Sat, Nov 15, 2008 - Page 11 News List

Analyst says LED output growth set to disappoint

TOUGH TIMESAllen Lin of IEK warned that the average selling price was likely to fall by more than 25 percent for the year as profit margins are hurt by weakening demand

By Sylvia Wang  /  STAFF REPORTER

The value of global light-emitting-diode (LED) output is expected to grow by only 5 percent next year amid a weak economic environment, while Taiwan, which accounts for 20 percent of the world’s LED output, is projected to fare slightly better with a 7 percent increase, an analyst with the Industrial Economics and Knowledge Center (IEK) under the Industrial Technology Research Institute (ITRI, 工研院) said. LACKLUSTER

The center’s projection came amid the recent lackluster performance of LED stocks on the local bourse, as Taiwanese LED makers including Opto Tech Corp (Optotech, 光磊科技), Tyntek Corp (鼎元光電) and Bright LED Electronics Corp (佰鴻) saw their share prices close limit-down for the second straight day yesterday.

Share prices of the big two LED makers, Everlight Electronic Co (億光電子) and Epistar Corp (晶元光電), have plummeted by 66.5 percent and 71.52 percent respectively from May 20 until yesterday.

DOWN

Everlight Electronic’s shares fell 0.72 percent to NT$41.55 on the Taiwan Stock Exchange yesterday. Epistar’s shares were down 5.56 percent to NT$28.05.

Allen Lin (林志勳), an analyst at Hsinchu-based IEK, said he expected the global LED market to grow by only 5 percent to around US$7.4 billion next year, given the impact of the global economic downturn.

Hi-bright LED, driven by demand in emerging markets, will become the major driving force of the LED market, Lin said.

He also said that he expected the hi-bright market to increase by 9 percent next year to reach US$5.5 billion.

PRICE DROP

Normal-bright LED is likely to face a slowdown, as the company expansion this year raises the odds of a price drop, he said.

Taiwan’s LED output value is estimated to climb 13 percent this year from a year earlier, to reach NT$60.9 billion (US$1.84 billion). But the level of growth differs between upstream and downstream sectors.

Upstream LED chip makers’ expansion of production capacity this year has led to a significant drop in unit price and caused output value to grow by only 8 percent.

GROW

In contrast, thanks to the increased application of hi-bright LED products, downstream LED packaging firms’ output value is projected to grow by 14 percent, Lin said.

As the global economic outlook remains unclear, Lin estimated that Taiwan’s LED output value may only see a modest growth of 7 percent to NT$65.4 billion next year.

Despite the fact that output value is still showing positive growth, Lin warned that the average selling price was likely to fall by more than 25 percent for the whole year, as profit margins are being hurt by weakening demand.

However, the prospects of the LED industry still look quite positive in the long-run, Lin said.

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