 2Q12 revenue reached NT$25.82 billion (QoQ+22.7%). Looking towards the second half of 2012, the LED industry will face a severe challenge – affected by the lukewarm economic outlook and the European debt crisis, the future for end market does not seem bright, and the peak season performance may fall short of expectations yet again.

In the LED backlight sector, be it TV, notebook or mobile phone, the demand has been shrinking, so brand vendors have concerns about hitting the shipment targets they set before. As for LED lighting, affected by the European debt crisis, orders from Europe and the United States have decreased as well. Consequently, the outlook for 3Q12 remains murky, and the fierce competition will persist well into 2H12.

Revenues of LED Chip Makers and Package Makers Remained Flat

Benefiting from the large-sized backlight orders and high demand for consumer electronic appliances, Taiwanese listed LED chip foundries’ revenues amounted to NT$3.83 billion in June (MoM-0.4%, YoY- 11.5%). Given the climbing display market demand, Taiwanese package makers started to receive orders from Chinese chip makers since 12’May.

Those Chinese companies aim to make inroads into Taiwan’s low-price LED market. Taiwanese firms need to put more emphasis on products’ quality and reliability in order to set themselves apart from the Chinese competitors.

Epistar’s revenue went up 4.3% to NT$ 1.73 billion in June, while Huga Opto’s revenue amounted to NT$210 million and the utilization rate increased to 70% in June, thanks to the orders the company received from Korean companies. FOREPI and CMLT’s revenues remained flat due to the demand from Asus’ new tablet PC.

As for package makers, the revenues of Taiwanese listed LED package makers in June hit NT$4.97 billion (MoM+2.3%, YoY-0.5%). The mass production of Lite-On’s lighting components carries out smoothly, not to mention the strong demand from brand vendors. Lite-On’s revenue slightly rose in June, reaching NT$ 1.09 billion.

Lextar’s lighting application business accounted for 40% of its revenue in June; aside from cashing in certain global brand vendors’ orders, Lextar’s efforts put in China also begin to take effect and bring in orders. Moreover, Lextar’s Suzhou plant’s lighting assembly lines were certified by the clients and reached scale of economy, which triggered Lextar’s lighting business and market share to grow in 1H12.

Furthermore, the new model that Unity Opto Technology jointly developed with its client has gone into mass production. Also, the company’s backlight orders increased considerably, which were from Taiwanese TV and tablet PC OEMs and Chinese TV brand vendors. As a result, Unity Opto Technology’s revenue soared by 19.9% in June to NT$ 700 million.

However, Taiwanese LED companies noted that the peak season is on the doorstep, but no prominent growth momentum is in sight. Coupled with the weak consumer confidence, the outlook for the LED market remains conservative.

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