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Taiwan LED industry to face challenges in 2H12

Posted: 13 Jul 2012 ?? ?Print Version ?Bookmark and Share

Keywords:Taiwan LED industry? European debt crisis? Taiwan chip foundries?

In a recent report of LEDinside, a research division of TrendForce, the total revenues of Taiwanese listed LED manufacturers totaled $293 million (NT$ 8.8billion). The LED industy's 2Q12 revenue reached $860 million (NT$25.82 billion). Moving forward, the LED industry will be facing a serious challenge. With the effects of the lukewarm economic outlook and the European debt crisis, the future for end market does not seem bright. The peak season performance of the LED market may also fall short of expectations.

With demand for the LED backlight sensor shrinking, brand vendors have become concerned about hitting the shipment targets that have been set. On the other hand, LED lighting has been affected by the European debt crisis as orders from Europe and the United States have decreased. Because of these factors, the outlook for 3Q12 remains murky and fierce competition should persist well into 2H12.

Revenues of LED Chip Makers and Package Makers Remained Flat
Strengthened by large-sized backlight orders and high demand for consumer electronic appliances, Taiwan's LED chip foundries' revenues reached $128million (NT$3.83 billion) in June. With the climbing display market demand, Taiwanese package makers started to receive orders from Chinese chipmakers since May 2012. These Chinese companies are aiming to take advantage of Taiwan's low-price LED market. Taiwanese firms must recognize the need to emphasize their products' quality and reliability in order to differentiate themselves from Chinese competitors.

Epistar's revenue went up 4.3% to $57.6 million (NT$1.73 billion) in June. Huga Opto's revenue amounted to $7million (NT$210 million) and the utilization rate increased to 70% in June, thanks to the orders they 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 $165million (NT$4.97 billion). 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 $36.3million (NT$ 1.09 billion.)

Table 1

Figure 1: Revenue of Ranking of 2Q12 for LED Chip Manufacturers.
Source: LEDinside

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 $23 million (NT$ 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.

Table 2

Figure 2: Revenue Ranking of 2Q12 for LED Package Manufacturers
Source: LEDinside

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