Taiwan’s two leading companies in the light-emitting diodes (LEDs) sector are expected to maintain growth momentum in the second half of this year on steady global demand for LED lighting products, analysts said last week.
Analysts said that is because the growing demand for general lighting products and mobile device backlighting applications is strong enough to offset the potential pullback in TV backlighting shipments, allowing both Epistar Corp (晶元光電) and Everlight Electronics Co (億光電子) to continue their growth through next year.
“Our thesis of two-engine growth [general lighting and backlight] remains unchanged, despite recent uncertainty in LCD TV demand,” HSBC Securities Taiwan Ltd analyst Jerry Tsai said in a note on Friday.
The increasing use of LEDs in general lighting applications and a steady demand of power-saving LED backlight units in computers and LCD TVs have been seen as the most important drivers for the Taiwanese LED sector in recent years.
As demand for backlights, and especially those used in TVs, has slowed down due to the expiration of subsidies in China and weakness in end demand for notebook computers and monitors, companies have responded with product mix adjustments, Tsai said.
He said growth in global large-sized LCD panel demand in terms of square meters, known as area demand, remained larger than the pace of decline in TV shipments in terms of units and hence could give support to overall LED demand.
“We expect the two companies [Epistar and Everlight] to play a larger role in global LED backlight in 2014, due to innovative designs that offer competitive cost savings to customers,” he said.
Tsai’s remarks came after Epistar, the nation’s largest LED chipmaker, last week said it swung into profit in the second quarter with earnings per share (EPS) of NT$0.38, compared with net losses per share of NT$0.27 in the previous quarter. Meanwhile, Epistar’s once-struggling subsidiary, the unlisted Huga Optotech Inc (廣鎵光電), also saw it break even last quarter following three consecutive quarters of losses.
In the April-to-June period, Epistar’s gross margin increased 9.6 percentage points to 15.9 percent from the previous quarter, while operating margin rose to 6.4 percent from minus-7.1 percent in the January-to-March period.
Everlight, the nation’s top LED chip packager, said on Thursday its EPS reached NT$0.92 last quarter, up from NT$0.53 in the previous quarter, with gross margin rising to 26.37 percent from 22.49 percent and operating margin improving to 9.77 percent from 6.69 percent over the same period.
In the first seven months of the year, Epistar’s consolidated revenue increased 5.08 percent to NT$12.31 billion (US$411 million) and Everlight’s cumulative revenue rose 24.11 percent to NT$13.11 billion, the companies said in their filings to the Taiwan Stock Exchange.
Analysts forecast the two companies would see revenues stay flat or increase slightly this quarter from last quarter due to tepid backlight demand. However, their profit margins could see continued sequential improvement on rising utilization rates and cost controls, they said.
For the whole of this year, HSBC forecast Epistar to report EPS of NT$1.76 this year and NT$3.13 for next year, while Everlight is forecast to see EPS of NT$3.17 this year and NT$3.67 next year.
JPMorgan Securities Taiwan Ltd is also upbeat about the outlook for the two companies, expecting Epistar to post EPS of NT$0.8 this year and NT$2.75 next year, while NT$3 and NT$3.7 for Everlight in these two years.
In particular, Epistar’s flattish sales last month from June made it stand out from most display supply-chain companies, which posted revenue declines last month, JPMorgan analyst Narci Chang (張恆) said in a report on Friday.
“We expect such divergence to continue as general lighting demand has grown large enough to offset the shortfall in backlight business,” Chang said.
Nevertheless, Taishin Securities Investment Advisory Co (台新投顧) on Friday took a relatively cautious stance toward Epistar, with EPS forecast of NT$0.66 for this year.
“The lighting demand remains stable this quarter but the company is expected to see sequential sales decline during the traditionally slow season next quarter,” said Taishin analyst Huang Chang-en (黃常恩).
Huang predicted the company to see EPS reach NT$1.05 next year, thanks to its solid technology base and leading market status.
Shares of Epistar rose 4.19 percent to NT$49.75 on Friday, while those of Everlight increased 3.45 percent to NT$46.45. So far this year, Epistar has fallen 5.6 percent but Everlight has risen 21.92 percent, compared with a 2.03 percent hike in the TAIEX over that period.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure