Thu, Jun 28, 2012 - Page 13 News List

Epistar expects turnaround this quarter

DEMAND:An Epistar executive said the LED chipmaker’s capacity utilization is full and was upbeat about demand for next month and in August

By Lisa Wang  /  Staff reporter

Epistar Corp (晶電), the nation’s biggest LED chipmaker, expects a turnaround this quarter, as strong demand for LED TVs and LED lighting would help boost factory utilization and lift gross margin significantly to more than 20 percent, a company executive said yesterday.

That would end two straight quarterly losses for Epistar, after the company lost NT$515 million (US$17.19 million) in the first quarter and NT$620 million in the final quarter of last year.

Epistar said the prospects for next quarter have never looked better.

“Capacity utilization is full now,” chairman Lee Biing-jye (李秉傑) told Unique Satellite TV (非凡電視) after the company’s annual shareholders’ meeting.

Supply still lagged demand by between 20 and 30 percent, Lee said.

“[Demand] looks quite good in July and August. [Demand in] September will depend on market demand for LED TVs,” Lee said.

Epistar also plans to build two new plants each in Miaoli County and China’s Fujian Province, Lee told reporters. The plants would start operation in 2014, he added.

LED lighting’s market penetration rate is expected to spike to 16.8 percent in 2015, from 1.9 percent last year, according to market researcher NPD DisplaySearch’s forecast.

Supply of LED chips is expected to reach parity with demand this year, DisplaySearch said in a quarterly report released on May 18. This quarter, supply is expected to be 15 percent more than demand, improving from the more than 30 percent glut a year ago, it predicted.

Last year, supply growth spiked at 41 percent, greatly exceeding the 10 percent increase in demand, leading to a severe glut, it added.

Epistar shareholders yesterday approved a plan to sell 250 million common shares via a private placement in an effort to seek strategic partners and expand capacity in the next few years in anticipation of a boom in the LED lighting industry beginning in 2015.

Epistar eked out a profit of NT$480 million last year, with a gross margin of 12.31 percent, after the European debt crisis and wobbling US economy dampened LED TV demand and chip prices declined on oversupply, the company said in a report to shareholders.

Shareholders also gave the green light to a proposal to deliver a cash dividend of NT$1.1 per share based on last year’s net income and a special allocation of NT$492 million from its accumulated profits, compared with NT$4.5 per share Epistar delivered last year.

The company’s shares dropped for the seventh consecutive session to NT$61.5 yesterday, down 0.16 percent from Tuesday, underperforming the TAIEX’s 0.63 percent gain.

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